§ The provisions of section twenty of the Finance Act, 1948 (Relating to purchase tax) and of the Eighth Schedule to the said Act shall hereafter have effect as if the second rate 1512 of purchase tax is one-half of the wholesale value of the goods and as if all articles at present chargeable to the first rate of purchase tax are hereafter exempt from purchase tax.—[Mr. Jay.]
§ Brought up, and read the First time.
§ Mr. Jay
I beg to move, "That the Clause be read a Second time."
I wish to make two emendations to the Clause. The first is to alter the word "half" to "55 per cent." and the second is to alter the words "exempt from purchase tax" to "chargeable to 26 per cent. of the wholesale value of such goods."
These alterations are to bring the Clause within the bounds of order, in view of the alterations made in the Bill since the Clause was first put on the Order Paper.
§ Mr. Boyd-Carpenter
I take it that the right hon. Gentleman is making—with your permission, Sir Charles—amendments to the Clause.
§ Mr. Jay
That is correct. I think that is in order.
Like the hon. Member for Buckinghamshire, South (Mr. R. Bell), I framed my Clause in this fashion, not primarily because I have a special affection for these figures or wish to press the proposal in this form, but rather to draw attention to certain of the goods now subject to Purchase Tax at the old rates of 66⅔ and 33⅓ and to ask the Government why, in this year's Budget, unlike last year's, no action has been taken to exempt from Purchase Tax altogether some of the ordinary necessities of life which are still subject to it. For that reason, we do not intend to press the Clause in this form to a Division, but it is my belief that some of my hon. Friends may wish to take advantage of it to mention by way of illustration some of the types of goods which we think might well be exempted from tax altogether.
There have been, and there still are, two general conceptions of the Purchase Tax. The first conception was that of a general sales tax falling at a flat rate on all consumer goods. That was the type of tax originally introduced by Lord Simon, when Sir John Simon, in the Budget of April, 1940. That is the type of tax which the Opposition have never favoured. In our view it is a regressive 1513 type of tax which tends to fall more heavily on those with lower incomes because, since all goods are taxed at a flat rate, they are compelled when buying necessities to pay a larger percentage of their incomes in tax.
When, in the last Parliament, on one occasion I said that the sales tax conception was favoured by the party opposite, I was called upon to advance evidence of support from them for that tax. It happens that the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton) as will be recollected by the Financial Secretary, in one of our earlier debates on the Bill, said that he favoured the general conception of a sales tax.
Our view of what the Purchase Tax ought to be is quite distinct. We favour a tax that falls more heavily on luxuries and much less heavily on near-necessities and necessities. We have really been engaged over the last five or six years in trying to transform the tax gradually from one which was nearer to the general sales tax conception into one which fell more heavily on luxuries. It seems to us that there is certainly a case for Purchase Tax falling on luxuries. There is no less good a case for taxing furs and jewellery than there is for taxing tobacco, beer and petrol. We have, therefore, over the last few years, when we were in the Government, exempted a number of household necessities from Purchase Tax altogether, and it was our intention to continue doing that in further years had we been on the other side of the House.
I would just remind the Committee that in last year's Budget we exempted altogether, for instance, dusters and cleaning cloths, ironing boards, sewing needles, knitting needles, school satchels and shoe laces, and eventually, in response to one of my hon. Friends, tooth brushes. It was our intention to continue that good work in the present year, and I will give this secret to the Financial Secretary: that we had particularly in mind certain goods such as household soap, razor blades and other things of this kind—including cutlery. We were not in a position last year to include these in the list because we were, in that Budget, seeking for extra revenue, but one has in the present year to regard this 1514 matter in the light of the position in which the Chancellor finds himself. In his Budget he gave away very large sums in remission of taxation.
Therefore it seems to us there should have been a case, in the interests of stability in the cost of living, of holding down the cost of living—and all that means in terms of wage and price stability—for at least a further modest step forward in making exemptions of this kind. I will leave it to my hon. Friends to mention some of the special types of goods we think might qualify for such an exemption, but I hope that the Financial Secretary will tell us why this was not included in the Budget this year.
