Value Added Tax (Hansard, 4 March 1993)

§ 9. Mr. Winnick
To ask the Chancellor of the Exchequer what representations he has received about VAT being imposed on food, books and newspapers.

§ Mr. Nelson
My right hon. Friend the Chancellor has received a number of representations, and these will be considered very carefully in the period leading up to the Budget. However, I am sure that the House will appreciate that it would be inappropriate for me to comment further at this stage.

§ Mr. Winnick
Inappropriate or otherwise, may I ask whether the Minister is aware that there would be no possible justification for a Tory tax on food, which would hit particularly hard the people in low-income households —the very people who have suffered enough under the Tory Administration? Would not the imposition of VAT on books and magazines break a clear pledge given by Ministers over the past few years?

§ Mr. Nelson
I cannot comment on what may or may not be in the Budget, but I can comment on an extraordinary statement last July by the Labour economic spokesman Lord Desai, who proposed that VAT should be applied at the full rate to all zero-rated items. Do the Opposition repudiate that?

§ Sir Terence Higgins
Is it not the case that the original structure of VAT, with a single positive rate and a zero rate for items of particular importance to families on low incomes, has stood the test of time? It would be wrong to alter that for short-term, revenue-raising purposes, particularly as narrowing the range of zero rating would result in greater pressure, especially from the European Community, to get rid of zero rating altogether.

§ Mr. Nelson
I hear very well what my right hon. Friend says. I am sure that he shares my view that the Government secured a very important agreement with the European Commission and other member states, which allowed for the retention of our current zero rates.

§ Mr. Nicholas Brown
I am sure that the whole House has noticed that the Government's pledges about not raising or extending the range of VAT have got more feeble as the Budget gets closer. Is the Minister aware that extending the VAT base to all currently zero-rated categories would add £7 per week to the budget of the poorest 10 per cent. of households, which is 7 per cent. of their average household income? Will the Minister give the House an assurance that whatever measures the Government bring forward will take into account the interests of the poor and that they will not pass on to the poorest 10 per cent. of households the deficit reduction measures that they are contemplating?

§ Mr. Nelson
What the hon. Gentleman has just complained about is exactly what his noble Friend proposed on behalf of the Labour party last year. I can give him the assurance that all these matters are carefully taken into account in assessing the Budget strategy.