§ Mr. BowdenTo ask the Chancellor of the Exchequer what estimate he has made of the effect of VAT on fuel at 8 per cent. on the annual rate of inflation in the year to September 1995.
§ Mr. Heathcoat-AmoryVAT on fuel at 8 per cent. was introduced in April 1994, so any price increases as a result will have fed through to the retail prices index prior to the year to September 1995, meaning that VAT on fuel and power will have no effect on the annual rate of inflation over that period.
§ Mr. Martyn JonesTo ask the Chancellor of the Exchequer what is his estimate of the amount of revenue forgone by exemption from value added tax of sums paid in advance to power-generating companies.
§ Mr. Heathcoat-AmoryIt is estimated that the VAT cost of prepayment of electricity by domestic consumers is £55 million.
§ Mr. AingerTo ask the Chancellor of the Exchequer what representations he has received on VAT being charged on fuel standing charges.
§ Mr. Heathcoat-AmoryTreasury Ministers have received a number of representations on this issue. Both the fixed standing charges and the variable consumption charges for domestic electricity and gas are payment for the one service—the supply of gas and electricity—and so liable to VAT at the 8 per cent. reduced rate, even though they are shown separately on the bill. VAT is normally chargeable on the whole price of any taxable goods or services, regardless of the way in which the supplier chooses to structure the price.