Clause 12. — (Changes in Rates of Purchase Tax.)

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 12 May 1959.

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Photo of Lady  Grant of Monymusk Lady Grant of Monymusk , Aberdeen South 12:00, 12 May 1959

I quite agree with the argument of the right hon. Gentleman the Member for Rowley Regis and Tipton (Mr. A. Henderson) about Purchase Tax on domestic utensils not only as it affects his own constituency but also on behalf of those women who run their households throughout the country. It may be that he was speaking from personal experience in helping, perhaps occasionally, with the washing-up.

I should like to speak specifically on two points. One is the individual effect of Purchase Tax and the other is the general question of Purchase Tax as a whole. I should like, first, to join with my hon. Friend the Member for Cambridge (Sir H. Kerr) and, believe, with a good many other hon. Members on both sides of the Committee, on the effect of the rate of Purchase Tax on gramophone records. I believe that a great number of hon. Members wish to make their voices heard on this issue, so I will be brief.

I recognise that the Chancellor is doing all that he can to try to tackle this jungle of Purchase Tax in reducing it to the more streamlined number of categories that we have now. I think that I should say at the start that all of us—at least, I hope all of us—are grateful for the reductions that have been made, including the 10 per cent. on gramophone records. Nevertheless, I wonder whether the Chancellor has really considered whether this particular section of Purchase Tax is the right one to apply to the gramophone record industry, which is lumped together with a great many things which can be described either as capital goods or in the luxury class.

I submit that gramophone records are not in the capital goods class and I question whether they can nowadays be considered in the luxury class of what was originally a wartime tax. We are supported in the view that they are no longer luxuries because the Chancellor has, in fact, abolished the Purchase Tax on television tubes. I remember very well hon. Members opposite, two years ago, questioning the Chancellor and asking whether he realised that television was now a necessity in every home. We all have our own views on that. I certainly would not say that every programme on television is pure culture. Nor, on the other hand, would I say that every record produced is also pure culture. I do not say that in tax matters we should distinguish between "pop" music and the classics any more than that we should try to distinguish between one television programme and another, or between trashy novels and the classics. I maintain, however, that the Chancellor would have met a strong feeling not only in this Committee, but in the country, if he had tried to remove this particular category of gramophone records into another category.

I should be out of order in suggesting a reduction of the tax in any particular way, but I suggest that at the earliest possible time we should try to remove it into another category altogether. There is, of course, always the argument of whether we want to try to stop spending by people on what are called consumer goods. In my submission, we will never stop young people spending money on music today. I think that it is one of the most encouraging features that more and more young people want to take their entertainment into the home and that is why I personally have always been in favour of television, because I think that everyone, from the grandmother down, in looking at television, has a common interest and a source of common discussion, and, indeed, often the grandmother is the most informed.

I do not see why, if we encourage television by abolishing the Purchase Tax on television tubes, we should not also encourage a real interest in music, which is taking place all over the country. It appears to me ridiculous that when one is sent a review copy of a book no tax is paid, but when there are test pressings of a record, perhaps 10 or 12 before the final copy is put into production, Purchase Tax is paid on them. If we consider the British Council, in which I have some interest, being chairman of the Scottish Panel, it appears to me ridiculous that one Department should tax another which has to subsidise its own records. If we take the year 1958–59, the British Council used records both for music and speech for instruction overseas—7,902 records altogether, on which it did not pay tax. It is quite true that at home in the same period it used only 209 records on which it did pay tax. The large total of practically 8,000 records which went overseas, however, was subsidised by the agreement of this House, yet it was taxed by another Department. That seems to me to be a most extraordinary way of making legislation.

Governments today exercise very great influence through their fiscal policy on the kind of society they want to see in the country. I should have thought that it was very unwise to try to encourage everything that goes with a materialistic society. Surely we always pride ourselves on being one of the most civilised nations. Therefore, I hope that on this specific matter the Chancellor will think again.

On Purchase Tax as a whole we always have, in this Committee, two conflicting opinions. One is that it is necessary to have it not only for purposes of revenue, but also positively to discourage consumer spending. On the other hand, we have the argument, which, I hope, is gaining prevalence now, that we have to do everything in our power to encourage employment and stimulate industrial activity. Here I would make a plea for the levels of Purchase Tax as a whole. We are trying, in dealing with our industrial problems in Scotland, to bring as many different industries as we can to the North, notably those concerned with consumer goods. I have always understood that an industry cannot start or expand satisfactorily unless it can do its experimenting and has a basic supply upon the home market.

Without doubt, the very high level of Purchase Tax on this wide variety of what we call consumer goods must have had a bad effect on the stimulus to trade internally on which the export trade is built. That being so and as Governments today exercise their guidance on the industrial activity of the country not only through the fiscal means of the Budget but through the economic policy of which it is a part, I hope that this Budget is the forerunner of several which will make a determined attack on a tax which was, after all, a wartime measure and has no place in time of peace.