Value Added Tax

HC Deb 27 April 1995 vol 258 cc647-50W

Mr. Nicholas Winterton

To ask the Chancellor of the Exchequer which directorate and commissioner are responsible for taking forward the proposals contained in European Commission document COM (94) 584 on the subject of the establishment of a common system of value added tax. [20981]

Mr. Heathcoat-Amory

Directorate General XXI of the European Commission has responsibility for "Customs and Indirect Taxation' and for matters relating to VAT. The commissioner responsible for DGXXI is Mr. Monti. Document COM (94) 584 is essentially a report produced by the European Commission on the operation of the VAT system in the Community, with particular reference to the rates of tax applicable in member states. The only specific proposal which is made in the context of this document relates to an option for member states to apply a reduced rate of VAT to certain non-food agricultural products, such as cut flowers.

Mr. Nicholas Winterton

To ask the Chancellor of the Exchequer (1) whether he has yet had chance to consider European Commission Document COM (94) 584 on the subject of the establishment of a common system of value added tax, what response he has made to those parts of that document which propose the abolition of zero rating for new houses; and if he will make a statement; [20977]

(2) whether it is his policy to endorse the recommendations of the European Commission Document COM (94) 584 on the subject of the establishment of a common system of value added tax in respect of (a) the scheduled establishment in January 1997 of a definitive value added tax regime and (b) the inclusion within that regime of the ending zero rating of all outstanding items including housing. [20978]

Mr. Heathcoat-Amory

Document COM (94) 584 is a routine report produced by the European Commission in accordance with the requirements of the sixth VAT directive. It is largely concerned with the operation of the VAT system within the Community, with particular reference to the rates of tax applicable in member states. I have noted its contents, and, in particular, its principal conclusion that the current VAT rates and structures applicable in the Community do not present any serious problems for the satisfactory operation of the single market.

The report makes no specific proposals in respect of zero rates, although it makes reference to them in the context of the proposed move to a definitive system for VAT. Separate proposals from the Commission in respect of a definitive system are expected later this year. The Government have already made it clear that a condition of any move to a definitive system would be that such a system made provision for the UK to continue to apply any zero rates which are in force at the time any new system is introduced.

Mr. Nicholas Winterton

To ask the Chancellor of the Exchequer what assessment he has made of the possible impact on the United Kingdom housing market of the implementation of the proposals of European Commission Document COM (94) 584 on the subject of the establishment of a common system of value added tax; and if he will make a statement. [20980]

Mr. Heathcoat-Amory

Document COM (94) 584 does not contain any specific proposals in relation to the VAT treatment of housing. To the extent that the document addresses the status of zero rates, it does so in the context of the proposed move to a definitive system. Substantive discussions on any such definitive system have yet to begin, but the UK has consistently made it clear that one condition of a move to any such system would be that it made provision for the UK to continue to apply any zero rates which are in force at the time any new system is introduced.

Mr. Nicholas Winterton

To ask the Chancellor of the Exchequer if he will list all those items which are currently zero rated for value added tax purposes and which would be affected by the recommendations for the ending of such zero rating included within the provisions of European Commission document COM (94) 584 on the subject of the establishment of a common system of value added tax. [20979]

Mr. Heathcoat-Amory

Document COM (94) 584 makes no specific proposals for the ending of UK zero rates. It addresses only the status of zero rates in the context of the proposed move to a definitive system. The Government have consistently made it clear that, as a condition of any move to a definitive system for VAT, such a system must make provision for the UK to continue to apply any zero rates which are in force at the time any new system is introduced.