§ 7. Mr. MacKayasked the Chancellor of the Exchequer if he has given further consideration to exempting maintenance of disabled persons' appliances from higher rate VAT.
§ Mr. Denzil DaviesI have noted the hon. Member's suggestion.
§ Mr. MacKayIs the Minister aware that many disabled people are concerned about the situation? Is he further aware that they think that it is ludicrous that their appliances are zero rated but that the maintenance of them and spare parts for them are taxed at the luxury rate? Does he know that in medical circles there is anxiety that because of the luxury rate there could be tragedies involving disabled people in the near future? Will he take action to remove this obvious bureaucratic error?
§ Mr. DaviesI cannot accept the last part of the hon. Member's question. I accept that there is concern that the maintenance of these aids is rated at 12½ 1534 per cent. whereas their supply is zero rated. When the aids are supplied to people who are not chronically sick and disabled they are taxed at the higher rate. It is thought right, as a matter of principle, to have the same basic rate of VAT for the supply of goods and for their maintenance.
§ Sir G. HoweDoes not that situation underline how foolish the Government were to introduce more than one positive rate of VAT? Is it not an overwhelming argument for returning to one rate?
§ Mr. DaviesThe problem would not be solved by reducing the rate from 12½ per cent. to 10 per cent. The problem would still be the same if the rate were the same for maintenance and for supply.