HC Deb 25 July 1974 vol 877 cc525-6W
Mr. Woof

asked the Chancellor of the Exchequer whether he intends to keep value added tax under continuous review.

Dr. Gilbert

My right hon. Friend is continually reviewing all aspects of VAT. If my hon. Friend has suggestions to make about any particular aspect of the tax my right hon. Friend will always be glad to study them.

Mrs. Sally Oppenheim

asked the Chancellor of the Exchequer (1) what is the reduction in the price of a fur coat costing £2,200 inclusive of VAT on 20th July 1974 as a result of the reduction in the rate of VAT announced by the Chancellor on 22nd July 1974;

(2) what is the reduction in the cost of items 50, 51, 52, 53, 54, 55, 56, 57 and 59 in Table 12, page 52, of the Family Expenditure Survey based on the preparation of weekly expenditure on each of these items in the case of a family of one man, one woman and two children with a weekly income of £30-£35, listing each of these items separately, resulting from the reduction in the rate of VAT announced by the Chancellor on 22nd July 1974;

(3) what is the reduction in the price of a diamond brooch costing £2,200 inclusive of VAT on 20th July 1974 as a result of the reduction in the rate of VAT announced by the Chancellor on 22nd July 1974;

(4) what is the reduction in the cost of items 12–43 in Table 12, page 51, of the Family Expenditure Survey based on the preparation of weekly expenditure on each of these items by a family of one woman, one man and two children earning £30-£35 a week, listing each of these items separately, resulting from the reduction in the rate of VAT announced by the Chancellor on 22nd July 1974.

Mr. Dell

The reduction in the rate of VAT to 8 per cent. means that the prices of goods and services subject to VAT should be reduced, on average, by 1/55, that is, about 1.81p in the pound. Thus, an item costing £2,200 inclusive of VAT now should be reduced by £40. Where the present tax-inclusive price is not divisible by 55, it will not be possible to express the reduction in exact units of currency. In these cases, the retailer will need to ensure that his prices are reduced on average by 1/55: this may mean that some prices in the shops remain unchanged while others are reduced by less and other prices are reduced by more, than the exact amount of tax. The tax change will not affect items which are zero rated under VAT. The detailed figures requested by the hon. Member would not be meaningful, since the 1972 Family Expenditure Survey—the latest available—antedates the introduction of VAT and takes no account of changes in prices and patterns of expenditure since 1972.

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