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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.

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

As I was saying, it may be the case that this rash promise of Lord Ingleby led to his being translated to another place and that may be a warning to the Chancellor not to make so many romantic promises.

As a result of imposing this tax on so many more household necessities, the Government have raised the Purchase Tax burden on the public from £300 million total revenue in 1951 to £462 million in the present year. That is what the Chancellor calls reducing taxation. Indeed, even after the small Purchase Tax cuts in this Budget, of which the Chancellor has been boasting, by his own estimates, in page 27 of the Financial Statement, he expects the revenue from Purchase Tax this year to be higher than the actual receipts from the tax last year. More and more is being taken from the housewife by the Government in Purchase Tax with every year that goes by.

The Chancellor made one of his romantic speeches in this very Committee the other day when he said that taxes were too high and ought to be reduced. He said that Purchase Tax was too high and ought to be reduced, and the Press took him seriously for once. Here is his chance to do something practical upon those lines by accepting the new Clauses, or a substantial part of them. If the Chancellor goes around saying that taxes are too high and that he means to reduce them, and then, in practice, does nothing about it, he will not please the public; and it may be that he will not please the Prime Minister very much either. If he goes on making these rash promises he may suffer the fate of Lord Ingleby and also be translated to another place. In that sense, there is "plenty of room at the top."

As it is, to take one example, the manufacturers of commercial vehicles are recalling what the Chancellor said about this tax in one of his more remarkable speeches in the debates in 1950. The hon. Member for Kidderminster (Mr. Nabarro) quoted some of those remarks in a debate the other night and I am sure that he will be giving us warm support this afternoon in seeking to bring about these reductions.

I will only remind the Economic Secretary that the Chancellor, on 15th June, 1950, said of the Purchase Tax on commercial vehicles: We think that it is a very bad thing. We think it is a most extraordinary thing to impose Purchase Tax upon capital goods of industry, such as these vehicles are. He went on, even more enthusiastically, to say: It is a vicious and vindictive tax which is calculated to hit at the small man particularly.…It is a tax on capital goods. The Chancellor seemed to take a remarkably light-hearted attitude in his past speeches upon these subjects. I think that what I said on that occasion showed a little more caution than did the Chancellor's words. I commend what I said to the Economic Secretary: this tax is not intended to be permanent…but is needed only as long as the necessity for restraint on our investment programme"— which was, naturally, great in 1951— and the maximum of exports are paramount."—[OFFICIAL REPORT. 15th June, 1950; Vol. 476, c. 567–81.] We should like to hear something about the Government's attitude to this tax on commercial vehicles in the changed circumstances of today.

It is no use the Chancellor or the Economic Secretary telling us that he would like to do all this, but that he just cannot afford it now because the Government have made so many other concessions. Compared with hon. Members opposite, in these debates we have been remarkably candid in opposing the large tax reliefs which, in the words of the present Lord Privy Seal, the Chancellor has "given away" both in Surtax concessions and on the profits of the overseas trade corporations. Let the Government now decide to give this away, or a substantial part of it, to the housewife, by way of Purchase Tax reliefs and so do something really practical to stop the new round of inflation which is threatening us.

The Government have no policy for restraining the rise in the cost of living and preserving the value of the £. Here, at least, is something practical which they can do and which will be a great contribution. I hope that the whole Committee, regardless of party, will join together as it did yesterday in the matter of building societies' profits and press this matter irresistibly.