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Refund To Diplomatic Missions, Etc, Of Vat On Importation Of Hydrocarbon Oil

Volume 887: debated on Tuesday 4 March 1975

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9.30 p.m.

I beg to move, Amendment No. 327, in page 3, line 23, after 'provisions', insert

'(but only in respect of such countries as the Secretary of State for Foreign and Commonwealth Affairs shall certify as offering reciprocal alleviation of taxation to British diplomatic and consular staff)'.

With this we are taking Amendment No. 331, in page 3, line 31, at end insert

'but the Commissioners shall not make any payment by virtue of the words so inserted before such date as may be specified by directions of the Treasury embodied in a statutory instrument which shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament'.

This is one of the few amendments which save public money instead of spending it. The Government propose a VAT drawback for diplomatic missions. The amendment seeks to confine that tax drawback to diplomatic missions from countries which make a reciprocal concession to British diplomatic and similar bodies.

The proposal is entirely reasonable on two grounds. First, it gives other countries an incentive to provide reciprocal tax drawbacks for British missions. Secondly, it limits the value of the concession.

At a time when we suffer from a plethora of international bodies, all claiming tax exemption, exemption from rates, and so on, we should discipline our enthusiasm for giving relief by limiting it to countries which the Secretary of State for Foreign and Commonwealth Affairs certifies as offering reciprocal alleviation of taxation to British diplomatic and consular staff.

The matter needs no further elucidation; it is entirely clear. Whether it recommends itself to the Government, which should welcome an amendment which reduces public expenditure, we shall doubtless shortly hear.

As no one has spoken to Amendment No. 331, which stands in the name of the official Opposition, the House will understand if I address my remarks solely to Amendment No. 327.

I assure the hon. Member for Tiverton (Mr. Maxwell-Hyslop) that the principle he puts forward is already well recognised and taken care of. He seeks to secure that relief from VAT shall be limited to countries which afford reciprocal privileges to diplomats in this country. That principle is already recognised in the two main enactments. Section 3(1) of the Diplomatic Privileges Act 1964 provides for restrictions on privileges and immunities by Order in Council in any case where a foreign country affords lesser privileges to members of a United Kingdom mission stationed there than those which are conferred by the United Kingdom on officials of that country stationed here. Section 2 of the Consular Relations Act 1968 provides similarly. On that basis the hon. Gentleman may be assured that what he seeks to provide against is already covered.

Before the hon. Gentleman sits down, can he tell us about subsection 5(b), dealing with the International Organisations Act, because international organisations seem to be multiplying even faster than sovereign States?

I deliberately did not refer to international organisations because it seemed to me that the hon. Gentleman's amendment did not purport to deal with that problem. As drafted, it leaves their position totally unclear. As far as I can understand, the question of reciprocity does not arise with international organisations. They do not extend any relief of this sort to us. If the hon. Gentleman has any specific examples in mind that have escaped my imagination I would be grateful to hear from him.

Amendment, by leave, withdrawn.