§ Mr. Ralph Morley (Southampton, Itchen)
We are discussing this evening the Purchase Tax, which is a form of indirect taxation, and I think it is a general valid canon of taxation that direct taxation is bad taxation. Indirect taxation is regressive taxation and it falls with the greatest severity on those with the lowest incomes. I remember that in the early days of the Socialist movement the pioneers of Socialism in this country were always most vehement in their condemnation of indirect taxation and favoured the transfer from indirect to direct taxation. Many of them, whose pamphlets I read at the time and whose speeches I heard, if they had lived to see the time when two Socialist Governments from 1945 to 1951 imposed such a heavy volume of indirect taxation, would have been very greatly disturbed and disillusioned.
It seems to me that the only excuse for any form of indirect taxation is if it has a sumptuary purpose and is meant to prevent the consumption of the particular article that is taxed. I suppose that would be the excuse for the heavy taxation we have at present on beer and tobacco, although my personal opinion is that, although heavy taxation has had the effect of curtailing the consumption of these commodities to a certain extent, it is imposed at too high a level at the present time, and should be reduced.
No one would argue that there was any justification for a tax imposed upon knowledge, or upon the implements by which knowledge is acquired. But today Purchase Tax is imposed upon a very wide range of school requisites which 1515 are in every day use by practically every scholar in our schools. There is Purchase Tax upon school stationery, upon stationery used in school exercise books of every description, in school copy books and in school drawing books. In fact, I believe as much as £1 million a year is levied in taxation upon school stationery.
Then there is taxation upon the little toys and gadgets that are used in teaching in infant and kindergarten schools; and then there is the Purchase Tax upon a wide range of needlework materials which are above the D level. When teachers find they have not sufficient apparatus and equipment to proceed with in an up-to-date manner they generally fall back on chalk and talk, but even the harmless chalk in the schools today is subject to Purchase Tax. The cost of chalk from the manufacturer is 1s. 3d. a carton, but after the uplift to the wholesaler and Purchase Tax has been added, the cost of the carton is raised to ls. 10½d.
Although, happily, text books are not subject to Purchase Tax, about 4s. in every £ spent on school requisites is Purchase Tax. It seems an absurd form of taxation to tax the things used in schools, because, after all, that taxation has to be paid by local authorities, and to meet it they have to raise another tax in the form of the local rate. There is no advantage gained from a national financial point of view in the taxation of school requisites.
I am pleading tonight that the Financial Secretary should take into account the possibility of the reduction of the Purchase Tax on the whole range of school requisites, and even, where possible, to free them altogether from tax. When the tax on stationery was first introduced by the present Leader of the House, who then occupied the more onerous position of Financial Secretary to the Treasury, he declared that he regretted having to place a tax on such articles, and he hoped that immediately the war was over the tax would be reviewed with a view to its withdrawal.
Last year, in the course of a debate on Purchase Tax the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton), whose lucid speeches on economic affairs we all listen to with 1516 interest if not complete agreement, said on this subject:…there are both economic and administrative considerations which justify the removal of Purchase Tax from stationery … This tax is inflationary and is a direct tax on production. … We believe this tax is a bad tax and that it should be removed. We give notice of our intention to press for its removal at the appropriate time."—[OFFICIAL REPORT, 14th February, 1951; Vol. 484, c. 575-7.]I suggest to the Financial Secretary that now is the appropriate time and I hope that at least he will be able to offer some concessions with regard to the Purchase Tax on stationery used in schools.
§ Mr. Coldrick (Bristol, North-East)
I am pleased to be able to give support to this Clause. Over a period of years we have constantly opposed certain features of the Purchase Tax. In the past we have succeeded in getting Labour Chancellors to exempt an increasing number of articles from the effect of the tax. Tonight I want to pursue the attack in the hope that the present Chancellor and Financial Secretary will pay attention to a number of articles which I wish to mention.
