Value Added Tax (Hansard, 13 February 1992)

§ 5. Mr. Wareing
To ask the Chancellor of the Exchequer if he will state the amounts of Exchequer revenue raised from value added tax in each of the years 1978–79, 1986–87 and 1990–91; and indicate what percentage of total Exchequer revenue raised in each of these years these figures constituted.

§ Mr. Maples
In 1978–79, £5.2 billion and 9 per cent.; in 1986–87, £22.2 billion and 15.1 per cent.; and in 1990–91, £32.5 billion and 15.8 per cent.

§ Mr. Wareing
I thank the Minister for that answer and the confirmation that during the Government's tenure the burden has been placed firmly on the shoulders of those who are least able to bear it. Will the hon. Gentleman give a categorical assurance that if, unfortunately, the Conservatives are returned to power in a general election, value added tax will not be extended to any of the goods or services upon which it is not already levied? May I have a simple answer, yes or no, and no shenanigans?

§ Mr. Maples
It simply is not true that the burden of taxation has been increased on the poorer members of society. [HON. MEMBERS: "Answer."] That was the subject of the first part of the hon. Gentleman's question. Living standards at all income levels improved over that period. [HON. MEMBERS: "Answer."] The hon. Gentleman asked about three questions and I shall choose which one to answer. I think that most people are interested in the fact that living standards under this Government have risen dramatically.
My right hon. Friend the Prime Minister has made it perfectly clear that we have no intention of increasing VAT. We have made our plans on spending and tax perfectly clear. We do not need to raise VAT and in the European Community we have fought harder than anyone could have done to maintain our zero rate. We do not need any clarification about that. We need clarification from the Opposition about what their tax burden will be.

§ Mr. Charles Wardle
Has my hon. Friend heard the call from the many people who run village halls about the burden that VAT imposes on their activities?

§ Mr. Maples
I hear my hon. Friend's Budget representation and will take it into account.

Mr. John D. Taylor
How can the Government give an assurance that there will be no change in VAT rates when, under the Single European Act, the Government have already committed themselves to a policy of convergence of VAT rates throughout the European Community?

§ Mr. Maples
Any change in fiscal measures has to be agreed by unanimous vote in the Council of Ministers.

§ Mr. Ian Taylor
Will my hon. Friend make it clear that. according to the Treasury and Civil Service Select Committee, VAT is progressive in its impact, given that the more people spend. the more tax they pay? May we therefore put the Government's tax policy into context: although we do not wish to raise VAT above its present level, what we have done reflects further taxation on those who can afford to spend more?

§ Mr. Maples
Of course, my hon. Friend is quite right. The more one spends, the more one pays in VAT. It must amaze my hon. Friend, as it amazes me, that we have to explain that to the Opposition.

§ Dr. Marek
Does the Minister agree that his initial answer, taken with the huge increases that his Administration have brought about in national insurance contributions, the poll tax and the burden of rates that business men and business women have to pay. makes it clear that his party is the tax, tax and tax again party? Will he confirm that the proportion of national income taken in tax rose from 34.75 per cent. in 1978–79 to 37 per cent. in 1991–92? Has the Minister any plans to lower the total burden of taxation on the people of this country, which reached its highest levels in the 1980s after the very much lower levels that we experienced under Labour in the 1970s?

§ Mr. Maples
It is extraordinary that the hon. Gentleman wants to discuss this part of his party's history. The tax burden under this Government rose during our first two and a hall years because we inherited at the top of the business cycle a borrowing requirement of 5.5 per cent. of gross domestic product. For every year since 1981, the tax burden has fallen. It will continue to fall this year and next year and I think that it is well known to everybody that this Government's policy is to lower taxes, in contrast with the plans of the hon. Gentleman's party. We know that it plans to spend £35 billion. We should like to know how Labour plans to raise that.

§ Mr. Wareing
On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the Minister's answer to the question on the extension of VAT, I intend to raise the matter on the Adjournment.