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Duty-free Allowances

Volume 698: debated on Tuesday 22 January 2008

asked Her Majesty’s Government:

What plans they have to raise the duty-free personal travel allowance from £145.

My Lords, on 28 November 2006 European Union Finance Ministers agreed to raise the tax-free allowance for travellers entering the EU by air and sea to €430. This equates to about £290, which doubles the current allowance. However, the implementing EU directive was adopted only on 20 December 2007 and the earliest date that the increased allowance may be introduced is 1 December this year. The increase in the allowance will come into effect from that date.

My Lords, does the Minister recollect what the Chancellor of the Exchequer said in his 2005 Budget speech? He said:

“I have today written to the European Commission proposing that the tax-free limit on goods brought into the UK from outside the European Union should rise from £145 to £1,000”.—[Official Report, Commons, 16/3/05; col. 264.]

He repeated the proposal in his 2006 Budget, but did not mention it in his 2007 Budget. Will the Government at least undertake that a traveller from outside the EU who enters the UK through the green customs channel with up to £1,000 worth of goods, but who genuinely, if mistakenly, took Mr Gordon Brown’s Budget speech at face value, will not be prosecuted?

My Lords, that is an interesting proposal; but the noble Lord will recognise that we are governed not by ministerial Statements but by the law of the land. The Chancellor—now the Prime Minister—was putting forward a proposal for discussion in the European Community at the figure that the noble Lord identified, which was well suited to the United Kingdom. A number of other countries in the European Union took different views and it has taken this long to reach agreement.

My Lords, does not the Minister really mean that we are no longer governed by the law of this land, we are governed by Brussels? Does the Minister seriously think that the British people would have voted in 1975 to stay in what they were assured was a Common Market if they were going to have to put up with this sort of thing from Brussels a few years later?

My Lords, the first principle that any British citizen understands about the European Community concerns its relationship with non-members and the duties it imposes. That has been the case with economic unions since the year dot. It is scarcely surprising that membership of the European Union involves agreeing a position across the union as a whole with regard to these duties.

My Lords, my noble friend Lord Marlesford makes a very good point. Proposals made by the Chancellor of the Exchequer in a Budget Statement are not just any old aspirations—they have a much more important standing constitutionally, and always have done. Can the Minister remind us of a precedent for this extraordinary expression of an aspiration, twice, in successive Budgets? Furthermore, why did the then Chancellor not admit, in his subsequent Budget Statement, that he had been shot down?

My Lords, it is very odd to say that an aircraft has been shot down when it has landed safely with twice the benefits that obtained before it took to the air. Britain has achieved a doubling of the allowances. The noble Lord seems oblivious to that fact.

My Lords, will the Minister speculate on what goods the noble Lord, Lord Marlesford, has been trying to bring through customs, but which he has been unable to bring through without paying an exorbitant duty because the tax-free limit is only £145?

My Lords, relations between the Opposition parties are good enough for them to solve those kinds of problems themselves.

My Lords, we are entitled to have Budget Statements treated as important statements of policy by the Government, not mere aspirations subject to trading off in the European Union. Are the Government not ashamed of the way in which the Prime Minister has been using the Budget Statements?

My Lords, the Budget Statement has a very important role in British national life with regard to the economy. A large number of proposals in the Budget Statement are translated into the law of our land. But certain changes can only be effected through the European Community. This was clearly one. My right honourable friend indicated what he hoped would be the increase in the allowance. What was achieved was a doubling of the allowance—a highly satisfactory state of affairs.

My Lord, can the Minister explain why the change is taking so long to implement? Why could the new limits not be brought in on 1 July, for example?

My Lords, in Britain the issue did not have any relationship to any customs duties. But other countries had taxes on certain goods, including alcoholic beverages, that needed to be brought into line. It would be ridiculous for a state to have two tax regimes for the same goods. The duties had to be brought into line. It has taken this long for the European Community to reach agreement.

My Lords, does my noble friend recall Budget Statements made by the then Chancellor of the Exchequer in the early 1990s, when we were promised that the burden of taxation would be the lowest in western Europe? Did that actually happen?

My Lords, the country looked upon Budget Statements at that time as just a host of aspirations, never to be fulfilled.