HC Deb 17 June 1976 vol 913 cc719-20
Mr. Hicks

asked the Chancellor of the Exchequer how many representations he has received from small businesses asking him to relieve the incidence of VAT by raising the exemption figure based on annual turnover.

Mr. Denzil Davies

In the 12 months up to 31st May Treasury Ministers received about 40 letters asking for the exemption limit to be raised.

Mr. Hicks

Will the Minister confirm that a figure of almost £9,000 represents the current value of the £5,000 turnover exemption first introduced in 1972? In view of the contribution made to the economy by small businesses and the self-employed, especially in rural areas, does the hon. Gentleman agree that this exemption figure should be increased?

Mr. Davies

I agree with the hon. Gentleman that from the point of view of inflation the figure should be between £8,500 and £9,000, but it does not necessarily follow that small businesses would benefit from a higher exemption limit. Many other considerations have to be taken into account. Many businesses would probably not wish to deregister, because of the benefits they get from operating within the registration exemption limit. Most of our friends in the European Community have a much lower exemption limit, and they seem to be able to manage.

Mr. Fernyhough

As VAT was part of the price that we had to pay for joining the Common Market, does not the Minister think it somewhat objectionable that those who voted for entry should now complain about the effect upon small business people?

Mr. Davies

I agree with my right hon. Friend that many features of the Common Market that are now part of our law were supported by Opposition Members. I do not think that they can complain too much now if the effects are not entirely beneficial.

Mr. Marten

Is not one of the factors the Sixth Directive concerning VAT, which is under discussion in the Community? As the Minister said, Community levels are much lower than ours. If the levels are to be harmonised, could not that be one reason why the Government are reluctant to lift the threshold?

Mr. Davies

No, Sir; these questions are not related to the Sixth Directive. As the hon. Gentleman knows, that directive has been under consideration for a long time. It is still not approved, and no decisions have been taken. The hon. Gentleman is correct in saying that the exemption limits set out in the draft of the Sixth Directive are lower than the present exemptions.

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