§ Mr. Freudasked the Chancellor of the Exchequer whether his Department has made any study of the potential effects of the introduction of value added tax at (a) 5 per cent. and (b) 15 per cent. on books on students' and educational libraries; and if he will make a statement.
§ Mr. HayhoeThe potential effects of VAT changes on particular sectors are assessed and taken into account in any review of the scope of the tax. The Government are committed to a shift in the burden of taxation from taxes on earnings to taxes on spending, but we have no set views at present on how this might best be done.
§ Mr. Fisherasked the Chancellor of the Exchequer if he will estimate what revenue would be raised by the imposition of value added tax at 15 per cent. on (a) books and (b) newspapers.
§ Mr. HayhoeIt is estimated that the net additional full year revenue (at 1984–85 prices) would be about:
£ million (a) Books 85 (b) Newspapers 225
§ Mr. Fisherasked the Chancellor of the Exchequer what are the policy reasons for the zero-rating of value added tax on (a) books and (b) newspapers; and under which of the reasons for zero-rating permitted by the United Kingdom's Community obligations the current position is permitted.
§ Mr. HayhoeIt was decided when VAT was introduced in 1973 that on the broad principle of relieving the main media for the dissemination of knowledge, books and newspapers should be zero-rated.
Article 28.2 of the sixth VAT directive permits member states to continue to zero rate goods and services for defined social reasons and for the benefit of the final consumer. It has always been the view of successive United Kingdom Governments that our zero rates, including those for books and newspapers, satisfy this criterion.