WINE (CUSTOMS DUTIES) (Hansard, 22 May 1974)

§ The Financial Secretary to the Treasury (Dr. John Gilbert)

I beg to move, That as from 23rd May 1974 the rates of the duties of customs chargeable under section 3 of the Finance Act 1964 on imported wine by virtue of the Customs Duties (Quota Relief) Order 1973 shall each be increased by £0.545 per gallon, but without prejudice to the powers conferred on the Secretary of State by section 5 of the Import Duties Act 1958, as amended. And it is hereby declared that it is expedient in the public interest that this Resoluton should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968. I regret the need to trouble the House with this resolution, which arises from a 559 defect in the drafting of the Budget Resolution in respect of wine. A similar defect exists in relation to the Finance Bill, and an amendment will be moved in Committee upstairs. The matter is somewhat technical, but I hope that the House will bear with a short explanation.

The Budget Resolution in respect of wine, in common with other Budget Resolutions on other revenue duty goods, applied a duty increase as an addition to the duty otherwise falling due by virtue of the Finance Act 1973, or orders made under that Act. These are the basic provisions under which the revenue duties are charged. The Finance Act 1973 laid down the rates applicable after the introduction of VAT and also gave powers to the Treasury to vary the rates by order in accordance with EEC obligations. Orders were accordingly made by the previous administration towards the end of last year.

But there is one special case in which the duty is chargeable by virtue of another provision, and this was overlooked. The Import Duties Act 1958 gives the Secretary of State for Trade power to grant certain reliefs from duties, and this power extends to revenue duties in order to allow the United Kingdom to suspend duties, wholly or partly, within a quota or limit of quantity, in accordance with EEC obligations.

In December 1973 the then Secretary of State made an order entitled the Customs Duties (Quota Relief) Order 1973 to implement a quota share for certain Portuguese wines opened by the Community in accordance with its trade agreement with Portugal.

That order lays down the rates of duty to apply within the quota. These are, in effect, the rates applicable to imports from the EEC. But it also provides that these rates shall be chargeable on goods within the quota

… instead of any higher rate which would otherwise apply. These words have the effect of nullifying the Budget resolution in respect of goods within the quota.

This defect was not noticed at the time, and Customs have been collecting the Budget increase in respect of all wines whether or not within the Portuguese quota. I think it is right to make it 560 clear that this is what the Chancellor intended and everyone understood him to intend. However, the error has now come to light, and it is necessary to consider what should be done to rectify it.

First, we must ask the House to give effect for the future to the Chancellor's intentions in the Budget. The resolution therefore rectifies the error and, with effect from tomorrow, imposes the intended Budget increase in duty on these wines as it already applies to all other wines.

We have not thought it right in the circumstances to ask the House's approval for a resolution with retrospective effect. This means that a certain amount of duty has been tendered and received in error. The total amount involved is estimated to be under £80,000, and this falls to be repaid. Customs will be giving instructions to their local staff to contact traders likely to be concerned, and to invite them to submit claims. I hope that the House will agree that this is the proper way to put matters right.

I invite the House to accept the motion.