Value Added Tax (Hansard, 16 January 1997)

§ 6. Mr. McAvoy
To ask the Chancellor of the Exchequer if he will make a statement on the amount of VAT collected in the last year for which figures are available. [9521]

§ The Exchequer Secretary to the Treasury (Mr. Phillip Oppenheim)
The net amount of VAT collected in the financial year 1995–96 was £43,069 million.

§ Mr. McAvoy
On the radio this morning the Chancellor, when asked about the Tory record on VAT 445 on fuel, said that the Labour party was using a quotation about VAT on fuel from somebody at the time of the 1992 general election. Clearly, the Chancellor has nothing but contempt for that somebody and regards that somebody as being of no importance or influence and easy to disregard. Can the Minister confirm that the Prime Minister is that somebody?

§ Mr. Oppenheim
With regard to that and to the campaign launch this morning—[Interruption.] If hon. Members give me a chance, I shall be delighted to answer the question. I remember that when the Leader of the Opposition got his job, he cast his eyes to heaven and said that he would not indulge in infantile yah-boo politics, yet this morning he signed off his VAT on food campaign, which is so catty and silly that it makes demon eyes look cerebral and spiritual by comparison.

§ Sir Sydney Chapman
Does my hon. Friend agree that we have one of the least burdensome VAT regimes of all European Union countries? Will he confirm that 40 per cent. of consumer expenditure in this country is free of VAT, that we want to keep it that way and that the worst prospect for that would come about if we ever agreed to the harmonisation of VAT rates in Europe?

§ Mr. Oppenheim
Yes.

§ Mr. Beggs
Is the Minister aware that jobs in my constituency and throughout the United Kingdom could be put at risk by the proposed two-tier insurance rate of 17.5 per cent. and 4 per cent., granting special concession and privilege to the retail sector as against the rental sector, which services about 3 million in the less well-off sections of our community? Will he undertake to meet representatives of rental companies and hear from them how he can continue to achieve the same VAT revenue to the Exchequer while maintaining level competition between the two sectors?

§ Mr. Oppenheim
The hon. Gentleman makes some valid points. I am meeting representatives of the travel industry and the insurance industry next week. There has been widespread VAT avoidance by those sectors. In the interests of taxpayers in general and of services such as health, education and law and order, which are significantly funded by VAT and on which almost all hon. Members understandably want more to be spent, we must not allow industries to create large VAT loopholes that will put at risk the revenue for those important services. Nevertheless, the hon. Gentleman makes an important point. I will meet the various interests and industries involved to see whether anything can be done to ensure that the system works fairly and to avoid the tax loopholes that have undoubtedly been created.

§ Mr. Bill Walker
Will my hon. Friend confirm that the vibrant UK economy that we are enjoying results in people having more money to spend, and that the advantage of VAT, rather than direct taxation, as a principal means of raising revenue is that people pay tax 446 as they spend? They make the choice, whereas with direct taxes they do not have a choice. That is a great advantage and it makes our economy what it is today.

§ Mr. Oppenheim
My hon. Friend is right. It is important to remember that VAT is not levied on items that form a significant part of the budget of the less well-off.

§ Ms Primarolo
Will the Minister tell the House why we should trust his undertaking that VAT will not be imposed on food? The Chancellor said this morning that that had never crossed his mind—those were his words. Will he explain, therefore, why on 30 November 1993 in the Budget statement, at column 940 in Hansard, the right hon. and learned Gentleman described the serious options and the "powerful case" for extending VAT to "food, children's clothes, transport, sewerage and newspapers."—[Official Report, 30 November 1993; Vol. 233 c. 940.]

§ Mr. Oppenheim
The hon. Lady should probably have continued the quotation to put it in context. I think that her question is marvellous. I never thought that I would stand at the Dispatch Box—[HON. MEMBERS: "Go, then."]—and listen to a Labour Front Bencher make such a heartfelt plea against tax rises. It shows that 17 years of Tory rule have not been in vain. The deputy leader of new Labour's throwing a temper tantrum at the suggestion that he should give a fiver to a tramp proves that, while new Labour may demonstrate admirable enthusiasm for Tory policies, it might be extrapolating a little too far.