HC Deb 22 February 1993 vol 219 cc428-9W
Mr. Peter Bottomley

To ask the Chancellor of the Exchequer what provisions of European legislation govern the introduction of a 5 per cent. VAT rate of goods and services now(a) exempt, (b) zero rated and (c) subject to the standard rate.

Sir John Cope

Article 1(1) of Council directive 92/77/EEC adopted on 19 October 1992, replacing article 12(3) of the sixth VAT directive 77/388/EEC, provides for reduced rates of VAT, of not less than 5 per cent., which may be applied to goods and services in a list annexed to the directive, regardless of their current VAT rating.

In addition, article 1(4)(b) of 92/77/EEC, replacing article 28(2) of 77/388/EC provides for the application of a reduced rate, of not less than 5 per cent., to goods and services which at 1 January 1991 were subject to a zero rate in accordance with Community law.

Mr. David Atkinson

To ask the Chancellor of the Exchequer how much additional revenue would be obtained by applying VAT at a level of(a) 5 per cent. and (b) 17.5 per cent., to each of (a) food, (b) children's clothes and shoes, (c) public transport, (d) energy, (e) newspapers and (f) books.

Sir John Cope

Table D1 of the "Statistical Supplement to the 1992 Autumn Statement" shows the estimated cost of the main VAT zero rates. These estimates suggest the following yields:

5 per cent. 17.5 per cent.
(a) Food 2.0 7.0
(b) Children's clothes and shoes 0.2 0.6
(c) Passenger transport 0.5 1.9
(d) Domestic fuel and power 0.5 1.8
(e) Books, newspapers and magazines 0.3 1.1

The estimates make no allowance for the behavioural responses to applying VAT to these categories, so that actual yield would probably be less than suggested.

Mrs. Roche

To ask the Chancellor of the Exchequer what estimate he has made of the effect on the level of sales of local newspapers of the imposition of a standard rate of VAT on newspapers.

Sir John Cope

The Institute for Fiscal Studies has estimated an own price elasticity of –0.657 for all leisure goods, which include newspapers. This elasticity suggests that a 17i per cent. increase in price would reduce demand, in volume terms, by around 10 per cent.

Mr. Andrew Smith

To ask the Chancellor of the Exchequer how many farmers and other eligible producers have registered for the VAT flat-rate scheme for farmers.

Sir John Cope

The flat rate scheme for farmers started on 1 January. Up to 17 February, 85 certificates had been issued to persons opting to join the scheme.