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 Frank Beswick Mr Frank Beswick , Uxbridge 12:00 am, 3rd July 1957

We appreciate the brevity with which the Economic Secretary made his point, but not the substance of it. If it is impossible to go any further in the way of concessions, the first question that springs to our minds is why it was possible to go any distance at all by way of tax concessions to those earning between £2,000 and £10,000 a year. If it were so very important to stop this money chasing goods, surely money in the hands of those people is just as bad as it is in the hands of the ordinary consumers, who find it very difficult to buy these essential commodities.

The Economic Secretary talked about the necessity for curbing inflation, but does he really think that trade union leaders will listen to any talk about planning on the wages front while they see, on the other hand, the continuance of this kind of tax upon essential commodities? It is no good the Economic Secretary expressing indignation or impatience. Of course, this matter is not directly mentioned in the new Clause with which we are dealing, but it is very closely bound up with it.

The sooner the right hon. Gentleman realises that to the ordinary consumer and worker this tax on essentials, together with the subsidies on essential foodstuffs, should be the absolutely first consideration in regard to any resources that we have, the better. Purchase Tax should come off, and the food subsidies should stay on.

I listened very carefully to the earlier debates we had on Purchase Tax, and I must say that I have never felt so frustrated when listening to a debate on that tax as I did then. I cannot think that there is any enthusiasm at all on either side of the Committee for this kind of tax. We are all losing patience with it. I am not now speaking about any question of relief in the total amount of taxation, but I am speaking of it as a method, and, as a method of collecting revenue, it is, surely, now discredited on both sides of the Committee.

It is a fact, of course, that in the Bill some concessions have been made, and the Economic Secretary reminded us of them. He said that, when the Labour Governments were trying to stop money chasing too few goods, we retained the Purchase Tax, but it is fair to remind him that we did not retain it on many of these articles which are now subject to tax. Many of these things are now being taxed by the present Government for the very first time either during or since the war.

The retailers and trading community of the country come into this as well as the consumer. In the autumn of 1955 we had these taxes imposed. The Government are now removing half of them, or half of them on a limited range of the goods which were newly brought into the tax range. What does the Economic Secretary think is happening to those goods which are still on the shelves of the retailer, on which tax has been paid, and which he still has to sell after this reduction?

Time after time, there have been deputations to the Treasury about some form of rebate on these articles on which the tax has been paid by the retailers but subsequently reduced. Of course, we have always had the reply that it is quite impossible to devise any water-tight system within which the rebate could be given. But the very fact that it is impossible to provide a workable rebate is surely another argument against retaining Purchase Tax at all.

I want to emphasise what was said by my right hon. Friend the Member for Battersea, North (Mr. Jay). If we are to have a general standstill in prices, and if we are to make any impression upon the trade union leaders—