HC Deb 13 December 1984 vol 69 cc1195-6
5. Mr. Pike

asked the Chancellor of the Exchequer if he will make it his policy that all items at present zero rated for value added tax will remain zero rated.

Mr. Hayhoe

No, Sir, I cannot give such a wide-ranging undertaking.

Mr. Pike

Does the Minister accept that there is great concern about the fact that switching to indirect taxation penalises the low-paid and those on fixed incomes and that we should take more income from the higher paid? Does he also accept that any introduction of VAT on newspapers, food, gas, electricity or children's clothing and footwear will be totally unacceptable? The Minister should give categorical assurances that VAT will not be imposed on any of those items.

Mr. Hayhoe

Any reasonable commentator looking back on my right hon. Friend's Budget earlier this year, with its substantial increase in income tax thresholds and modest extension of the VAT base, will have seen that the Budget was not regressive, but was in fact helpful to low-income families.

Mr. Hayes

In the light of Her Majesty's Inspectorate's estimate that 33 per cent. of educational books are bought by parents, does my hon. Friend not feel that the imposition of VAT on books would be a catastrophe for education?

Mr. Hayhoe

My right hon. Friend will certainly take those facts into account in forming his Budget judgment.

Mr. J. Enoch Powell

Is it not possible for the EEC—to our membership of which I am no friend—to argue logically that, since own resources are raised on the basis of a percentage of VAT in the respective member states, it is a demand of equity that the base should be the same in all the member countries?

Mr. Hayhoe

The theoretical base upon which the calculation is made is the same for all countries, and any extension of the VAT base does not change the amount that we pay under our EEC obligations.

Mr. Forth

Does my hon. Friend agree that many, if not most, European countries manage to survive and prosper with a much wider range of items subject to VAT than Britain? Does my hon. Friend further agree that that is another item that should be considered when my right hon. Friend the Chancellor makes his Budget dispositions?

Mr. Hayhoe

My hon. Friend's comments are perfectly true. Most member states of the Community have a wider VAT base than this country.

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