Value Added Tax

HC Deb 23 May 1978 vol 950 cc551-2W

Mr. Ralph Howell

asked the Chancellor of the Exchequer, further to his reply to the hon. Member for Norfolk, North, Official Report, 8th May, c. 357, what assumptions are used when calculating the increases in value added tax

GENERAL GOVERNMENT EXPENDITURE ON GOODS AND SERVICES AS A PROPORTION OF GDP AT MARKET PRICES
									1973 per cent.	1974 per cent.	1975 per cent.
United Kingdom*	…	…	…	…	…	…	23.6	25.6	27.0
Belgium	…	…	…	…	…	…	…	…	18.2	18.1	20.4
Denmark	…	…	…	…	…	…	…	…	25.5	27.2	29.2
France	…	…	…	…	…	…	…	…	16.6	16.9	18.2
West Germany	…	…	…	…	…	…	…	21.7	23.8	25.1
Ireland	…	…	…	…	…	…	…	…	16.4	18.7	n.a.
Italy	…	…	…	…	…	…	…	…	16.8	17.1	16.8
Luxembourg	…	…	…	…	…	…	…	17.0	18.7	23.2
Netherlands	…	…	…	…	…	…	…	20.2	20.8	21.8
United States of America	…	…	…	…	…	…	19.9	20.6	21.6
Japan	…	…	…	…	…	…	…	…	15.0	15.9	17.3
Canada	…	…	…	…	…	…	…	…	22.1	22.8	24.1
Source: National accounts of OECD countries, 1975.
* 26.2 per cent. in 1976.

required to offset reductions in income tax.

Mr. Robert Sheldon

The assumptions of the Government's economic outlook are stated on page 12 of the Financial Statement and Budget Report 1978–79. In addition, it is assumed that income tax reliefs would be spent or saved like other additions to disposable income and that the composition of consumers' expenditure is modified at the margin by the relative price changes caused by increases in VAT rates.