HC Deb 23 May 1972 vol 837 cc1200-1
3. Mr. Hunt

asked the Chancellor of the Exchequer whether he will set up machinery to examine the extent to which purchase tax reductions are passed on to the consumer.

Mr. Nott

No, Sir. Purchase tax will be abolished next year, and in any case experience has shown that purchase tax reductions are generally passed on to the consumer.

Mr. Hunt

Does not my hon. Friend realise that a racket has been going on, particularly in toiletry and cosmetics? Is he aware that the jar of Max Factor hair dressing that I am holding cost 39p before the Budget and, in spite of the 20 per cent. reduction in purchase tax, still costs 39p? Should not the public have some redress against blatant profiteering of this kind, which undermines and sabotages the Chancellor's fight against inflation?

Mr. Nott

If certain trades or industries have not passed on the whole reductions, it is very disappointing, but this is a matter for the commercial judgment of the traders concerned.

Mr. Molloy

Does not the hon. Gentleman realise that his extraordinarily shaky and vacillating reply should convince him of the need to set up machinery to examine whether purchase tax and other reductions are passed on to the consumer, and that he might include the building societies, which increase mortgage interest rates when Bank Rate is raised but do not reduce them when it is subsequently lowered?

Mr. Nott

The hon. Gentleman's point about building societies is in no way related to purchase tax.

11. Mr. James Hamilton

asked the Chancellor of the Exchequer whether he will relieve from purchase tax dental packs given to children starting primary school; and if he will make a statement.

Mr. Nott

Toothpaste and plastic beakers are chargeable whether sold in packs or separately, but if such packs were issued free to local authorities by the manufacturers, no purchase tax would be payable.

Mr. Hamilton

Is the hon. Gentleman aware that Lanarkshire County Council got these packs free, but now, because of the increased cost, the company concerned has found it necessary to impose a charge? Is he further aware that the Secretary of State for Scotland has given a sympathetic hearing to the point of view we have expressed to him? On that basis, and in the interest of children's teeth in Lanarkshire and in Scotland as a whole, is the hon. Gentleman not prepared to waive this tax, bearing in mind that the company and the local authority do not make any money from it?

Mr. Nott

I know of the case mentioned by the hon. Gentleman, but we cannot just waive purchase tax in a particular case. That would not be possible. Under the value added tax, however, which will replace purchase tax in due course, toothpaste, for example, will effectively have its rate cut by the equivalent of 8½ per cent., assuming a 10 per cent. VAT rate. There will be a small rise of 2½ per cent. on beakers, but the tax on toothpaste will be substantially cut.