Hate Crimes
Debate between Lord Leigh of Hurley and Baroness Penn(2 months ago)
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Baroness Penn (Con)
My Lords, we have seen an increase in reporting and recording of hate crime over the last decade or so. There has been a small decrease in the last year, but, overall, that is partly reflective of the fact that we have put additional efforts into encouraging people to come forward. That includes through supporting charities such as the Community Security Trust but also Tell MAMA, which we fund, which is an organisation that focuses on anti-Muslim hatred and provides a different route by which people can report crimes and incidents and then get the appropriate support.
Lord Leigh of Hurley (Con)
My Lords, I refer to my entry in the register of interests, which discloses that I am president of Westminster Synagogue. This Saturday, we had 20 policemen and four vans to protect us as a demonstration went past Knightsbridge. Does my noble friend agree that these demonstrations, with anti-Semitic slogans and rhetoric calling for genocide against the State of Israel, need to be controlled and curtailed so that British Jews can once again feel safe and secure in the streets of London?
Baroness Penn (Con)
My Lords, I think my noble friend’s experience bears out the statistics that we saw announced by the Community Security Trust last week, showing the highest number of reported anti-Semitic incidents on record in 2023, with the majority of these being reported from 7 October. There is no place on British streets for demonstrations, convoys or flag-waving that glorify terrorism or harass the Jewish community, and we will work closely with the police, who we urge to step up patrols and use all available powers to enforce the law.
Finance (No. 2) Bill
Debate between Lord Leigh of Hurley and Baroness PennTuesday 4th July 2023
(9 months, 4 weeks ago)
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Baroness Penn (Con)
The noble Baroness is exactly right. The increase in the headline rate of corporation tax makes a significant contribution to our public finances and to the consolidation of our public finances after Covid. All I meant to say is that, for some of the reasons set out by the noble Baroness, we have been able to exempt smaller businesses from that increase while also ensuring that bigger businesses—which often benefited a large amount from government support put in place during the pandemic—contributed their share to returning our public finances to a sustainable footing.
The noble Lord, Lord Sikka, also asked why HMRC’s budget had been cut. HMRC will receive a £0.9 billion cash increase over the Parliament, from £4.3 billion in 2019-20 to £5.2 billion in 2024-25, so I do not quite recognise the picture that the noble Lord has put forward. HMRC’s budget includes funding to tackle avoidance, evasion and other forms of non-compliance, to deliver a modern tax system and to support a resilient customs border.
I turn to another area of tax, the energy profits levy, which, I remind noble Lords, has helped to pay a significant proportion of households’ and businesses’ energy costs through the support that we have been able to provide. I want to be clear to noble Lords that the allowances in place are not a loophole. The OBR’s latest forecast is that the EPL will raise just under £26 billion between 2022-23 and 2027-28, inclusive of the EPL’s investment allowances. That is on top of £25 billion over the same period from the permanent regime for oil and gas taxations, totalling around £50 billion.
Abolishing the investment allowance would be counterproductive. The UK is still reliant on oil and gas for its energy supply and will be for several years; reducing incentives to invest would lead to investors pulling out of the UK, damaging the economy, causing job losses and leading to lower tax revenue in future.
My noble friend Lord Leigh asked about the impact of the price floor and the Government’s long-term plans for energy security. By introducing the energy security investment mechanism, the Government are providing certainty about the future of the energy profits levy. This allows companies to invest confidently in the UK and supports our economy, jobs and energy security.
On the long-term fiscal regime for oil and gas, the Government are also conducting a review to ensure that the regime delivers predictability and certainty, supporting investment, jobs and the country’s energy security. I wonder whether that predictability and certainty would be covered in Labour’s review of business taxes. I do not think the oil and gas sector sees predictability and certainty in its policy approach in recent weeks.
