§ Mr. Peter Bottomleyasked the Chancellor of the Exchequer (1) if he will estimate the rise in the cost of living of increasing VAT to 15 per cent. for (a) a single person, (b) a married couple, (c) married couple with two children, (d) married couple with four children, if they are earning average earnings and two-thirds of average earnings;
(2) if he will estimate the effect on the cost of living of raising VAT to 15 pet cent. for households on (a) three times average earnings, (b) twice average earnings, (c) on average earnings and (d) two-thirds of average earnings.
§ Mr. Robert SheldonI regret that the information in the form asked for is not available and no reliable estimates are possible, even at a disproportionate cost. However, if the standard and higher rates of VAT were raised to 15 per cent, the retail price index, the most used measure of the cost of living, would increase by about 3½ per cent.
§ Mr. Peter Bottomleyasked the Chancellor of the Exchequer if he will estimate the increase in social security benefits which would be necessary to compensate beneficiaries for (a) a rise in VAT to 15 per cent. and (b) the raising of VAT to 10 per cent. with a higher rate of 25 per cent. on luxury goods.
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§ Mr. Robert SheldonIt is estimated that raising the standard and higher rates of VAT to 15 per cent., and raising the standard rate to 10 per cent. and the higher rate to 25 per cent., would add about 3½ per cent. and 1½ per cent., respectively, to the retail price index. Similar percentage increases in those social security benefits which are regularly uprated would cost about £360 million and £170 million, respectively, in a full year.
§ Mr. Peter Bottomleyasked the Chancellor of the Exchequer what would be the increase in revenue from VAT following a 1 per cent. increase (a) in the standard rate of VAT and (b) in the higher rate.
§ Mr. Robert SheldonAbout (a) £325 million and (b) £35 million in a full year.
§ Mr. Peter Bottomleyasked the Chancellor of the Exchequer (1) if he will estimate the rise in the cost of living of increasing VAT to 10 per cent. and imposing a luxury VAT rate of 25 per cent. for (a) a single person, (b) a married couple, (c) married couple with two children and (d) married couple with four children, if they are earning average earnings and two-thirds of average earnings;
(2) if he will estimate the effect on the cost of living of raising VAT to 10 per cent. and imposing a luxury VAT rate of 25 per cent. for households on (a) three times average earnings, (b) twice average earnings, (c) on average earnings and (d) two-thirds of average earnings.
§ Mr. Robert SheldonI regret that the information in the form asked for is not available, and no reliable estimates are possible even at disproportionate cost. However, raising the standard rate of VAT to 10 per cent. and the higher rate to 25 per cent. would increase the retail price index, the most used measure of the cost of living, by about 1½ per cent.
§ Mr. Peter Bottomleyasked the Chancellor of the Exchequer if he will estimate the effect on the Retail Price Index of increasing VAT to 10 per cent. and instituting a luxury rate of 25 per cent.
§ Mr. Robert SheldonIt is estimated that raising the standard rate of VAT to 10 per cent. and the higher rate to 25 per 313W cent. would increase the retail price index by about 1½ per cent.
§ Mr. Peter Bottomleyasked the Chancellor of the Exchequer if he will estimate the effect on the Retail Price Index of increasing VAT to 15 per cent.
§ Mr. Robert SheldonIt is estimated that raising the standard and higher rates of VAT to 15 per cent. would increase the retail price index by about 3½ per cent.
§ Mr. Peter Bottomleyasked the Chancellor of the Exchequer (1) if he will estimate the unemployment effects of raising the standard rate of VAT to 10 per cent. and instituting a higher rate on luxury goods of 25 per cent.;
(2) if he will estimate the unemployment effects of raising VAT to 15 per cent.
§ Mr. Robert SheldonRaising the standard rate of VAT to 10 per cent. and the higher rate to 25 per cent. would in a full year raise revenue of £1.05 billions. If VAT was unified at a rate of 15 per cent. the full year revenue yield would be £2.2 billions.
The Treasury macro-economic model which is now available to the general public, indicates that with all other effects remaining unchanged a revenue yield of £1.05 billions would increase unemployment by about 50,000 after one year and 100,000 after two years. A revenue yield of £2.2 billions would raise unemployment by 80,000 and 230,000 after one and two years, respectively.
§ Mr. Peter Bottomleyasked the Chancellor of the Exchequer what would be the revenue if VAT were raised to 15 per cent.
§ Mr. Robert SheldonIt is estimated that raising the standard and higher rates of VAT to 15 per cent. would yield additional revenue of about £2,200 million in a full year.
§ Mr. Peter Bottomleyasked the Chancellor of the Exchequer if he will publish in the Official Report estimates of increases in revenue if the ordinary VAT rate were raised to 10 per cent. and a higher rate of 25 per cent. were imposed on those goods and services which were previously subjected to the higher rate.
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§ Mr. Robert SheldonAbout £650 million in a full year from raising the standard rate and about £400 million from raising the higher rate.
§ Mr. Arnoldasked the Chancellor of the Exchequer what is the current cost of collection of VAT.
§ Mr. Robert SheldonIt is estimated that the cost of collecting VAT in the financial year 1976–77 is about £80 million.
§ Mr. Arnoldasked the Chancellor of the Exchequer (1) how many VAT inspectors there are at the present time; and if he has plans to increase them;
(2) what representations he has had about increasing the staff of VAT inspectors; and if he will make a statement.
§ Mr. Robert SheldonThere is no grade of VAT inspector as such. Visits to traders in connection with VAT are normally carried out by executive officers and higher executive officers located in local officers of the Department of Customs and Excise. It is estimated that rather more than 5,000 officers are engaged on making these visits.
Representations were made by Her Majesty's Customs and Excise Departmental Staff Side on 26th June last year. There are no plans to increase the current level of visiting officers.