§ Sir G. Nabarroasked the Minister of Posts and Telecommunications if he will make a further statement on the impact of value-added tax on the finances of the Post Office Corporation.
§ Sir J. Eden:I refer my hon. Friend to the reply I gave on 10th May to the hon. Member for Manchester, Openshaw (Mr. Charles R. Morris). The Bill would apply the standard rate of tax to telecommunications and exempt posts. The selection of particular goods and services for exemption or zero-rating is a matter for my right hon. Friend the Chancellor of the Exchequer. But in the case of telecommunications, with its large investment programme, exemption would also be onerous because it does not allow rebating. This is the opposite to the reply which I regret I gave incorrectly yesterday to my hon. Friend's supplementary question which arose from the question asked by the hon. Member for Newcastle-under-Lyme (Mr. Golding) about VAT and telephone calling rates. In the case of posts which would be exempt the indirect effect on the finances of the business—and hence on postal charges—because of the unrebated tax payments on purchases, would be relatively small.—[Vol. 836, c. 1298–9.]