I turn to the electricity generator levy. Unlike the EPL, this not a tax on total profits that is calculated after the recognition of total revenues and costs. Instead, the EGL is payable only on the portion of revenues that exceeds the long-run average for electricity prices. The Government took into account the potential impact on investment when setting the benchmark price.
The Government are supporting renewables deployment through a range of policy levers, including the contracts for difference scheme, through which generators have received almost £6 billion net in price support to date. The electricity generator levy will not be payable on renewable generation produced under contracts for difference, which is the Government’s main form of support for green energy and will account for most new large renewable generation.
I turn to the point raised by the noble Lord, Lord Livermore, on non-doms. The Government recognise that issues of taxation come down to fairness. We need to have a fair but internationally competitive tax system which brings in talented individuals and investment that contribute to growth. Reforming the non-dom regime could potentially damage the UK’s international competitiveness, leading to a loss of international investment and talent. There is a great deal of uncertainty over the wider economic impacts of complete abolition.
Non-doms play an important role in funding our public services through their tax contributions. They pay tax on their UK income and gains in the same way as everyone else, and they pay tax on foreign income and gains when those amounts are brought into the UK. The latest information shows that that non-UK domiciled taxpayers are estimated to have been liable to pay almost £7.9 billion in UK income tax, capital gains tax and national insurance contributions in 2020-21 and have invested over £6 billion in the UK using the business investment relief scheme introduced in 2012.
Lord Leigh of Hurley (Con)
On another point of clarification, is my noble friend saying that HM Treasury’s calculations are that, if the reliefs that apparently exist for non-doms were withdrawn, as has been suggested elsewhere, there would be a net loss to Treasury revenue, given the mobile nature of such non-domiciled persons?
Baroness Penn (Con)
I am saying that that is most certainly a risk. There is a high amount of uncertainty about the impact of any changes in that area, and it would not necessarily lead to an increase in revenue, as is being relied upon by the Labour Party.
Income Tax Threshold
Debate between Lord Leigh of Hurley and Baroness Penn(9 months, 4 weeks ago)
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Baroness Penn (Con)
I reassure the noble Baroness that the income tax system is still highly progressive: the top 5% are projected to pay nearly half of all income tax in 2023-24 and the top 1% are projected to pay more than 28% of all income tax. The noble Baroness is right that those on middle incomes are feeling the squeeze; that is why we are absolutely focused on supporting the Bank of England in its mandate to get inflation down.
Lord Leigh of Hurley (Con)
Does my noble friend agree that the one tax that goes up because of inflation is receipts from inheritance tax? The latest figures show that inheritance tax receipts grew by 14% last year. As the noble Baroness, Lady Kramer, has pointed out, people are dragged into the fiscal net who were never intended to pay inheritance tax on their estates—which are essentially quite modest family homes. Is there not an urgent need to address the threshold rates for inheritance tax?
Baroness Penn (Con)
Since 2010, we have introduced additional allowances for people in certain circumstances to pass on up to £1 million to their direct descendants. Inheritance tax makes an important contribution to our public finances, so any changes in that area would need to be properly funded.
Energy Profits Levy
Debate between Lord Leigh of Hurley and Baroness Penn(1 year, 2 months ago)
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Baroness Penn (Con)
The noble Baroness will know that the tax regimes for the two sectors are quite different. Oil and gas already has a specific tax regime that is higher than for electricity generators, which pay normal levels of corporation tax. This levy is on top of that for their profits related to the price for gas, which were unforeseen when they were making their investments. I agree that we need more support for investment in renewables. The Government have committed £30 billion towards our domestic green industrial revolution over the coming years.
Lord Leigh of Hurley (Con)
My Lords, in the debate on the Finance Bill, I raised the concern about the unintended consequences of the energy profits levy. Now that a little time has elapsed, has the Treasury had the opportunity to assess the impact particularly on independent, smaller oil companies? They have said that they no longer have the certainty and cash flow to make the same investment in the UK as they thought they would do previously, which will lead to an uneconomic and environmentally unfriendly increase in imports of oil and gas.
