§ 38. Mr. Arthur Lewis
asked the Minister of Agriculture, Fisheries and Food. whether he is aware that, notwithstanding the small amounts of Purchase Tax increases proposed in the Budget, ice cream manufacturers have decided to increase their prices by amounts ranging from 12½ per cent. to 33⅓ per cent., partly on the grounds of increased Purchase Tax; and whether he will refer these increases to the National Board for Prices and Incomes.
§ Mr. Hoy
These increases have been discussed between my Department and the two main firms concerned. In one case, the increased prices will do no more than recover the additional Purchase Tax payable. In the other, there is also an element to cover increases which had been notified under the "early warning" system, and accepted as justified against the present criteria.
Because small increases in tax cannot be added exactly to low-priced products, it is normal practice for the extra tax on such products to be applied to selected lines, and consequently at a higher rate than the tax increase. This is what has happened here. I am satisfied that what has been done is fully consistent with the Government's prices policy.