§ [The Question was as follows:
§ To ask Her Majesty's Government whether it is not the case that the reduction of purchase tax on any article imposes a loss upon the smaller retailers, which they, of all sections of the community, are least able to bear, since they are unable to obtain from the public repayment of the tax paid upon their stock; whether Her Majesty's Government will consider giving some notice to the public when reductions are contemplated, or whether they consider that this method would be ineffective; whether they contemplate any other remedy; or whether they consider that this class of the community is that best fitted to bear the burden of their generosity to the public.]
§ THE MINISTER OF STATE, BOARD OF TRADE (LORD DERWENT)My Lords, I should like to say how glad I am to see that my noble friend has recovered from his illness. My Lords, this is a four-barrelled Question which is, if my noble friend will allow me the phrase, loaded in all four barrels. The position of traders holding tax-paid stocks at the time of an alteration in the tax rate was, as my noble friend is aware, considered by an independent Committee appointed as long ago as 1952 under the chairmanship of Sir Maurice Hutton. The Committee reported in 1953 and their Report was issued as Command Paper 8784. In spite of the very exhaustive examination which they gave to the problem, which is evident from a perusal of the Report, the Committee were not able to find a 1244 comprehensive answer to it; nor, I am afraid, has an equitable, practicable or commendable one emerged since, although this question is kept under constant review.
As to the suggestion of advance notice being given of contemplated reductions, apart from the obvious Budgetary objections this would not be likely to be effective, since the public would immediately upon publication cease buying the affected goods until after the tax change became effective, or purchase only provided the retailer reduced the price in advance to take into account the forthcoming reduction, and in either event the trade would be no better off than under the present arrangements. Any immediate loss borne by retailers owing to a reduction in rates of tax should, in general at least, be offset by the long-term benefits to trade resulting from the reductions.
LORD SALTOUNMy Lords, I would thank the noble Lord for his Answer and the trouble which he has taken over it. I would thank him also for allowing me to question him further to-day. I can assure him that, if I had not been ill, I would have tried a little to enswathe the language of my Question. Would the Government agree that one of the principal virtues of a good tax is that an increase or decrease in the rate is transmitted almost completely either to the public or to the taxpayer? Therefore, is it not one of the worst features of this tax that a variation results in heavy cost to the retailer, and in particular that a decrease in the rate is a punitive burden on the taxpayer which he cannot recover?
§ LORD DERWENTMy noble friend really cannot expect me to say whether I think this is a good or a bad tax. I doubt whether the House would be interested in my opinion about that. But I must repeat that where there is a reduction in tax, although there may be an immediate and temporary loss to the retailer, he should, and in fact usually does, greatly benefit over the slightly longer period to which I referred by the reduction of the tax.
LORD SALTOUNMy Lords, since the noble Lord is unable to say that it is a good tax, may I ask him, therefore, whether the Government would not avoid 1245 the objection if they were to announce some time, something like a year, in advance that they would abolish the tax and substitute another one? Then the public would not be able to refrain from buying over so long a period and, by watching the stocks in the trade, it would be possible to advance the date and so avoid a very large amount of loss.
§ LORD OGMOREMy Lords, is it not a fact that there are no good purchase taxes, only that some are worse than others?
§ LORD DERWENTMy Lords, with regard to the question of the noble Lord, Lord Ogmore, some people hold that there are no good taxes of any kind. As regards what my noble friend said, I really do not think I can add anything to what I said originally. So far as I can see, if you are going to give a longer period of notice of alteration in tax, it is likely even more to affect adversely the trade in question.