Baroness Penn (Con)
I can reassure my noble friend that the Government have been engaging with the sector, including independent, smaller oil and gas companies. We have included the investment allowance precisely to try to strike the right balance between funding cost of living support while encouraging investment to improve our energy security. My noble friend is right that we should look at the carbon intensity of production here in the UK versus the carbon intensity of importing gas from elsewhere.
Economic Downturn
Debate between Lord Leigh of Hurley and Baroness Penn
Baroness Penn (Con)
The Bank of England’s independent Monetary Policy Committee said in its recent report that the vast majority of the increase in inflation over the past year reflects the impact of sharp increases in global energy and tradeable goods prices. On increases in energy prices, we have introduced the energy profits levy, and more than the amount that will be raised through that levy is being returned to households through our cost of living support.
Lord Leigh of Hurley (Con)
Does my noble friend agree that the great success in this country of the unicorns—greater than that in Germany, France and Israel combined—could be enhanced with the relaxation of the EU state aid rules, particularly on EIS and SEIS companies?
Baroness Penn (Con)
My noble friend is right that the UK remains a great place to start a business and we will always want to make sure that our tax regime is incentivising businesses to start here. I am sure that he would agree that measures such as the super-deduction are a great initiative to help support that.
Enterprise Investment Schemes
Debate between Lord Leigh of Hurley and Baroness Penn
Lord Leigh of Hurley (Con)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I draw your Lordships’ attention to my register of interests, which includes investments in EIS companies.
Baroness Penn (Con)
My Lords, the Enterprise Investment Scheme and Seed Enterprise Investment Scheme are world-leading in their generosity, with more than £2 billion of funds raised across the schemes in 2019-20. They provide a range of reliefs for investment in small and growing companies with a permanent establishment in the UK. The Government keep the schemes under review to ensure that they continue to meet their policy objectives in a fair and effective way.
Lord Leigh of Hurley (Con)
I welcome my noble friend back to the House. The EU state aid rules, in particular the risk finance guidelines, are the reason why these important incentives for small and growing businesses are restricted. For example, they cannot be more than seven years old, there is a sunset clause and there is a cap on SEIS investments. Many restrictions were imposed on business by the EU, so now is the time for us to unwind them—particularly those that will facilitate investment into private companies by private individuals. Will my noble friend agree to facilitate a meeting between me and others interested in this area with Treasury officials to discuss this matter further?
Baroness Penn (Con)
My Lords, the schemes referred to by my noble friend are targeted at new and younger companies where asymmetry of information can make it difficult to attract the investment needed. However, we recognise that there is a scale-up gap in the UK, which is why we have other schemes, such as the British Patient Capital scheme, to support UK companies with high growth potential. I will happily take my noble friend’s request back to the Treasury, which is always looking at what more it can do to support British business.
G7 Global Tax Agreement
Debate between Lord Leigh of Hurley and Baroness Penn
Baroness Penn (Con)
My Lords, I emphasise again that the G7 agreement was a really important milestone in progressing this international work on tax. It is only the first step towards that agreement, and there is much more detail to be worked on. The next step will take place at the G20 next month, when more details will be discussed with a wider range of countries.
Lord Leigh of Hurley (Con)
I will pick up on the point made by the noble and right reverend Lord, Lord Harries. While we all welcome the progress made, does my noble friend not agree that companies, such as Amazon in particular, will generate less than a 10% margin, mainly due to their monopolistic position, therefore avoiding the tax? Would it therefore not be sensible to retain the digital services tax and beef it up so that the tax cannot be passed on to suppliers, as is currently the case, and more importantly so that profits made on goods sold outside the marketplace are also fairly taxed?
