Purchase Tax (Furniture)

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 24 January 1963.

Alert me about debates like this

Mrs. Butler:

asked the Chancellor of the Exchequer if he will now remove Purchase Tax from furniture.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

asked the Chancellor of the Exchequer whether he will reduce the Purchase Tax on furniture.

Photo of Mr Dingle Foot Mr Dingle Foot , Ipswich

asked the Chancellor of the Exchequer whether he has considered the representations made to the Economic Secretary to the Treasury on 21st December, 1962, by the British Furniture Manufacturers Federated Associations, the National Association of Retail Furnishers and the National Bedding Federation, in relation to Purchase Tax on furniture and the restoration of the facility for add-to hire-purchase agreements; and what action he proposes to take.

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

As my right hon. Friend has explained, he decided that he could no longer justify the exceptionally high rate of Purchase Tax which had applied to television sets and some other goods; furniture, on the other hand, is taxed at the lowest of the existing rates. The tax yield from it is about £20 million per annum.

I have, of course, reported to my right hon. Friend upon the full discussion which I had with representatives of the furniture industry on 21st December; but hon. Members will not expect me to anticipate his tax decisions. Hire-purchase regulations are a matter for my right hon. Friend the President of the Board of Trade, to whom I see that there is a Question on the Order Paper today.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Would not the hon. Gentleman agree that a concession of £20 million from the Budget to help young married couples and the very important furniture industry in Scotland would be worth while? Would not the abolition of this Purchase Tax be worth while, because it would help Scotland and young married people?

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

I should like to express my sympathy with the objects mentioned by the hon. Gentleman. But I must point out that the effect of the abolition of Purchase Tax on furniture would be to reduce the retail price by 7 per cent. only. This is the information which the industry has given to me. I think it would be generally agreed that that could make only a small contribution to the whole problem. As I understood the case presented by the industry, to which I listened with care, it is not a reduction in Purchase Tax which the industry is seeking, so much as a restoration of the hire-purchase facilities.

Mrs. Butler:

Does the hon. Gentleman appreciate how grievously the increase in the Purchase Tax rate has hit the furniture industry, which fears that 10,000 of its 90,000 labour force will be unemployed by March if the present trend continues? Does he appreciate that a reduction of even 7 per cent. would be welcomed by young people and others who are setting up home for the first time and already are finding the burden more than they can bear? How can he justify an increase in the Purchase Tax on furniture in view of the concessions which have been made with regard to television and radio sets?

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

With respect to the hon. Lady, I am quite convinced that increasing the Purchase Tax on furniture from 5 per cent. to 10 per cent. has not had the dramatic effect which she suggests.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Is not the Government aware that there is a very serious depression in the furniture industry and as the Government have actually doubled the tax on this industry when it was reduced on a number of other industries, is not that absolutely indefensible?

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

There is a very substantial difference between reducing high rates of Purchase Tax such as 45 per cent. to 25 per cent. and those that are taxed at 10 per cent. I do not think it is anything like as simple as the hon. Member suggests.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Kidderminster

Would my hon. Friend agree that furniture is only one of a very large group of consumer articles on the 10 per cent. rate of Purchase Tax? Would he confirm that it would be grossly inequitable to relieve furniture unilaterally and leave at that rate of 10 per cent., for example, carpets, pottery, glass, clothes and many other important articles? Why should furniture alone be relieved?

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

With his customary lucidity and ability to get to the point, my hon. Friend has illustrated precisely the difficulty, if not the impossibility, of agreeing to a unilateral reduction of Purchase Tax in a case of this sort.