§ Mr. Dewar
To ask the Chancellor of the Exchequer if he will estimate the revenue yield in 1993–94 and in a full year of(a) raising the rate of VAT by 1 per cent. and (b) extending VAT to (i) children's clothing and footwear, (ii) food, (iii) domestic fuel, (iv) fares, (v) domestic construction, (vi) books, (vii) newspapers, (viii) other zero-rated supplies and (ix) all zero-rated supplies.
§ Sir John Cope
Table 5.8 in the 1992 "Autumn Statement" shows an estimate that a one percentage point increase in the rate of VAT would produce a yield of £1,675 million in 1993–94 and £2,350 million in the full year of 1994–95. The statistical supplement to the 1992 "Autumn Statement" shows the estimated cost in 1992–93 in terms of forgone revenue from zero-rating various goods and services.
The figures are as follows:— £million Children's clothing and footwear 600 Food 7,000 Domestic fuel 2,600 Domestic passenger transport 1,100 International passenger transport 800 Domestic construction 1,800 Books, newspapers, magazines 1,100 Water and sewerage services 700 Drugs and medicines on prescription 500 Supplies to charities 200 Ships and aircraft above a certain size 500
These figures make no allowance for the likely behavioural response to applying the standard rate of VAT to these items so the actual yield would probably be less than these figures suggest.
§ Mr. Betts
To ask the Chancellor of the Exchequer (1) what estimates have been made of the impact of (i) 5 per cent. and (ii) 17½ per cent. VAT on air travel on(a) fare levels, (b) the number of passenger journeys, (c) the transfer of traffic to private road vehicles and (d) road congestion;
(2) what estimates have been made of the effect of 5 per cent. and 17½ per cent. VAT on road passenger transport on (a) fare levels, (b) concessionary fare levels, (c) the number of passenger journeys, (d) the transfer of traffic to private road vehicles and (e) increased road congestion;
(3) what estimates have been made of the effect of 5 per cent. and 17½ per cent. VAT on rail travel on (a) fare levels, (b) concessionary fare levels, (c) the number of passenger journeys, (d) the amount of freight transported, (e) the transfer of traffic to private road vehicles and (f) increased road congestion.
§ Sir John Cope
A positive rate of VAT on public passenger transport would lead to higher fares and some reduction in traffic and some diversion to private road vehicles. All of these impacts would, however, depend in particular upon the individual degree of competition on routes, and numerical estimates are not available. Freight traffic already bears VAT.