§ Mr. Teddy TaylorTo ask the Chancellor of the Exchequer if he will make a statement on the revised proposals by the European Economic Community for the revision of value added tax arrangements in the United Kingdom, and, in particular, what items, at present zero-rated, would require to be taxed; and if there are any other proposals linked to the arrangements proposed by the European Economic Community for changes in excise duty.
§ Mr. Lilley[holding answer 22 May 1989]: The Commission announced its revised thinking on indirect taxation in the single market on 17 May. It now accepts that some zero rates may be retained, but still seeks a measure of tax approximation in the shape of an unspecified minimum standard rate for VAT; a reduced VAT rate band as previously proposed; and, as yet unspecified, minimum rates or rate bands for excise duties. It also suggests quadrupling the tax-paid travellers' allowances and doubling the duty paid allowances on alcohol and tobacco in stages by 1992. Announcement of its technical proposals for fiscal control of exciseable goods has been deferred until August.
The Commission's admission that zero rates are acceptable in principle is clearly a step forward and a vindication of our firm stance, and we welcome it; but we shall obviously need to clarify a number of elements, given our very clear commitments in this area. We also welcome the proposals on travellers' allowances, for which we have 441W been pressing. Other parts of the Commission's revised thinking, such as its continued desire for tax approximation, are less welcome; our position on that issue is unchanged.
These proposals would require the unanimous assent of all member states.