§ Mr. Alasdair MorganTo ask the Chancellor of the Exchequer what estimate he has made of the number of non-United Kingdom based EU companies which have been liable to pay higher rate insurance premium tax on their products in 1997. [31122]
§ Dawn Primarolo[holding answer 25 February 1998]: The information held centrally by Customs and Excise categorises insurers registered for insurance premium tax (IPT) only into UK and non-UK. Of the non-UK insurers approximately 77 have indicated on their IPT returns that their payments include some tax at the higher rate. Customs are however aware that some insurers have used "higher rate" box on their IPT returns to declare tax due at the standard rate of 4 per cent. rather than the previous standard rate of 2.5 per cent.
§ Mr. Alasdair MorganTo ask the Chancellor of the Exchequer what is the estimated cost to public funds of introducing for the next financial year(a) a single lower rate insurance premium tax for all insurance products at (1) 4 per cent., and (2) 5 per cent., and (b) a higher rate of insurance premium tax for all insurance on motor vehicles, travel and electrical retail goods at (i) 10 per cent. and (ii) 17.5 per cent.; and if he will make a statement. [31115]
§ Dawn Primarolo[holding answer 25 February 1998]: The cost, in a full financial year, of introducing a single rate of insurance premium tax on all insurance products currently liable to the tax, is estimated at £255 million for a 4 per cent. rate.
Introducing a single rate of 5 per cent. as you propose is estimated to yield £45 million.
(i) The full year cost from introducing a new rate for both direct and indirect sales of:
is estimated at £135 million for 10 per cent. rate.
- travel insurance
- mechanical breakdown insurance or warranties for motor vehicles or domestic appliances
(ii) A 17.5 per cent. rate is estimated to yield at £15 million.
§ Mr. Alasdair MorganTo ask the Chancellor of the Exchequer, pursuant to his answer of 16 February 1998,Official Report, columns 478–79, which of the European Commission Tax Directorates Customs and Excise officials have met to discuss higher rate insurance 717W premium tax; if she will list the dates of such meetings and who was present; if she will place in the Library copies of the information provided by HM Customs and Excise to the Commission; and what discussion took place over (a) the cross-border impact of higher rate insurance premium tax and (b) the treatment in law of higher rate insurance premium tax and VAT; and if he will make a statement. [31121]
§ Dawn Primarolo[holding answer 25 February 1998]: The discussions referred to in my answer of 16 February took place at a meeting on 22 January between Customs and Excise officials from VAT Policy Directorate and officials from the Competition directorate (DGIV) of the European Commission. The United Kingdom Permanent Representation to the EU(UKREP) was also represented. DGIV had received representations from certain UK trade bodies about the impact of the higher rate of insurance premium tax and had sought information on this subject from the appropriate UK authorities. The information provided by Customs officials was in response to the requests from DGIV for background information. Copies of letters sent to DGIV via UKREP have been placed in the Library. Although the meeting was informal, Customs officials made clear the Government's view that the higher rate of insurance premium tax would have no effect on cross-border trade and fully complied with both UK and EC law.