HL Deb 23 February 1977 vol 380 cc172-3

2.45 p.m.

Lord SELSDON

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government why VAT is not reclaimable on car and estate car charges for business use; and whether they will consider an apportionment between private and business use for tax purposes.

The Parliamentary UNDER-SECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk)

My Lords, VAT is not reclaimable because these vehicles can be used for private purposes as well as business purposes. Apportionment would not be possible without running a serious risk of abuse.

Lord SELSDON

My Lords, I am most grateful to the noble Baroness for the rather standard reply. May I ask her whether she will acknowledge the importance of the business market to the motor car manufacturer, particularly at present when, in view of inflation and pernicious taxation, the private individual is finding it increasingly difficult to buy a new car? May I ask her whether she would urge her right honourable friend the Chancellor to look very closely at all the various anomalies that exist in the taxation of business and private cars?—because anomalies exist which are complicated, lead to increased bureacuracy friction and often total unfairness.

Baroness BIRK

My Lords, I think the noble Lord will agree that there seems to be quite an amount of confusion; he seems to have quite a shopping list of things that he wants the Chancellor to look at. So far as this question is concerned, there are two duties which car owners have to pay; that is, the excise duty and value added tax, which is a second duty. I do not accept that this has an effect on the car industry, because if the noble Lord is arguing that people who are using their cars for private purposes should not pay VAT like the rest of us, then that argument was unacceptable to us and to the Conservative Government who brought in this measure in 1972. So far as the effects on business costs are concerned, which may have been what the noble Lord had in mind, I think we must keep this in perspective and realise that most of the carriage of goods is done in business vehicles which are exempt from VAT.