§ There is one other tax which falls heavily on families with children. It is a tax which started at a rate of 15 per cent., and was three times increased, in July 1966, in March 1968, and again in November 1968, first to 16½ per cent., next to 20 per cent. and then to 22 per cent. I refer to foods, other than pet foods, which are at present charged to purchase tax—mainly all kinds of confectionery, and ice cream, crisps, soft drinks and so on.
§ The day has passed when these items can seriously be regarded as luxuries in the old sense of the word. They are bought by all sections of the community, and expenditure on these foods is now running at over £1,000 million a year. I have decided that they should be entirely relieved of tax—in other words, zero-rated for VAT. An order is being laid today. The cost will be £75 million in 1973–74, and £110 million in a full year.
§ The two taxes which have borne directly or indirectly on food have been purchase tax and SET. In March 1971 I announced that SET was to be cut by half, and in July 1971 purchase tax on food was cut from 22 per cent. to 18 per cent. As from the 1st April both purchase tax and SET will be abolished and, as a result of the decision I have just announced, all food sold in the shops 277 for human consumption will be relieved from VAT.
§ By way of contrast, at the rates in force when we took office, the yield of purchase tax and SET on food would next year have been £225 million. I am sure that this change will be welcomed in all parts of the House.