First, 1 should like to endorse the remarks of my hon. Friend the Member for Southampton, Itchen (Mr. Morley) about stationery. I shall not touch the question of the stationery used in schools. One of the great anomalies of Purchase Tax has always been that there is even a tax on the books which every trader has to keep in order to record the Purchase Tax which he must give to the Chancellor. I ask the right hon. Gentleman to take that into consideration.
Certain other articles have been mentioned, including razor blades. When one walks around the Houses of Parliament and sees the pictures of venerable statesmen, when apparently whiskers and wisdom were synonymous, one can understand any Chancellor in those days looking upon the razor, whether safety or otherwise, as a diabolical instrument designed to disfigure people. But in these days when we see that all the people from Oxford and Cambridge, Eton and Harrow, those institutions which always supported the traditional, have now succumbed to the use of Gillette blades, and so on, a different view should be taken, 1517 I believe that those hon. Gentlemen would as soon come to the House of Commons in their underwear as come unshaven into the Chamber.
As the razor is now an article used by almost every man, it is incredible that a modern Chancellor should impose a tax upon it and other necessary articles, such as soap. Then there is the question of cutlery. It would be cruelty on my part to talk about cutting meat in these meatless days. but we spend millions in schools and other places trying to teach table manners to children. We teach them the use of the knife and fork, and so on. Though it is true, to judge from what I have read and pictures I have seen, that even royal families in the days of Henry VIII were inclined to grab hold of the bone and gnaw the succulent meat from it, I do not think that even the hon. Member for Orpington (Sir W. Smithers) would like us to go back to that practice.
One recognises that in the most humble homes the acquisition of cutlery is essential. Therefore, it is incredible that any Chancellor should impose a Purchase Tax upon cutlery. As we move into a period when there is a slight recession in trade, it will become increasingly difficult for the trade to provide the poorer families of the community with these desirable articles, unless the Chancellor removes Purchase Tax from them.
Lastly, we recognise that as a result of the increase in the duty on hydrocarbon oils there will be an increase in the price of linoleum and floor covering. The Labour Government built well over one million houses. If the Conservative Government live up to their promises, they will build well over another million in about three years. Therefore, one can conceive the millions of miles of linoleum which will be required. Young people setting up home have to face the fact that they need something more than mere brick walls. It is essential that at least they should have some form of floor covering. When we consider the rent and rates they will have to pay—
The Deputy-Chairman (Mr. Hopkin Morris)
I hope that the hon. Member will not bring within his argument such a variety of subjects, including the Rent Restrictions Acts.
§ 11.15 p.m.
§ Mr. Coldrick
I was merely giving that indication of the terrific problem with which a lot of people will be confronted in the expense of purchasing floor covering. Floor covering is a very necessary item, and one which warrants the attention of the Chancellor for a substantial reduction, if not complete exemption, as far as the tax is concerned.
The Financial Secretary is no doubt aware that the sanitary and other inspectors from the Home Office can, when making their visits throughout the country, compel traders who employ more than three or four people to maintain an adequate supply of hot water. That I regard as essential. The introduction of either a gas or electric heater, or a water heater of some kind, then becomes necessary, and the trader has at once to pay 66⅔ or 100 per cent. tax upon those things which the Home Office regard as essential for hygiene and health reasons.
Without enumerating further examples, I ask the Chancellor to give his very favourable consideration to our request for the removal of, or a very substantial reduction in, the tax that is imposed on all these various items.
§ Mr. Mulley
In support of the Clause I could quote many more examples of the operation of the tax, but I do not want to weary the Committee by going over ground that has already been covered or which, I suspect, will be covered by hon. Members on one side or other of the Committee. We may be hearing, for example, from the hon. Member for Kidderminster (Mr. Nabarro) about Purchase Tax on equipment that is designed to promote economy in the use of fuel.
