HC Deb 17 October 1991 vol 196 cc428-9
6. Mr. Michael

To ask the Chancellor of the Exchequer if he will make it his policy that all tax arrangements and other regulations in regard to products available for sale in the United Kingdom shall apply to imported items with at least the same stringency as they apply to items produced in the United Kingdom.

Mrs. Gillian Shephard

The Government are fully committed to removing distortions in the market between home-produced and imported goods.

Mr. Michael

While I support the idea of restrictions likely to reduce smoking and improve health—indeed, the Opposition have a greater commitment to that idea than the Government have—does the Minister agree that to implement regulations so as to place a greater onus on home-produced items than on imported items is likely to endanger jobs in this country to the benefit of jobs abroad, without any balancing improvement in health? Will the Minister undertake, with colleagues in other Departments, to review the Government's approach to the matter?

Mrs. Shephard

The hon. Gentleman clearly understands that the Tobacco Products Labelling (Safety) Regulations 1991, based on the EC directive to which he referred, are a matter for the Department of Health. The directive applies partial harmonisation, so there appears to be a little room for manoeuvre above the 4 per cent. of the surface area of the front pack that has to be devoted to the health warnings. From a tax standpoint, the important issue is that all products manufactured to be sold in the United Kingdom will be required to display English language warnings, whatever the text or size permitted, so that packs of cigarettes being imported which do not bear that warning are likely not to have had duty paid on them. That will be useful from a tax point of view.

Mr. Ian Bruce

Will my hon. Friend look particularly at those European countries to which we export goods and which impose high rates of VAT upon those goods? Most of the tax raising in those countries is done by indirect taxation through VAT. Does that not give an unfair advantage to people who export goods to us, given that we impose a low rate of VAT compared with the European average? Surely, the evening out of VAT throughout the European Community would be good for industry and we should not resist that.

Mrs. Shephard

I agree with my hon. Friend. The Government are fully committed to removing the distortions, whichever way they work.

Mr. Nicholas Brown

Have not the Government also agreed to increase dramatically the duty paid allowances for travellers from Europe coming to Britain, including returning British citizens? In so doing, the Government have forgone more than £1 billion in duty, mostly on cigarettes and spirits. Can the Minister tell the House how that duty forgone will be made up? Do the Government intend to increase VAT again? Do they intend to extend the public sector borrowing requirement still further or to cut expenditure on the national health service to encourage people to smoke cheaper cigarettes? It surely requires a peculiar incompetence on the Government's part to lose £1 billion of revenue and to encourage cigarette smoking at the same time.

Mrs. Shephard

It seems that the hon. Gentleman has been reading some rather misleading figures. For example, the Tobacco Advisory Council claimed that the effects of the single market would mean a £1 billion loss in revenue, but that claim is far too high as it assumes that every traveller who smokes will bring in 2,000 cigarettes for his own use each time he passes the border. As things stand, travellers who smoke by no means use up their allowances. The Government estimate that the loss in that particular case might be about £200 million.