Finance Bill (First sitting)

Debate between Holly Lynch and George Kerevan

Thursday 17th September 2015 Public Bill Committees

[Holly Lynch]

Thank you, Sir Roger. It is a pleasure to serve under your chairmanship. Thank you for your kind and thoughtful guidance, which is particularly useful to me and, no doubt, other new Members.

I rise to speak in support of new clause 3, and I encourage other Members to join me in doing so. I am mindful that there are European implications regarding VAT that we must consider, but I am certain that the European restriction on abolishing VAT on sanitary products is more oversight than intent. I have every faith that there will be support for addressing this injustice at a European level, and I urge the Government to investigate those possibilities. The new clause would give the Government 12 months, which would be ample time to conduct investigations.

There is huge public support for abolishing VAT on sanitary products. A recent change.org petition asking the Chancellor to look into the issue has reached nearly 250,000 supporters. The Prime Minister was asked what he would do about the issue by a student at the University of East Anglia in the run-up to the general election and he agreed to look into it again. We know that the new clause has cross-party support and would be well received by the electorate.

I am pleased that the new clause makes particular reference to women under 25. On average, girls need to start purchasing sanitary products at the age of 12. It should have as small a financial impact as possible. Girls at that age are inevitably in full-time education, so we need to ensure that what can be a big personal transition has a limited financial burden.

I found examples of bizarre VAT-exempt products, including alcoholic jellies, edible sugar flowers and exotic meats, such as crocodile and kangaroo. Perhaps most ironically of all, no VAT is paid on millionaire shortbread. [Laughter.] We can all have a giggle about some of those bizarre contradictions, but what an insult to women and girls they are. It is a travesty that tampons and sanitary towels have ever been deemed luxury purchases. They are necessities for millions of women. I hope the Government will do the right thing in considering the new clause.

[George Kerevan]

I am mindful of the fact that we have got another 48 clauses, so I will try to be brief—which is difficult for me. There are particular issues about the VAT lock that have to be put to the Minister.

VAT income to the Treasury is notoriously variable because VAT is a tax on consumption. It varies with the business cycle because it is a consumption tax. Unfortunately, in clauses 1 and 2 the Government are introducing the new doctrine that major taxes, including VAT, will be set once every five years at the start of each Parliament. I presume that in the Government’s mind the tax lock will exist in perpetuity and will be set at a different level every time we elect a Government. They are decoupling the raising of revenue—the revenue function of the Government and the Treasury—from the business cycle. As the business cycle goes up and down, income to the Treasury will go up and down independently of when we set tax rates—particularly VAT.