Lord DE CLIFFORDMy 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 quarantine costs previously zero-rated are now subject to VAT as from 1st January 1978 and whether all Ministries involved with quarantine were consulted before it was imposed.
§ Lord STRABOLGIMy Lords, the change in the value added tax position of quarantine services reflects changes in United Kingdom law which came into effect on 1st January 1978 following the EEC Sixth Council VAT Directive which is designed to harmonise the bases on which VAT is levied in Member States.
Lord DE CLIFFORDMy Lords, I thank the noble Lord for that reply. Is it not a fact, however, that any big firms—for example, firms which import animals for experimental purposes, zoos and circuses—can absorb these costs in their expenses and that only private people are hit? And is there not a large number of Servicemen included among those private people for whom this becomes a very nasty, niggly addition to their costs?
§ Lord STRABOLGIMy Lords, VAT is a broadly based tax on goods and services in the domestic economy and is not confined to luxuries or less essential articles alone. To attempt to give relief to all essential goods and services would greatly complicate the structure of the tax and be contrary to our obligations to the Community. With regard to Servicemen, the charge became standard rated under the previous arrangements as soon as the Servicemen arrived in the United 782 Kingdom. Unless the Servicemen remained overseas for the whole of the six months' quarantine period, the quarantine charges would be apportioned between the standard and zero rates.
§ Lord GLENKINGLASMy Lords, is the Minister not aware that any extra charge on the export of animals is serious for the people concerned, and does he not realise that, whatever the harmonisation system within the EEC may be, every other EEC country supports its animal export effort to an extent far greater than we do?
§ Lord STRABOLGIMy Lords, this is a charge on the import of animals while they are in quarantine.
§ Lord WYNNE-JONESMy Lords, can my noble friend say how much value is added to an animal while it is kept in quarantine?
§ Lord STRABOLGIMy Lords, not without notice.
§ Lord DRUMALBYNMy Lords, may I ask the noble Lord whether there are many other instances when everyone has to pay VAT on an expense which they would not normally incur? Quarantine is compulsory and VAT is charged. Are there many other examples of this?
§ Lord STRABOLGIMy Lords, a fundamental factor is that quarantine services were taxable prior to 1st January, except in the special circumstances in which the person who placed the animal in quarantine—who was usually the owner, but not always—remained overseas during the whole of the quarantine period. That is the only difference now which the Directive brings about. With regard to other services which were formerly zero-rated for overseas residents and are no longer, two that come to mind are the storage of furniture in the United Kingdom and the training of bloodstock.