To ask the Chancellor of the Exchequer if he will make a statement on the criteria his Department applies in respect of the operation of the Value Added Tax Act 1994, section 33. [4617]

[holding answer 20 June 1997]: The chief criteria which apply to the operation of section 33 of the Value Added Tax Act 1994 are that VAT should not fall as a burden on local taxation, and that local authorities should not bear tax on activities they are specifically required by statute to undertake.

To ask the Chancellor of the Exchequer if he will undertake to review the decision to refuse the Scottish Environment Protection Agency an exemption in terms of the Value Added Tax Act 1994, section 33; and if he will make a statement. [4618]

[holding answer 20 June 1997]: SEPA has no power to precept on local taxation, and therefore does not meet one of the main criteria for bodies relieved by section 33 of the Act. The VAT position of SEPA and similar bodies is taken into account when setting levels of public expenditure in Scotland.