HC Deb 27 June 1996 vol 280 cc453-4
5. Mr. Harry Greenway

To ask the Chancellor of the Exchequer what is his latest estimate for VAT income for (a) the current financial year and (b) each of the previous two financial years; and if he will make a statement.[33409]

Mr. Heathcoat-Amory

VAT receipts for 1994–95 and 1995–96 were £41.8 billion and £43.1 billion respectively. The latest published forecast for 1996–97 is £47.9 billion.

Mr. Greenway

I welcome the rising trend announced by my right hon. Friend. Does it not compare favourably with the dismal stories put about by the dismal Johnnies in the Labour and Liberal parties—stories about declining economic activity and falling VAT receipts? Do not the figures reflect a more buoyant economy and augur well for a more cheerful future when tax cuts may in due course be made for everyone?

Mr. Heathcoat-Amory

My hon. Friend is right. The strong and buoyant figures for consumer expenditure are feeding through into higher VAT receipts. When my right hon. and learned Friend comes back from Lyon, he will no doubt read about my hon. Friend's enthusiasm for tax cuts.

Rev. Martin Smyth

Although I welcome the increase in VAT takings and realise that money talks, will the Minister undertake to review VAT on specialist equipment for the blind-deaf, so that they can play a fuller part in a society in which they are so often isolated?

Mr. Heathcoat-Amory

I am sure that the hon. Gentleman knows that equipment specially adapted for disabled people is zero rated—but we keep these matters under review and his comments will have been noted.

Sir Sydney Chapman

Although I am glad that VAT receipts are rising, will my right hon. Friend confirm that they are still a relatively small proportion of total tax receipts? Is he aware that in Social Democrat Sweden the VAT rate is 22 per cent., and it is on everything?

Mr. Heathcoat-Amory

My hon. Friend is entirely right about that. Not only do the Swedes have a much higher standard rate but they do not have our zero rates, so their tax system is a great deal more regressive than the United Kingdom's.

Ms Primarolo

Will the Minister confirm that he is considering introducing a statutory limit of six years on the refund of VAT campaigns? Will he confirm that he is doing so to prevent a haemorrhage of public funds and repayments, to close the gap on avoidance schemes which is opening up and to try to shore up the weak public finances that are undermining the Government's ability to do anything positive in the public sector?

Mr. Heathcoat-Amory

In answer to the original question by my hon. Friend the Member for Ealing, North (Mr. Greenway), I announced that VAT receipts over the past few months have been extremely buoyant. For April and May, they are 12 and 15 per cent. higher, respectively, than a year ago. So I do not understand how the hon. Lady can refer to a haemorrhaging of national finances. If she is saying that the Opposition are against stopping loopholes and avoidance schemes, that too is a most interesting announcement by an Opposition Front Bencher.