HC Deb 26 March 1974 vol 871 cc89-90W

The first of these amendments relates to price increases in manufacturing and the provision of services. The second relates to adjustments for indirect tax changes in the calculation of net profit margins for price control purposes. The third and fourth amendments affect distributors' prices and gross percentage margins.

1. Insert new paragraph 26A

  1. "(i) Where after 25th March 1974 an indirect tax has been increased, an addition not exceeding the cash amount of the increase borne by the vendor may be made to the prices permitted by other provisions of the Code for goods bearing the 90 increased tax. Where an indirect tax is reduced the reduction must be fully reflected in prices.
  2. (ii) This paragraph applies also to the effects of changes in the coverage of indirect taxes.
  3. (iii) In calculating maximum permitted price increases after 25th March 1974, the figures for total costs per unit and the selling price at the base date must exclude any additions or reductions under this paragraph."

NOTE. If a paragraph stipulating that a price may not be increased within 3 months of the last increase in that price is inserted in the Code, as in the proposals published by the Secretary of State for Prices and Consumer Protection on 25th March, provision would be made to enable increases resulting from changes in indirect taxes to be disregarded in applying the 3 months rule.

2 Paragraph 63

Add at end:

"and of other changes in those duties where indirect taxes have been increased (or reduced) after 25th March 1974. A deduction should be made from the value of sales corresponding to the cash value of the extra tax borne by the goods sold: similarly, an addition should be made for a reduction in tax."

3. Insert new paragraph 74A

"Where indirect taxes have been increased after 25th March, an addition not exceeding the cash amount of the increase may be made to the prices charged by distributors. Where indirect taxes are reduced, the reduction must be fully reflected in prices."

4. Paragraph 75

Add at end:

"In particular the cash value of increases in indirect taxes referred to in paragraph 74A should be deducted from both sales and costs of sales in arriving at current gross percentage margins. Similarly the cash equivalent of any tax reductions should be added to costs and sales."