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Purchase Tax (Gas And Electrical Appliances)

Volume 436: debated on Tuesday 15 April 1947

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I have two more unpleasant topics to touch upon in the field of taxation. In my first Budget, a few months after the end of the war, I took the Purchase Tax off a number of domestic cooking and heating appliances. At that time, everybody welcomed it. No one opposed it, in any part of this House. Indeed, I was pressed to extend the exemptions more and more widely, to include, among other things, electric irons and electric washing machines. [An HON. MEMBER; "Electric chairs?"] I am sure the Committee would wish me to admit them, along with the other articles, in order to yield a little revenue with an accompaniment of justice. At that time, everyone welcomed the concession; everyone pressed for more. The gift of foresight is sometimes denied, not only to Ministers of the Crown and Members of Parliament, but to the whole community. Lord Baldwin once said, in another connection, that "We were all wrong." So we were. It is quite clear we were all wrong—all of us—about these electrical appliances.

In present circumstances, the exemptions can no longer be justified. Most of these appliances make heavy demands on the public gas and electricity services, where the effect of the fuel shortage is most acute and the need for economy most urgent. I propose, therefore, to bring them all back under the tax at the rate of 66?, per cent.—on new articles, of course; anybody who has got an electric iron is all right. The tax will be 66? per cent. of the wholesale value. This is a new rate of duty intermediate between the maximum rate of 100 per cent., which now operates in some cases, and the 33⅓ per cent. rate, which is the rate most widely imposed. I propose also to tax at the same rate of 66⁔ per cent. a further group of gas and electrical appliances. some of which are at present exempt and others taxed at 33⅓ per cent. I will not weary the Committee with the full definition of the articles, which will be found in the White Paper; but among the appliances which will not be affected will be lighting appliances, wireless sets. and electric clocks.

These increases will apply to goods delivered by registered manufacturers and wholesalers to retailers from tomorrow. This is an unpleasant, but a necessary, method of fuel economy. I hope it will also lead to a considerable increase in the export of these articles, which, I am sure, will be much appreciated by persons resident in other parts of the world. The additional revenue from these increases of Purchase Tax will be about £18 million in a full year, and about £13 million this year. The Purchase Tax concession which I mentioned earlier will cost about £2,500,000 in a full year and £2 million this year. On Purchase Tax as a whole, therefore, there will be a net gain to the Exchequer of about £15,500,000 in a full year and £1t million this year.