Selective Employment Tax

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 7th July 1970.

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Photo of Mr Ken Lomas Mr Ken Lomas , Huddersfield West 12:00 am, 7th July 1970

asked the Chancellor of the Exchequer when he intends to introduce measures to implement his policy regarding selective employment tax and direct taxation; and what are his proposals on maintaining the revenue.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

asked the Chancellor of the Exchequer if he will give his time-table for the phased abolition of selective employment tax.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

asked the Chancellor of the Exchequer what proposals he has for abolishing selective employment tax.

Mr. Bob Brown:

asked the Chancellor of the Exchequer what are his proposals in regard to selective employment tax.

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

The Government's pledge to abolish S.E.T. is firm and and arrangements to implement it will be laid before the House in due course. As regards direct taxation, I shall announce my detailed proposals at the appropriate time.

Photo of Mr Ken Lomas Mr Ken Lomas , Huddersfield West

Does not the Chancellor agree that a reduction of, say, 6d. in direct tax and abolition of S.E.T. would amount to around £800 million? How can he take that out of revenue and maintain the social services at their present standard without imposing additional taxation? Has he value-added tax in mind?

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

There is no precise equation. There is a relationship between public expenditure and taxation proposals, as my right hon. Friend the Prime Minister made quite clear in his speech.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

However firm the decision, will the Chancellor reflect perhaps that selective employment tax is easily the cheapest tax to collect in terms of the Inland Revenue and reflect that any alternative tax might involve more, not fewer, civil servants to collect it?

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

That is a fair point. The only thing I can say in favour of S.E.T. is that it is relatively a cheap tax to collect.

Photo of Mr Tufton Beamish Mr Tufton Beamish , Lewes

Does my right hon. Friend agree that the best way of maintaining the revenue is to get some growth into the economy? Is he aware that in the last five years we have had the lowest growth rate in the whole of free Europe?

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

Yes, that is exactly right, but, with respect to my hon. and gallant Friend, I would not limit it only to growth. I think it is of first importance to encourage savings as well.

Photo of Mr Joel Barnett Mr Joel Barnett , Heywood and Royton

Will the Chancellor give a guarantee that he will not be replacing S.E.T. with an employment tax?

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

No. We have Questions later in relation to value-added tax. What we have said is that in any event the selective employment tax will go, but, in the words of the manifesto, it may be as part of a wide-ranging review of indirect taxation.

Photo of Mr John Biffen Mr John Biffen , Oswestry

With reference to the second part of the Question asked by the hon. Member for Huddersfield, West (Mr. Lomas)—that of maintaining the revenue—does my right hon. Friend agree that a very prudent regard to economic management must lead him critically to examine the present size of the surplus and to consider whether the maintenance of this surplus is having a detrimental effect on the liquidity of the economy generally?

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

Yes, indeed, and that is a factor in the examinations which we are carrying out.

Photo of Mr Derek Walker-Smith Mr Derek Walker-Smith , Hertfordshire East

asked the Chancellor of the Exchequer whether, prior to any general legislation in regard to selective employment tax, he will initiate immediate legislation for the repeal of section 51(9) of the Finance Act, 1969 which retrospectively reverses the decision of the Appellate Committee of the House of Lords in Secretary of State for Employment and Productivity versus C. Maurice and Company Limited, Bishop's Stortford, rejecting the Minister's appeal against the decision of the Court of Appeal in favour of the Company.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

No, Sir. My right hon. Friend is reluctant to embark on a series of minor amendments to S.E.T. He has given a firm pledge to abolish the tax.

Photo of Mr Derek Walker-Smith Mr Derek Walker-Smith , Hertfordshire East

While appreciating the firm pledge, may I ask whether my hon. Friend does not agree that anything which carries a degree of inequity cannot be called minor and should not be called minor in this House? Has he observed the words of the Master of the Rolls in the Court of Appeal pointing out that the law as it now stands confers an unfair advantage on the public sector over the private sector, and, in view of that, will my hon. Friend be good enough to reconsider his answer?

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

I have some sympathy with my right hon. and learned Friend's point, but if we were to devote our attention to correcting all the unfairnesses and anomalies in the selective employment tax we might never have time to get round to abolishing it.

Photo of Mr Hugh Jenkins Mr Hugh Jenkins , Wandsworth Putney

Will the hon. Gentleman confirm that where it has already been decided to correct some inadequacies or mistakes in the application of the selective employment tax—for example, in relation to removing it from the theatre—and where that is currently being carried out, there is no intention of altering that decision and that such decisions already taken will continue?

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

The hon. Gentleman may have that assurance.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

asked the Chancellor of the Exchequer by what date he intends to complete the abolition of selective employment tax; and what reduction he estimates this will bring about in the Index of Retail Prices.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

In reply to the first part of the Question, I would refer the hon. Member to the answer my right hon. Friend gave the hon. Member for Huddersfield, West (Mr. Lomas) earlier today.

On the second part, it is estimated that S.E.T. represents about 1 per cent. on the retail price index.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

Does the Minister recall the Prime Minister's television statement earlier this year that selective employment tax will be abolished in the first Budget and his further statement on television last month: I give you my word and I will keep my word"? Will the Minister confirm that the Prime Minister's second statement will govern action on his first statement?

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

My right hon. Friend has made it clear that the selective employment tax will be abolished without undue delay.

Photo of Mr Dick Taverne Mr Dick Taverne , Lincoln

Is it not clear from the second answer which the Financial Secretary gave that the selective employment tax has had less effect on the retail price index than have other forms of indirect taxation?

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

It does not necessarily mean that it is a better tax.