HC Deb 16 May 1996 vol 277 cc1066-7
9. Mr. Hain

To ask the Chancellor of the Exchequer what recent representations have been made to him on VAT receipts. [28498]

Mr. Heathcoat-Amory

My right hon. and learned Friend the Chancellor has received no recent correspondence regarding VAT receipts.

Mr. Hain

Is not the significant shortfall in VAT receipts contributing to the huge hole in the Government's finances? Is not that evidence of continuing economic insecurity and the fact that there is no feel-good factor? Why do not the Government change their slogan? Not only has it been hurting, but it still is not working.

Mr. Heathcoat-Amory

It is working and the strength in the economy has already been outlined by both my right hon. Friends during this Question Time. To answer the hon. Gentleman's question, the VAT receipts for the financial year just ended came in near to the Budget target announced at the end of last year.

Mr. Allason

Does my right hon. Friend accept that, as the Government accept the principle of variable rates of VAT, the tourism industry is anxious to have a reduced VAT rate, particularly on catering and hotel accommodation, which would be a great assistance, particularly in the south-west, where his constituency is involved in tourism?

Mr. Heathcoat-Amory

I do not accept my hon. Friend's suggestion. Where possible, we want a simple VAT system, which is easy to administer. There is no valid case for a zero or reduced rate for tourism services. As my hon. Friend will know, the British tourist industry had another record year last year.

Ms Primarolo

Is the Paymaster General aware that the Chancellor admitted on "On the Record" last Sunday, that he had "made a mistake" in the calculations for tax revenues in the Budget? Is that because he also made a mistake in the forecast for growth in the economy? The truth is that public finances are in a mess and he is looking for creative accounting to try to cook the books. The Tories cannot be trusted in what they tell the nation, unless they tell the truth, which they are clearly incapable of doing.

Mr. Heathcoat-Amory

That was not a direct quotation of my right hon. and learned Friend the Chancellor, so the hon. Lady's question was about as accurate as her other observations about the British economy.

Mr. Peter Ainsworth

Will my right hon. Friend confirm that a sharp rise in income tax would hardly do wonders for the retail sector and that, under a Labour Government, VAT receipts would probably fall sharply as a result?

Mr. Heathcoat-Amory

My hon. Friend is correct. VAT receipts are very much related to disposable income and consumption, both of which would be dealt a body blow by the tax policies—in so far as any of us know them—of the Labour party. The Opposition undoubtedly have a hidden agenda on tax. We are beginning to see little parts of it and they are still squabbling about it, but it scares the wits out of the country out there and we must never allow it to come about.