HC Deb 24 October 1978 vol 955 cc873-4W
Mr. Adam Butler

asked the Chancellor of the Exchequer if he will give his estimate of the total of value added tax due but not paid for one reason or another over the last available 12-month period.

Mr. Robert Sheldon

£42 million, or 0.65 per cent., of the value added tax due in 1977–78 was still outstanding at 30th September 1978; £9 million of this was due from persons who are insolvent or missing.

Mr. Lawson

asked the Chancellor of the Exchequer what is the estimated yield from VAT for 1978–79; what it would be if VAT had been unified at the beginning of the current fiscal year at (a) 8 per cent., (b) 10 per cent., (c) 12½ per cent., and (d) 15 per cent.; and what macroeconomic assumptions are made when calculating revenue from changed rates of VAT.

Mr. Robert Sheldon

The estimated yield for 1978–79 is £4,775 million.

Estimates of the revenue yield from unification of the VAT rate at the beginning of the current fiscal year are:

Rate of VAT (per cent.) Revenue (£ million)
(a) 8 4,575
(b) 10 5,475
(c) 12½ 6,575
(d) 15 7,625

The estimates are based on the Government's economic forecast which was published in the Financial Statement and Budget Report 1978–79. For variations in tax rates they allow for the effects of relative price changes on the composition of consumers' expenditure. For large changes in tax rates the changes in composition would be substantial and the effects correspondingly uncertain.

Mr. Craigen

asked the Chancellor of the Exchequer what study he has made of the restructuring of value added tax in the United Kingdom, in a manner consistent with Treaty of Rome obligations and such harmonisation as has already been agreed, so as to eliminate transactions between registered businesses.

Mr. Robert Sheldon

Following the undertaking I gave during the Budget debate on 12th April, Customs and Excise is presently discussing with the main trade and accountancy bodies representations that VAT should be eliminated on transactions between registered businesses. An announcement about the results of this study will be made in due course.