New Clause.; — (Reduction of Purchase Tax from Five or Ten per Cent. to One per Cent.)

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 3rd July 1957.

Alert me about debates like this

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North 12:00 am, 3rd July 1957

I agree that it is convenient to take this group of new Clauses together.

The Government have a real chance here to do something practical to stop the new rise in living costs which is beginning. We therefore strongly press these Clauses on the Government, particularly the proposed relief in the 5 per cent. and 10 per cent. rates of Purchase Tax. A new round of inflation appears to be beginning and there is every sign that it will continue, unless the Government do something definite about it. All the evidence is that way.

At present, the Government are adding to the inflationary tendencies rather than doing anything to check them. A cut in Purchase Tax would at least countervail the other rises in the cost of living which are now threatened in rates, rents, food prices, and in the new National Insurance contribution and all the other burdens which are being imposed by the Government on housewives, and which have completely brought to an end the so-called plateau of prices, such as it was, of last year.

If the Government acted on this group of new Clauses, a real contribution to preserving the value of the £ would be made. The group covers the 5 per cent., 10 per cent., 15 per cent., and 30 per cent., rates of Purchase Tax and includes the following household goods and necessities, to mention a few, which are now subject to tax: clothing, boots and shoes, many textile fabrics, floor coverings, wallpaper, furniture, and many domestic appliances, including sewing machines, commercial vehicles, cutlery, brushes and combs, razors and razor blades and last, but not least, soap.

I do not know whether the Chancellor and the Economic Secretary realise that the Government are still imposing tax on ordinary domestic soap. I recall that Lord Chandos, when in opposition, used to argue with great vehemence that it was the last form of iniquity of a really depraved Government to impose tax on soap and that is one of the forms of tax which we are discussing. Over a very wide range of goods, especially with clothing, boots and shoes and furniture, Purchase Tax has been extended by the Government to a large number of goods which were not subject to it previously.

Under the Labour Government, 80 or 90 per cent. of clothing, boots and shoes, and many textile materials and a large proportion of furniture products were entirely exempt from tax. Far more things in this range are now being taxed than were before. I recall that Mr. Peake, as he then was—he is now Lord Ingleby—promised from this Box, in 1950, that under a Tory Government Purchase Tax would be removed from everything except a few luxuries. That proves once again the never-ending dishonesty of the party opposite. I include the whole lot. I am not suggesting that any one is worse or better than the other.