I endorse very strongly the remarks of my hon. Friend the Member for Itchen (Mr. Morley) concerning educational requisites that now carry tax. The Financial Secretary may well argue that it is very difficult to separate stationery which can be used in school and stationery that is used elsewhere. He may also argue that it is really a matter of taking the money out of one pocket and putting it into another, in the sense that the Purchase Tax goes to the Government and, of course, the educational grants are made by the Ministry of Education. But before he puts that argument, I ask him to reflect that a certain amount of local 1519 education authority money which is raised by local taxation is also required to give schools their necessary educational supplies, particularly in view of the recent economies. I ask the hon. Gentleman, therefore, to give special consideration to the provision of tax-free supplies for schools.
The whole range of household and toilet requisites is another matter which demands urgent attention by the Government, particularly because my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), when he was Chancellor of the Exchequer, made a number of substantial concessions and improvements in this direction; and I have no doubt that had we remained in office we should have extended the number of these essential commodities to be brought either to a lower lever of tax or free of tax.
There was the difficulty last year that it was the first year of re-armament, and revenue was a very important matter; but this year we have had already a number of revenue concessions, and I should have thought that essential articles would have had a very strong claim to consideration for any concessions that the Chancellor felt able to make. Instead, however, in a number of cases we have had additional Purchase Tax rather than a reduction.
The particular case I want to argue is cutlery, because I represent a constituency in Sheffield which manufactures nearly all the cutlery in this country. Things are difficult now for cutlery firms, particularly in view of the loss of overseas orders. Every week of late there have been a substantial number of people laid off or put on short time, and, although employment is not the only angle from which to view the incidence of Purchase Tax, at any rate the cutlery industry has the same case as the textile industry for consideration. When we add to that substantial case the fact that cutlery is an essential everyday article in common use, there is an overwhelming argument for taking at least a large number of grades of cutlery out of the range of Purchase Tax altogether.
Cutlery and a number of other similar commodities have never had a utility scheme. As the Financial Secretary knows, cutlery is strictly anything that cuts, and forks and spoons are within the province of the silverware industry, but 1520 I take the two industries together. Neither has been able to produce any article for the home market that is free from tax. This was raised with the late Government, who rather regarded cutlery as a marginal case. I suggest that had they been in office now we should have succeeded in getting a concession, at any rate for part of the cutlery trade.
It is serious that the present Government should have proposed, not consciously, but certainly in practice, to increase the incidence of Purchase Tax on cutlery. On 29th April, after the Chancellor had presented the Budget, the Customs and Excise office issued a notice that brought within Purchase Tax a great number of scissors and blanks sold by the cutlery trade which had hitherto been exempt under Group 13 (B) of the Schedule.
I have raised this matter by Question in the House. The effect of the decision is to extend the range of Purchase Tax on cutlery, and it is a particularly unfortunate incidence since the articles concerned are industrial scissors and tools of trade. Thus, whereas the Chancellor rightly prided himself for having removed overalls from Purchase Tax, he has put in the net of Purchase Tax for the first time industrial scissors that are used in textile manufacture, and this at a time when the textile trade is in difficulties on its own account.
I have a copy of a letter sent by the Sheffield Cutlery Manufacturers' Association to the Secretary of Customs and Excise, in which it says that one member, as a result of the change in classification, says that the price of one dozen pairs of industrial scissors used by the girls in the textile industry goes up another 29s. 3d. It means that operatives who are already worried by short-time and the prospect of unemployment have to pay, on a hire-purchase basis, for another five weeks before they can buy a pair of scissors which they must have in order to do their work.
This is a new incidence of tax and, while it may not be the concern or the direct responsibility of the Financial Secretary, it is a decision taken by the Customs and Excise Office. I feel that the imposition of such a tax by administrative decision is a very unsatisfactory feature of Purchase Tax, and that all taxation should come before the House and 1521 not be left to the discretion of officials of Customs and Excise.
