Increase of Value Added Tax

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 3 July 1979.

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Photo of Mr Peter Rees Mr Peter Rees , Dover and Deal 12:00, 3 July 1979

That is a different point that I should be happy to debate with the hon. Member on some other occasion. The hour is late, however, and I shall concentrate on the essential issue in this case.

We are debating whether the British racing industry is at a disadvantage and we recognise that it is due to the quirks of the VAT systems operating in two other EEC States. I am, I hope, as convinced an adherent of the Common Market as the right hon. Member for Bermondsey. That sentiment may not be shared throughout the Committee, but it must be an essential principle of the EEC that there should be no distortion in competition for a variety of reasons. There is a distortion, as we recognise, due to the differing interpretations and applications of VAT in three countries—our own, Ireland and France. The question is how to put British racing in the position that it can compete at level weights.

Various ingenious suggestions have been made, particularly by my hon. and learned Friend the Member for Thanet, West (Mr. Rees-Davies), whose knowledge and expertise in this field is recognized by the whole Committee, and by my right hon. Friend the Member for Farnham (Mr. Macmillan). I found his speech compelling. He quoted not precisely the words of my hon. Friend the Financial Secretary and myself but a report that may have been penned by his own agile hand and to which I and my hon. Friend put our names. I would not wish to withdraw at all from that. I always find my own arguments particularly compelling, even when recited back to me after a lapse of years.

If my right hon. Friend will consider section 10 of the Finance Act 1972 he will see the difficulty that we face. It is that VAT is to be charged on the price at which goods and services are to be provided.

My hon. and learned Friend the Member for Thanet, West made an interesting point, but I am not sure whether it takes full account of the sixth directive. Certainly the advice we have received, which I am not disposed to reject, is that we would be in breach if we were to value racehorses on some speculative or carcase basis.

Let me at this point reassure the hon. Member for Stirling, Falkirk and Grangemouth on the question of footballers.