CUSTOMS DUTY (PERSONAL RELIEFS) (Hansard, 10 July 1979)

§ The Minister of State, Treasury (Mr. Peter Rees)
I beg to move, That the Customs Duty (Personal Reliefs) (No. 1) Order 1975 (Amendment) Order 1979, a copy of which was laid before this House on 15 June, be approved. The order is extremely simple in conception and, I hope, in execution. Customs and Excise authorities have power to make orders simplifying the calculation of the amount of customs duty and VAT payable on goods imported by passengers. A simplified combined rate can be charged on the first £70 worth of goods brought in by passengers over and above duty and tax free allowances. The system does not, however, apply to goods like tobacco, wines and spirits, on which there are high excise duties.
The last order in this series was made in 1975 and amended in 1976 to take account of the then revised rates of VAT, of 8 per cent. and 12½ per cent. These orders are necessitated by the consolidation of VAT into a single rate of 15 per cent. They are simple, convenient and for the advantage of people importing goods personally into this country. On that basis I commend them to the House.

§ Mr. Denzil Davies (Llanelli)
The hon. and learned Gentleman says that the order is simple, but I find it difficult to understand. When I had to move it from the Dispatch Box, when we changed it before, I did not understand it. However, I am sure that the hon. and learned Gentleman understands it. The explanatory note is not much help. It is very brief. In future perhaps we could have more explanation of the order, which is not entirely clear.
The figure of 8 per cent. goes up to 15 per cent. We understand that. The figure of 12½ per cent. is substituted by 20 per cent., and that does not make much sense to someone reading it for the first time. One would think that the 12½ per cent. should go up to 15 per cent., so why should it go up to 20 per cent.? Perhaps the Minister can tell us.
430 The effect of the order is clear. Anyone bringing in personal imports, with the exceptions mentioned, will pay 15 per cent. VAT. It is a consequence of the rather silly and mad things that the Government did in putting up VAT to 15 per cent., but can the hon. and learned Gentleman explain more fully how the 12½ per cent. becomes 20 per cent.? Will all goods brought into the country by British tourists from abroad, except wines, spirits and tobacco, be subjected to 15 per cent. VAT? Is that the only tax they will pay, or is that on top of customs duty?

§ Mr. Peter Rees
The right hon. Gentleman appreciates my difficulties, as he has grappled with them himself. In the days when he presided with such distinction from the Government Benches the rates of VAT were 8 per cent. and 12½ per cent. The composite simplified rate imposed in these cases was 12½ per cent. and 16⅔ per cent. We have taken a new rate of VAT of 15 per cent. and rounded the single flat rate up to 20 per cent.
I hope that that explains it adequately. I tried to explain, with too much haste because of the lateness of the hour, that this does not apply to goods such as tobacco, wines and spirits, on which there are high excise duties. However, it does apply to other personal goods that a passenger may have bought. It is always open to the passenger to have his goods assessed on a proper, non-simplified basis, but it will almost invariably be found by those coming to our shores—whether they are resident or not—that it is to their advantage to accept the single flat rate of 20 per cent. I hope that that reassures the right hon. Gentleman and the House.

§ Mr. Denzil Davies
I thank the hon. and learned Gentleman. He has been on the Treasury Bench all day. He has explained the matter very well, and now I fully understand it.