Apart from this special case of industrial scissors, which have fallen within the range of Purchase Tax for the first time this year, I think that, taking together the employment problems within the industry, the danger of foreign exports coming in and replacing some of the cutlery orders for the home market and the very strong argument for taking out of the net of Purchase Tax articles of essential and common, everyday use, there is an overwhelming case for the exemption of cutlery at the present time. I would ask the Financial Secretary to give serious consideration to these points. Obviously it cannot be met by the present Clause but he will have an opportunity on the Report stage to introduce a Clause to make cutlery exempt, at any rate for some of the articles concerned.
§ Mr. J. Grimond (Orkney & Shetland)
I should like to support the case for the removal of Purchase Tax from stationery. The tax was introduced not primarily to raise revenue but to curtail consumption, and I think it is now the case that supplies of paper are more generally available. As far as commercial stationery is concerned, it is a tax on a great many stages of production and, as is well known, it also leads to the most curious results. Envelopes of one size are subject to tax and of another size free from tax. A printed notice may be liable to tax or may escape tax, according to its wording.
As to other forms of stationery, the case has been argued in relation to educational stationery. I do not think anyone would argue that it is the desire of the Government to curtail the use of educational stationery, because they are the people who compel children to use it. I have no doubt that the children would be willing to cut down on its use to any degree which the Government may desire.
I think the case for educational stationery speaks for itself. I know it is an old chestnut in this Committee, and that the argument for some reduction of this tax must be well known to the Financial Secretary; but he will know that conditions have changed to some extent and, while I agree that it is difficult to distinguish between one use of stationery and another, has not the time now come 1522 when paper supplies are sufficient to enable the whole question of the tax on stationery to be reviewed and either substantially reduced or removed entirely?
§ Mr. Edward Shackleton (Preston, South)
I wish to make only a very short contribution, and hon. Members may be surprised to hear that it is concerned with something that is manufactured in my constituency. It is with regard to an object which many hon. Members have seen moving along the road at a fair speed and have sometimes wondered whether it was a motor car or motor bicycle. It goes by the name of Minicar.
I have no doubt that both the late Chancellor and the present one, having observed this vehicle and seen that it has a body and a hood, have decided that it was a kind of motor car and should bear Purchase Tax at the higher rate. I assure the Financial Secretary that so far from being a motor car it is a kind of motor bicycle. This is something of very great importance, because if I can convince him that it is a motor bicycle he will appreciate that it should bear Purchase Tax at the lower rate.
The arguments which I would adduce to demonstrate that it is a motor bicycle are precisely those which any hon. Member would use in arguing that a motor cycle and sidecar constitute a motor bicycle. It does have a motor bicycle engine, it is taxed for Road Fund purposes at motor cycle rates and it sells in the motor cycle market. It is exhibited not at motor car exhibitions but at motor cycle exhibitions. But unfortunately, by virtue of a very unfortunate decision by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), when Chancellor of the Exchequer, it has been treated for purchase tax purpose as a motor car.
I ask the present Government to redeem their dreadful failure about Purchase Tax on textiles by taking some action in this matter. Here is a machine which in its manufacture does not call for skilled labour. There is serious unemployment in Lancashire and in Preston, and if the Purchase Tax could be reduced on this vehicle I am assured that we could expand the home market considerably and bring costs down, which would enable us to increase exports to dollar areas. It 1523 would also provide employment for some unemployed textile workers and in fact solve some of the pressing problems which face the nation.
I would ask that serious consideration is given to this case, which I admit by my enthusiasm I am painting in the strongest way I can, but which none-the-less has genuine merit. I would ask that, in any consideration of the matter, the mere fact that a person sits alongside another person in a motor vehicle, should not make that vehicle a motor car, and that this admirable vehicle, which sells among people who are trying to decide between a motor cycle and sidecar and one of these vehicles, should have some of the Purchase Tax remitted.
§ Mr. Nabarro
Could the hon. Gentleman tell the Committee how these curious vehicles are taxed? Are they taxed as motor cars or as motor cycles?
