HC Deb 30 November 1984 vol 68 cc604-5W
Mr. Austin Mitchell

asked the Chancellor of the Exchequer whether he will publish in the Official Report a note explaining how the rebate of value added tax to West German farmers is expected to operate; and whether, and to what extent, the rebate discriminates against imports.

Mr. Hayhoe

In the context of the common agricultural policy, Agriculture Ministers agreed in March to the dismantling of monetary compensatory amounts and the payment of special aid, in compensation, to farmers in the Federal Republic of Germany, through the harmonised VAT system. To give it effect the Commission has made a proposal for a 20th VAT directive enabling the Federal Republic to pay this special aid in derogation from the provisions of the sixth VAT directive. The special aid is not a VAT rebate and the draft directive would require farmers to show it separately from any VAT, both on their invoices and in their accounts. The special aid would be charged by farmers to their taxable customers who may treat it as deductible input tax. The payment of this special aid should not therefore be reflected in prices to final consumers and thus should not discriminate against imports.