Books and Newspapers: VAT Rating (Hansard, 25 March 1988)

§ Lord Beaverbrook
My Lords, the Government have made it clear on numerous occasions that the United Kingdom cannot accept proposals which would restrict their ability to apply VAT zero rates.

Lord Bruce of Donington
My Lords, is the noble Lord aware that the Treasury and Civil Service Select Committee in another place, which consists of Members of all parties (with the government party in the majority) specifically recommended that the Government should send a reply to the Commission in response to its representations and that this reply should be sent without delay, making plain that abolition of the zero-rating principle is not something on which there can be unanimity and that the Government is not prepared to consider any draft which includes it"? Does the noble Lord agree that if such a taxation were levied on hooks, periodicals and newspapers, it would cost the public anything between an extra £140 million and £280 million per annum at the lower bracket rate and that there would be an additional cost to education authorities throughout the United Kingdom?

§ Lord Beaverbrook
My Lords, perhaps I may take the noble Lord's last question first. The cost to the public of a 4 per cent. VAT rate on books, periodicals and newspapers would be approximately £150 million. I agree with him in that respect. He also asked whether the Government should respond to the Commission's proposals. No member state appears to have regarded it as necessary to respond by writing to the Commission. It would be the normal route for proposals to be considered by the Committee of Economic and Finance Ministers. The Government will respond in that committee—ECOFIN—at the appropriate time.

§ Lord Barnett
My Lords, will the Minister clarify the somewhat ambiguous first reply he gave to my noble friend Lord Bruce of Donington? He did not ask whether the Government wanted to restrict themselves in removing zero-rating but whether the Government would be willing to compromise in any way on this subject in order to achieve the internal market by 1992.

§ Lord Beaverbrook
My Lords, the noble Lord will no doubt be aware that my right honourable friend the Prime Minister has made it absolutely clear that the United Kingdom could not accept proposals which restricted our right to apply VAT zero rates. The noble Lord asked about the completion of the internal market. We are not convinced that tax harmonisation on the lines proposed by the Commission is necessary to achieve the internal market.

§ Lord Boyd-Carpenter
My Lords, in respect of zero-rating of books and newspapers specifically, is my noble friend aware that, quite apart from the cost, many people would find it repulsive to impose taxation on knowledge and the dissemination of knowledge?

§ Lord Beaverbrook
My Lords, I am grateful to my noble friend for his view on that point. It is a well known convention that statements on tax matters are made at Budget time. I cannot go further than to say that that is a matter for my right honourable friend the Chancellor of the Exchequer.

Lord Bruce of Donington
My Lords, in regard to that last point, is the Minister aware that the Prime Minister herself has been extremely emphatic on the whole question of zero-rating for food and children's clothing and has given specific assurances that she will resist it? The purpose of this Question is to elicit an equally frank statement of view in regard to books, periodicals and newspapers. Cannot the Government give the same unequivocal declaration as the Prime Minister herself gave in regard to food and children's clothing?

§ Lord Beaverbrook
My Lords, an undertaking on food and children's clothing was indeed given by my right honourable friend the Prime Minister but no further commitment on books has been given for future years. The noble Lord would not expect me to go further at this stage.

§ Lord Peston
My Lords, may I—

§ Lord Broxbourne
My Lords, I am very much obliged to the noble Lord for his characteristic courtesy. Will my noble friend confirm that any such proposal would require unanimity and that, therefore, if, as is much to be hoped, the Government stand firm in their opposition to this proposal, it would be a case of cadit quaestio?

§ Lord Beaverbrook
My Lords, zero-rating in the United Kingdom cannot be abolished by the European Commission in the face of United Kingdom opposition.

§ Lord Peston
My Lords, if the issue is one of knowledge and of dissemination of knowledge, would it be possible to levy VAT at a maximum rate on some alleged newspapers while not levying it on serious newspapers?

§ Lord Beaverbrook
My Lords, the noble Lord may remember that about a year ago I said in your 383 Lordships' House that it was becoming increasingly difficult to tell what is a newspaper and what is some other form of daily publication.

§ Lord Molloy
My Lords, does the noble Lord agree that my noble friend Lord Bruce of Donington made his point transparently clear to all of us in the Chamber except the Minister? Inasmuch as the Prime Minister herself was opposed to VAT on children's clothing, will he ask her whether she takes the same attitude on books and newspapers, as set out in the Question on the Order Paper? Will he ask the Prime Minister that question?

§ Lord Beaverbrook
My Lords, of course I am prepared to bring the comments of the noble Lord, and those of all noble Lords, to the attention of my right honourable friend.