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Purchase Tax Reductions

Volume 436: debated on Tuesday 15 April 1947

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I turn to the Purchase Tax, In both my previous Budgets, I have lightened the burden of the Purchase Tax. But I cannot go much further along this road today. The Purchase Tax falls only on goods sold in the home market; it does not fall on exports. Therefore, any reductions or remissions in the Purchase Tax discourage exports proportionately, and we cannot afford such discouragement just now. There are many things which we would like to keep for ourselves, but which we must send abroad, to pay for our own food, raw cotton and the like. But, I can do just a little. I have recently agreed with the President of the Board of Trade that silk stockings—I am told they are very good silk stockings—should be added to the very wide range of tax-free utility clothing. This will not require new legislation and will not, therefore, be included in the Budget Resolutions. I am told that these stockings will be in the shops before very long, and that they will give every satisfaction. I propose to reduce the Purchase Tax of 33⅓ per cent. to the minimum rate of 16⅔ per cent. on linoleum, and similar floor coverings which are much needed just now. This reduction should help the housewife, and all holders of priority dockets issued by the Board of Trade.

I should like to do something more this year for the young and active members of the community, and those not yet too old to take vigorous exercise I propose, therefore, to reduce the tax from 33⅓ per cent. to 16? per cent. on sports requisites for football, cricket, hockey, boxing and rowing. I was much impressed by the keenness with which Members pressed the case for reduction for sports gear last year. I regret that I cannot go further than the list I have mentioned today, because I must maintain the present rate of tax on many sports articles which are very good export lines. This applies particularly to golf, and tennis. I am told that many sports requisites are very good export lines indeed, and we must not stand in the way of the export trade. I hope and believe that the reductions I have proposed will be welcomed by those who play these games, and just as my last Budget contained a reduction of Entertainments Duty for the benefit of British sport, I am happy that this year's Budget should contain a second concession on behalf of the young and active.

Finally, the Budget Resolutions will provide for a number of small miscellaneous reductions in Purchase Tax. Dental sticks, razor strops and sharpeners will be reduced from 100 per cent. to 33⅓ hot water bottles—[ Laughter]—we want to look after the old as well—and certain other articles of domestic chinaware, will be reduced from 33⅓ per cent. to 16⅔ per cent.; and water filters, now taxed at 33⅓ per cent., will be completely exempt. I am also making an order to exempt from Purchase Tax certain special kinds of heavy cloth used in mechanical plant.

Full particulars of these changes, including precise definitions of the articles concerned, of which I have only mentioned some, will be found in the White Paper. The new rates provided for in the Budget Resolutions will apply to goods delivered by registered manufacturers and wholesalers to retailers from tomorrow, and as soon as retailers' existing stocks have been cleared, the price of new supplies should reflect the tax reductions. The exemption of utility silk stockings has been taken into account in my calculation of the yield of Purchase Tax on the existing basis. It will cost £1,250,000 in a full year, and £1 million this year. The cost of the other Purchase Tax concessions is £2,500,000 in a full year, and £2 million this year. Therefore, summing up on Customs and Excise as a whole, I propose tax reductions to cost £9 million in a full year, and £8 million this year.