Value Added Tax

HC Deb 05 July 1973 vol 859 cc709-11

12. Mr. Biffen

asked the Chancellor of the Exchequer what discussions have been held or are in prospect with M. Henri Simonet of the European Commission concerning the future of zero rates of British value added tax after 1975.

Mr. Patrick Jenkin

My right hon. Friend the Chancellor and my hon. Friend the Financial Secretary had a useful discussion with M. Simonet when he visited London in April and there have since been further discussions between M. Simonet and United Kingdom officials.

Mr. Biffen

What, if any, indication has been received from the Commission about zero rates of value added tax? Will my right hon. Friend reflect that many of us, even though we be possessed of only the meanest intelligence, believe that the authority of the House turns upon the test of ultimate sovereign control over rights of taxation, and that we wish to be assured that that authority will remain undiminished?

Mr. Jenkin

I certainly would not put my hon. Friend in the category to which he referred. He will recall that under the European Communities Act there can be no question of additional taxation being charged without legislation in the House, and there can be no question of the Community's agreeing on a harmonised VAT, whether or not it involved the ending of zero rating, without a unanimous vote of all the members. That position is unchanged. I understand that the directive allows the continuance of zero rating for the time being.

Mr. Heffer

As Commissioners of the European Commission seem to enjoy coming to Britain rather than answering questions in the European Parliament—[An HON. MEMBER: "Assembly."]—in the European Assembly, does the Chancellor know whether the gentleman referred to in the Question is likely to answer questions from the British delegation at that Assembly on the important matter of zero rating?

Mr. Jenkin

I cannot foretell, but there would obviously be a better chance of his answering questions if the hon. Gentleman were there to ask them.

Mr. Marten

May I put the question more simply than my hon. Friend the Member for Oswestry (Mr. Biffen) did? As of today, can we or can we not extend the area of zero rating without offending the rules of the Common Market?

Mr. Jenkin

As of today, if we chose to put down an amendment to the Finance Bill, I am certain that could be done.

Mr. Joel Barnett

Will the Chief Secretary now give us a clear assurance that the Chancellor either has told or will tell the Commissioner that under no circumstances will he agree to anything other than zero rating of food?

Mr. Jenkin

We have made it abundantly clear to the Commission and to our partners that we regard the zero-rating element of the value added tax as of the utmost social benefit—[HON. MEMBERS: "Answer"]—and I am confident that in the years ahead our partners will appreciate the truth of that in their circumstances.