§ Mr. Teddy TaylorTo ask the Chancellor of the Exchequer what representations he has received from trade associations and the Confederation of British Industry regarding the implications of the current case in the European Court of Justice on zero-rating; and if he will make a statement.
§ Mr. LilleySeveral representations have been received from interested parties including trade associations.
§ Mr. Teddy TaylorTo ask the Chancellor of the Exchequer if he will make a statement on the relative effect of levying value added tax on gas, electricity, water and sewerage on larger firms which are registered for value added tax and on smaller firms which are exempt because of their turnover.
§ Mr. LilleyIf VAT were levied on these goods and services, large firms which are registered for VAT would be able to recover any tax incurred on purchases relating to their taxable activities through the normal input tax credit mechanism. Firms not registered for VAT would have to bear the tax in the same way as they currently bear the VAT incurred on their taxable purchases.
§ Mr. Teddy TaylorTo ask the Chancellor of the Exchequer if he will make a statement setting out information available to him on the nature of the industrial and commercial buildings which the Advocate General argued should be levied for value added tax in his advice to the European Court of Justice of 2 December; and if buildings for local authorities, public bodies and charities were covered by his advice.
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§ Mr. LilleyThe Advocate General's opinion seems to be that, while the zero-rating for the construction of public and private housing is permissible, that for all other new buildings and civil engineering works is not.
§ Mr. Teddy TaylorTo ask the Chancellor of the Exchequer if he has now received from the European Court of Justice its decision on the proposal by the EEC Commission that the United Kingdom should be obliged to levy value added tax on spectacles; and if he will make a statement.
§ Mr. LilleyThe European Court of Justice has not yet delivered its judgment; it is now expected early in the new year.
§ Mr. Barry FieldTo ask the Chancellor of the Exchequer (1) what reduction there has been in the refund of value added tax under section 20 of the Value Added Tax Act 1983 to local government bodies as a result of privatisation of local authority services, over the last five years;
(2) what sum of value added tax regained by the Treasury is attributable to privatisation of local government services; and what is the forecast in the light of the Local Government Bill.
§ Mr. LilleyI regret that information is not available at a sufficient level of detail to identify the effect of privatisation on refunds of value added tax under section 20.
§ Mr. Gordon BrownTo ask the Chancellor of the Exchequer (1) what revenue would be raised in 1987–88 by the introduction of value added tax at 15 per cent. on travel fares;
(2) what is his estimate of the additional cost per household on transport costs of imposing value added tax at 15 per cent. on travel fares;
(3) what is his estimate of the annual cost to industry of imposing value added tax on travel fares.
§ Mr. Lilley[holding answer 18 December 1987]: The estimated full year net revenue yield in 1987–88 of imposing value added tax at 15 per cent. on travel fares is £575 million.
The average additional cost per household on transport costs of imposing value added tax at 15 per cent. on transport fares is estimated to be about 20p per week in 1987.
Most businesses would be able to reclaim any value added tax on fares and so would face no extra costs. Only traders who choose not to register or those making exempt supplies would face any increase in costs. It is not possible to give an estimate but the figure is thought to be very small.
§ Mr. Gordon BrownTo ask the Chancellor of the Exchequer what additional revenue would be raised in 1988–89 by increasing the rate of value added tax to(a) 16 per cent, (b) 17 per cent, (c) 17.5 per cent, (d) 18 per cent. and (e) 19 per cent.
§ Mr. Lilley[holding answer 18 December 1987]: The estimated net additional revenue would be:
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Rate of value added tax per cent. £ million 16.0 945 17.0 1,870
Rate of value added tax per cent. £ million 17.5 2,320 18.0 2,770 19.0 3,655