§ Mr. Shackleton
They are taxed for Road Fund purposes as motor cycles but bear Purchase Tax as motor cars. There are obvious anomalies. I think it is necessary that these anomalies should be sorted out, and if the Financial Secretary will take this seriously he will meet for the first time the needs of Lancashire by giving direct encouragement to increasing employment in an area where there is today grave unemployment and distress.
§ Mr. Wilkins (Bristol, South)
I just want to say a few words to support my hon. Friend the Member for Southampton, Itchen (Mr. Morley) in what he has said about Purchase Tax on school stationery. I am very concerned about this particular matter, because one recalls that recently the Minister of Education apparently had an instruction to effect a 5 per cent. cut in education. In my constituency we have already had the suspension of the building of a new school, which will cause serious difficulties in the near future, because at the moment children from the adjacent area will not be able to gain admission to an adjoining school until the age of at least 5½ or later.
I make that point because I think it illustrates a possibility and opportunity for the Minister of Education to effect some saving if the Chancellor of the Exchequer would permit her to do so by 1524 removing the Purchase Tax on school stationery. We estimate, and I am speaking here on behalf of the Purchase Tax Joint Standing Committee of the Paper, Printing and Stationery Trades of the printing industry, that in education stationery supplies alone Purchase Tax to the value of £600,000 a year is paid. That is a very substantial sum of money, which could be used in other directions on education.
I now want to refer for a moment to what is a very serious matter for the printing industry. I understand that the Chancellor has been supplied with a memorandum on behalf of the industry, which quotes a number of the anomalies which have arisen. In passing, might I say that a difference of a quarter-of-aninch in the size of an envelope means the difference between paying Purchase Tax and not paying it. That is one anomaly, but at the moment our major concern is that we are finding ourselves unable to compete with competitors on the Continent.
I am trying—and I have the support of some of the Chancellor's hon. Friends in this—to see the President of the Board of Trade in order to make representations to him. We find ourselves in very difficult competition with printing firms in Europe, and especially in Holland. I do appeal to the Chancellor to give consideration to this very serious matter. Redundancy is with us already, so far as labour is concerned, and unemployment is showing itself; in the case of a firm in Paulton, Somerset, it has reached really serious proportions. We appeal for help for the industry before it is too late; before we lose a lot of trade to continental competitors.
§ Mr. Percy Holman (Bethnal Green)
On four occasions since 1945 I have pleaded, while sitting on the benches opposite, with former Financial Secretaries, for the remission of Purchase Tax on stationery. Two years ago, I was accused from my own benches of being too gentle with my own Chancellor. The reason was that about £20 million was involved in this tax; that was the figure given to me by the then Financial Secretary, and perhaps his successor tonight will say that the amount is now nearer £35 million, owing largely to the fact that paper has nearly doubled in 1525 price since de-control was introduced early in 1950. Perhaps I should be even more gentle in my remarks tonight.
Let me say at once, as I have said before, that I have no financial or other interest in the stationery trade; I have been in the stationery and printing industry for only part of my life, and am now only occasionally connected with trades using stationery. I do not use the arguments I have used previously—my hon. Friends have spoken eloquently in support of the reduction or abolition of this tax.
It may be said that it is impracticable to differentiate between educational and other stationery; but there is no necessity for that, because 95 per cent. of stationery is used in commerce and administration, and half of 1 per cent. could be saved on education estimates in paper used in schools and for school administration if this Clause were accepted. Ninety-five per cent. of this enormous revenue falls on the cost of production and distribution and on our export trade.
I warn the Government that the time is now near when they will have to look into this particular tax as a tax on production. As the buyers' market becomes more general in this country it will be essential to review every tax that falls specifically on production. Neither the home market nor the export trade can stand excessive taxation upon the products of our industry. Stationery taxation is becoming considerable. It will fall in the next 12 months because paper has started to fall in price from the excessive figures at which it stood in the earlier part of this year. But in addition to that this is a tax which is overwhelmingly a cost on production and on administration. Whatever Government is in power next year should give a high degree of priority for the consideration of its complete abolition.
