HC Deb 21 January 1997 vol 288 cc539-40W
Sir Peter Fry

To ask the Chancellor of the Exchequer what estimate he has made of the revenue forecast from the imposition of a rate of insurance premium tax of 17.5 per cent. on holiday insurance sold by travel agents; and what account it takes of switching of the purchase of holiday insurance from travel agents to insurance brokers in order to incur the lower rate of insurance premium tax. [11451]

Mr. Oppenheim

[holding answer 20 January 1997]: Around £70 million of the estimated £235 million revenue yield in 1998–99—published in the 1997–98 "Financial Statement and Budget Report"—is from charging the higher rate of insurance premium tax on travel insurance; the remaining £165 million is from charging the higher rate of insurance premium tax on mechanical breakdown insurance of various types and insurance sold with TV and car hire. The travel insurance costing incorporates assumptions about changes in behaviour in response to the increased rate of IPT and this includes the option to buy travel insurance direct from insurers or through insurance brokers.

Sir Peter Fry

To ask the Chancellor of the Exchequer what submissions or correspondence he has received from the Foreign and Commonwealth Office in respect of holiday makers going abroad uninsured as a result of the proposed 17.5 per cent. rate of insurance premium tax on holiday insurance sold by travel agents; and if he will place copies of such submissions or correspondence in the Library. [11452]

Mr. Oppenheim

[holding answer 20 January 1997]: No such submissions or correspondence have been received.

Sir Peter Fry

To ask the Chancellor of the Exchequer what is his estimate of the VAT currently lost to the Exchequer as a result of travel agents selling higher margin insurance with a high holiday discount instead of a low holiday discount and a lower insurance margin. [11453]

Mr. Oppenheim

[holding answer 20 January 1997]: VAT lost to the Exchequer is not dependent on the practice of holiday price discounting by travel agents. The usual pricing structure of the industry is that low margins are applied to holidays and high margins are applied to the associated sales of VAT exempt insurance.

Sir Peter Fry

To ask the Chancellor of the Exchequer what assessment has been made by his Department of the commercial impact on travel agents of the proposed imposition of a higher rate of insurance premium tax on holiday insurance sold by travel agents than on similar insurance sold by insurance brokers and agents. [11679]

Mr. Oppenheim

[holding answer 20 January 1997]: Current pricing differentials and marketing practices in this sector, coupled with the fact that insurance provided free by travel agents will not be subject to the higher rate of insurance premium tax, suggest that the proposed tax differential in favour of other insurance agents and brokers is unlikely to have a significant effect on purchasing behaviour.