HC Deb 15 February 1979 vol 962 cc1297-8
11. Mr. Townsend

asked the Chancellor of the Exchequer if he will seek to alter the current value added tax rates.

Mr. Robert Sheldon

I cannot anticipate my right hon. Friend's Budget Statement.

Mr. Townsend

Will the Financial Secretary ask the Chancellor of the Exchequer to give careful consideration to introducing a single rate of VAT at 10 per cent? Bearing in mind the expected rates of inflation, is it not time the threshold was raised further?

Mr. Sheldon

The threshold has been raised regularly in the last few years. It is now almost as high as that which is permitted under the harmonisation of the Community arrangements. The hon. Member referred to a uniform rate of VAT. That is a matter which falls to be decided at the time of the Budget.

I remind the hon. Member that we are receiving a useful revenue from the higher rate. That is a matter which is frequently overlooked and the revenue would have to be made good some other way.

Mr. George Rodgers

Will my right hon. Friend bear in mind that elderly people whose State pensions are their only form of income could not benefit from any gestures involving income tax if VAT were to be raised?

Mr. Sheldon

I understand my hon. Friend's case. He will be aware that we have committed ourselves to a move towards obtaining a greater amount of revenue from indirect taxation as opposed to direct taxation over tile period ahead. He will also be aware that we have failed to revalorise indirect taxes over a long period. In particular, I refer him to the vehicle excise duty, which is at a rather low level by comparison with its level in real terms only a few years ago.

Mr. Peter Rees

Will the right hon. Gentleman reassure the House that, if he is unable to persuade his right hon. Friends to moderate public expenditure, direct taxation will not be increased, that the Government will not shirk their obligation to adjust personal allowances and that they will prefer instead, as he has indicated, to review indirect taxation?

Mr. Sheldon

I should be more convinced by that argument if the hon. and learned Gentleman and his right hon. and hon. Friends had not voted against the increase in vehicle excise duty. Having stated how strongly they were in favour of the move towards indirect taxation, when the time came for a decision they forgot what they had said.

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