§ Mr. Blackburn
I am sure that the Financial Secretary will agree that there are many anomalies in the present scheme of Purchase Tax and that the whole system requires thorough investigation. Tonight the argument has ranged from Minicars to industrial scissors and cutlery and I want to add my word to those arguments about educational and commercial stationery, because this is not only a charge upon industry but also a 1526 charge which the Government has to meet in its expenditure, directly or indirectly.
Every year, when there are Parliamentary, county and municipal elections, £40,000 is paid in Purchase Tax for voting papers and poll cards quite apart from tax paid on other stationery in the elections. I have had a Question down to the Treasury for some days—I know they are very busy with the Finance Bill—which I thought might have provided me with the answer I want, namely, the amount paid directly or indirectly so that these figures could be used tonight.
Examples have been given of the effect of the anomalies in the tax on stationery. I should like to quote one which shows very clearly how Purchase Tax on educational and commercial stationery needs looking into. A sheet of paper more than 13½ in. by 17 in. sold flat or loose is not taxed. The same paper sold in a roll or packed as shelf-lining paper is taxed 66⅔ per cent. the same paper sold as sandwich wrapping is tax-free. The same paper sold in a roll as ceiling lining paper is taxed 33⅓ per cent.
I am sure that the Financial Secretary will agree that there is something wrong with a scheme which allows that sort of thing to exist. I am quite certain that he would not like me to bring forward again the argument about hats, but I hope that with regard to these anomalies the Treasury are having second thoughts on the whole position. Take these articles, for example. Boot and shoe laces, sewing and darning needles, knitting pins, bodkins, crochet hooks, thimbles and tape measures are all exempt from tax—but elastic is not. If the Financial Secretary has an accident and repairs are effected by a pin he does not pay Purchase Tax, but if he uses elastic he must pay tax upon it.
There are so many anomalies under Purchase Tax that I am sure the hon. Gentleman will agree that the scheme should be looked into very carefully with a view to removing some of them. The best way to remove the anomalies is to remove the tax itself. When Lord Simon introduced Purchase Tax he stressed that it was to reduce consumption. It has now become merely a matter of raising 1527 revenue. If we could return to a position where we had no Purchase Tax at all we should remove all the anomalies about which we have heard tonight.
§ Mr. A. Fenner Brockway (Eton and Slough)
I wish to raise two points about which I have been in correspondence with the Financial Secretary. The first concerns Purchase Tax upon educational equipment. We have heard about the burden of the tax upon stationery. I want to draw attention to the burden upon school furniture, and especially furniture in nursery schools. The argument is that some of that furniture can be used for domestic purposes as well, but we have the most absurd anomalies.
If a table is for one child there is tax upon it, but if it is a table for two children there is none; or it may be the other way about, but the anomaly is there. The argument is that in one case the table can be used for domestic purposes. I seriously urge the hon. Gentleman in this case to adopt the same method of rebate as in the case of war memorials. If we have a rebate for war memorials, why cannot we have one for furniture for the schools?
The other point concerns razor blades. I put this to the hon. Gentleman not only from the point of view of the consumers but particularly from the point of view of the small firms, largely engaged in the export trade, who suffer particularly because of the Purchase Tax upon their home sales and find it very difficult indeed to carry on.
§ Mr. Boyd-Carpenter
One of the most obvious features of Purchase Tax is its capacity to generate debate in this Committee. I have no doubt that in the course of the discussions on the Bill hon. Members have had considerable opportunities of discussing different aspects of it.
On this Clause the Committee has pursued a somewhat complicated and involved course. First, we had on the Order Paper a new Clause in the name of the right hon. Gentleman the Member for Battersea, North (Mr. Jay), designed to alter the general rates of Purchase Tax so as to reduce the 66⅔ per cent. rate to 50 per cent. and the 33½ per cent. rate to nil, Then, for reasons which the right 1528 hon. Gentleman explained to us, not unconnected with the rules of order, a different one was moved reducing the 66⅔ rate to 55 and the 33⅓ rate to 30.
