Vat

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 11th June 1992.

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Photo of Mr Roy Hughes Mr Roy Hughes , Newport East 12:00 am, 11th June 1992

To ask the Chancellor of the Exchequer what was the level of VAT in 1979 and in each succeeding year.

Photo of Sir John Cope Sir John Cope , Northavon

From 18 June 1979 the highest rate of VAT, which was 12½ per cent. was abolished and the standard rate of VAT was increased from 8 per cent. to 15 percent. On 1 April 1991 that rate was increased to 17½ per cent.

Photo of Mr Roy Hughes Mr Roy Hughes , Newport East

Does the Minister acknowledge that VAT was 8 per cent. when the Labour Government left office but that it is now 17.5 per cent.—an increase of 119 per cent? Does not that bear heavily on poorer homes? The Government claim that they are reducing taxation and many people appear to believe that. Does the Minister agree that the conclusion to be drawn from that is that although the Government are not good at reducing taxation, they are most adept at black propaganda?

Photo of Sir John Cope Sir John Cope , Northavon

The hon. Gentleman is drawing attention only to the standard rate of VAT in 1979. Of course, what matters is real disposable incomes, not just the tax burden. As the Institute of Fiscal Studies said, there were real gains in all parts of income distribution between 1979 and 1988.

Photo of Mr Bob Dunn Mr Bob Dunn , Dartford

Can my hon. Friend confirm that there is no question whatsoever of the United Kingdom being forced to give up zero rates?

Photo of Sir John Cope Sir John Cope , Northavon

I can indeed. Our zero rates are guaranteed by the sixth VAT directive and they can be changed only by the unanimous agreement of all member states. Obviously, we have no intention of agreeing to that.

Photo of Dr John Marek Dr John Marek , Wrexham

May I welcome the Minister to his first Question Time as the Paymaster General? Will he not be corrupted immediately by using selective statistics and admit that the burden of taxation has gone up and that, in spite of what it says, the Conservative party has increased the burden of taxation on the British people compared with the days when Labour was in office? Will he also make the pledge that the Prime Minister made before the election, that the scope of VAT will not be widened one iota during this Parliament?

Photo of Sir John Cope Sir John Cope , Northavon

I am happy to reinforce what my right hon. Friend the Prime Minister said, in so far as I can add anything to it. Obviously, we stand entirely by what he said. On the earlier part of the hon. Gentleman's question, I certainly have not been corrupted and I have no intention of being corrupted. The statistics that I gave are the relevant statistics and they are extremely important to the people concerned. In any case, the amount of taxation to which the hon. Gentleman and the hon. Member for Newport, East (Mr. Hughes) referred concerned VAT.