HC Deb 20 October 1993 vol 230 cc243-4W
Mr. John Marshall

To ask the Chancellor of the Exchequer what estimate he has made of(a) the percentage fall in the volume of book purchases if VAT at 17.5 per cent. were imposed on books and (b) on the consequential loss in corporation tax, income tax and national insurance contributions.

Sir John Cope

Research carried out by the Institute for Fiscal Studies suggests that imposing the standard rate of VAT on books would reduce book sales by approximately 10½ per cent. The consequential loss in corporation tax, income tax and national insurance contributions would depend on the behaviour of individual companies.

Mr. John Marshall

To ask the Chancellor of the Exchequer what is the estimated effect on the retail prices index of the imposition of VAT at 17.5 per cent. on books.

Sir John Cope

Imposing VAT at the standard rate would increase the RPI by around 0.08 per cent., assuming the tax is fully passed on to consumers in the form of higher prices.

Mr. John Marshall

To ask the Chancellor of the Exchequer how much revenue he estimates would be raised if VAT at 17.5 per cent. were applied to books.

Sir John Cope

The Treasury publication "Tax Ready Reckoner and Tax Reliefs" shows the estimated cost of applying a zero rate of VAT to books, newspapers and magazines as being £1,100 million in 1993–94. Revenue from books alone would be around 30 per cent. of this figure. This estimate makes no allowance for the likely behavioural response to applying VAT at the standard rate.