That was a perfectly proper Parliamentary device in order to introduce a general discussion upon Purchase Tax. But its effect, as was indicated by the right hon. Gentleman, was that particular cases and particular rates only come within the terms of our discussion, in the hallowed words, "by way of illustration".
I think I should comment very briefly, first, on the Clause which, in form if not in substance, the Committee has been discussing for the last hour or so. The first version would have cost £200 million in the yield of tax. Even its altered and expurgated alternative would have cost £26 million. The right hon. Gentleman made it clear that hon. Gentlemen had very little desire—as it has become clear —to discuss that at all or seriously to press either version of the proposed Clause.
The right hon. Gentleman asked where were the proposals in this Bill in respect to this. I can answer that in this way. This year my right hon. Friend has concentrated on that part of the Purchase Tax which came within the old Utility scheme and is now covered by the D scheme. I am perfectly certain hon. Members are not complaining of not having adequate opportunity for discussion on that aspect. We have discussed it at full length. So far as Purchase Tax outside the Utility scheme is concerned, my right hon. Friend has not put forward proposals for dealing with it this year. I do not think any hon. Member has cause for complaint there. We have dealt in great detail and at great length with one part of the Purchase Tax. There have been occasions in recent years when the Budget Resolutions have been so drafted as to exclude discussion on Purchase Tax altogether.
I must deal with a number of hon. Members who have raised various specific points. Quite apart from this Finance Bill my right hon. Friend, in the course of his duties, keeps the whole of this complicated and difficult tax under revue. What hon. Members have said, therefore, in this debate, or any representations that have been made on other occasions, is carefully considered and my right hon.
1529 Friend does review these matters from time to time in order to avoid anomalies. I cannot, without going outside the rules of order, argue the case for each and every one of these specific items which, in the guise of illustration, have been discussed tonight. I have no doubt I should be going completely outside the terms of this new Clause and the rules of order generally. But I can perhaps, without incurring your displeasure, Sir Charles, make one or two general comments.
Probably the subject most frequently raised was that of the Purchase Tax on stationery. There are two particular points on that. In the first place the hon. Member for Bethnal Green (Mr. Holman) asked what was the yield. It is between £25,000,000 and £30,000,000. They are a very substantial item and a very appreciable part of the Purchase Tax revenue. A number of hon. Members raised the subsidiary aspect relating to Purchase Tax on stationery used in schools.
The problem which neither the last Government nor the present one has successfully solved in connection with Purchase Tax is any feasible method of determining liability to that tax by the test of the ultimate use of the article concerned. The purely practical difficulty is that many articles used in schools are used for other purposes, and it is not feasible to give immunity from the tax because it is alleged by the purchaser that a particular use will be made of articles. That general difficulty goes far wider than stationery, but it is one of the problems which has defied the ingenuity of successive Governments in their desire to make special adjustments in special cases.
§ Mr. Boyd-Carpenter
It would be an additional grant, and it seems to me there is no particular reason why it should be treated separately from the ordinary grants. That goes for rebates. As I understand, hon. Gentlemen were raising the question of immunity and not rebate.
On the constitutional point raised by the Member for Sheffield, Park (Mr. Mulley)—and I must not go into the details of the case of industrial scissors—I have that matter fairly well in mind. The point is not that tax was imposed 1530 by any outside body. All that arose was that on a Board of Trade interpretation of the Finance Act of 1948 it became quite clear that the facts relating to these scissors did not entitle them to the immunity given by Parliament under that Act.
The more special and detailed points which hon. Gentlemen have made will be recorded, of course, in HANSARD, and they will all be considered on their merits when the Chancellor comes to review this side of the Purchase Tax. But as I understand, as far as this particular Clause is concerned, its merits are not very seriously urged, and the object in putting it forward, as indicated by the right hon. Gentleman the Member for Battersea, North, was to enable some Purchase Tax points not previously aired in the debates on the Bill to be discussed.
§ Question put, and negatived.