§ Mr. BettsTo ask the Chancellor of the Exchequer what calculations he has made or plans to make to estimate the effect on(a) purchases of books and newspapers, (b) consumption of food and (c) purchase of children's clothes, by families on a regional, socioeconomic and income basis of the imposition of VAT at various percentage rates.
§ Sir John CopeWork carried out by the Institute for Fiscal Studies commissioned by Her Majesty's Customs and Excise and Her Majesty's Treasury and completed in 1991 suggests an own price elasticity of -0.657 for leisure goods, which include books and newspapers; -0..856 for food; and -0.754 for clothing. These elasticities suggest that applying the standard rate of VAT to goods which are presently zero-rated would reduce the volume of sales by 9.8 per cent., 12.7 per cent. and 11..2 per cent. respectively. We are not aware of any reliable estimates of how these price elasticities vary according to region, socio-economic status or income.