Value Added Tax

HC Deb 26 June 1979 vol 969 cc165-7W

Mr. Faulds

asked the Chancellor of the Exchequer whether he will take steps to zero rate for value added tax purposes all works of art, in the light of the substantial increase in incentive to export the national heritage which has been given to artists and dealers in his Budget.

Mr. Peter Rees

No. I am not satisfied that the Budget will have the effect the hon. Member fears. Zero-rating would, in any case, be contrary to our EEC obligations and inconsistent with the Government's policy of switching from direct to indirect taxation.

Mr. Eggar

asked the Chancellor of the Exchequer how much tax revenue was raised in fiscal year 1978–79 by charging value added tax on sanitary towels, and how much revenue would be raised with value added tax levied at 15 per cent. thereon in a full fiscal year.

Mr. Peter Rees

The VAT revenue from the sale of sanitary towels is not known, as such, because persons registered for VAT are not required to make returns of the VAT charged on particular goods and services but only on the total of all their supplies. These goods are only one of the items sold by shops in several trade classification, including chemists and photographic shops and department stores. However, it is estimated from other sources that the zero rating of sanitary protection would have resulted in a loss of revenue of about £4 million in 1978–79 and about £8 million in a full year at the new VAT rate introduced in the Budget.

Mr. Eggar

asked the Chancellor of the Exchequer if he intends to abolish value added tax on sanitary towels.

Mr. Peter Rees

No. In a broadly based tax, sanitary towels should bear VAT in common with other toilet articles, many of which are regarded as necessities.

Mr. Skeet

asked the Chancellor of the Exchequer, in the case of bicycles imported from the United States of America, why is VAT charged upon the duty levied on the goods; and whether he will take steps to prevent the imposition of a tax upon a tax for revenue purposes.

Mr. Peter Rees

Under the Finance Act 1972 value added tax is levied on a value which, together with the VAT itself, equals the full price charged to the customer. Thus, if there is an element of import duty in the final price—as there may well be with imported goods—VAT will be charged on that duty.

The Government have no proposals for varying this long-standing arrangement.

Mr. Denzil Davies

asked the Chancellor of the Exchequer what percentage of the extra revenue arising as a result of the standardisation of value added tax at 15 per cent. will come from (a) the provision of services and (b) the sale of goods.

Mr. Peter Rees

, pursuant to his reply [Official Report, 21 June 1979], gave the following answer:

Information in the precise form asked for is not available but, using the latest available statistics of VAT paid by businesses and making various assumptions about the proportion of higher rated and standard rated supplies in different trade classifications, it is estimated that about 15 per cent. of the increase will come from those businesses registered as providing services. The remaining 85 per cent. derived from the sale of goods.