Baroness Penn (Con)
My Lords, I cannot comment on individual companies. As part of the further work we are doing, we are considering how pillar 1 will apply to groups that have different activities and business lines, some of which may meet the scoping criteria and some of which may not. Pillar 1 is designed to respond to concerns around international tax rules not adequately dealing with digital businesses generating profits in countries where they do not have physical presences. Online sales businesses are not necessarily within that. We recognise the concerns about tax treatment of online retailers; that is why we are doing other work across the tax system, such as the fundamental review of business rates. In the call for evidence we asked about the scope and potential impacts of an online sales tax, for example.
New Businesses: Capital Gains Tax
Debate between Lord Leigh of Hurley and Baroness Penn(3 years, 3 months ago)
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Lord Leigh of Hurley (Con)
My Lords, I beg leave to ask the Question in my name on the Order Paper and, in so doing, draw your Lordships’ attention to my interests as disclosed in the register.
Baroness Penn (Con)
My Lords, in July 2020, the Chancellor commissioned the Office of Tax Simplification to examine and provide recommendations on how to make CGT as simple and efficient as possible. The Government are now considering this report and its recommendations. Any changes to the tax system will take place at a fiscal event and be informed by appropriate analysis of the impact on those affected by such changes.
Lord Leigh of Hurley (Con)
I am sure my noble friend the Minister will agree that, while we all want tax to be as simple as possible, one has to recognise that capital gains tax is different from other taxes: it is to reward capital that is invested and is at risk. The Laffer curve for capital gains tax is different from the curve for income tax, and we need entrepreneurs, particularly serial entrepreneurs, to start new businesses in the UK.
Tax Avoidance: Base Erosion and Profit Shifting
Debate between Lord Leigh of Hurley and Baroness Penn
Baroness Penn (Con)
My Lords, I can make that commitment. By their very nature, these proposals will benefit low-income countries by expanding their tax rights and reducing the incentive to shift profits away from such jurisdictions. As I outlined in my previous answer, the Government are also committed to putting resources behind capacity building to ensure that low-income countries can also benefit from these measures.
Lord Leigh of Hurley (Con)
My Lords, I welcome this extremely important Question. We have discussed pillar 1 before in this Chamber. My noble friend is aware of my views that the digital services tax is not working. The pillar 2 blueprint was published a few weeks ago. Although it is complex, it has four concrete proposals to ensure that international companies pay the minimum level of tax. One of these, the subject to tax rule, looks the most effective, as it encourages withholding tax. Can the Minister assure the House that the Government will support this?
Baroness Penn (Con)
My Lords, I assure my noble friend that pillar 1 remains the UK’s number one focus, partly so that we can achieve a multilateral agreement to replace the digital services tax, which was intended to be only temporary. We also recognise that a global solution will need to include outputs on pillar 2. We are working to ensure that these proposals, including the one referred to by my noble friend, are balanced and appropriately targeted, and have the support of all those involved in the negotiations.
VAT Retail Export Scheme
Debate between Lord Leigh of Hurley and Baroness Penn
Lord Leigh of Hurley (Con) [V]
My noble friend the Minister might want to read the CEBR report again, because it is based on Global Blue’s research and those assumptions have been verified. However, will she consider focusing on high-spending visitors? Twenty per cent of users are responsible for around 50% of all tax-free shopping, and the highest 1% of spenders spend an average of £60,000, saving themselves £12,000. Those people will choose to go to cities other than London such as Paris. Therefore, will she consider postponing the scheme for high-value purchases while further research is undertaken in a post-Covid environment?
Baroness Penn (Con)
My Lords, of course purchasers can still benefit from the Shop & Ship method of VAT-free shopping. In addition, research from VisitBritain shows that cultural attractions remain the key motivation for visiting Britain, followed by the variety of places to visit. Tax-free shopping does not appear as one of the reasons in that research.
Inheritance Tax
Debate between Lord Leigh of Hurley and Baroness Penn
Baroness Penn
My Lords, the Government keep the tax system under review and any changes made are taken in consideration of economic competitiveness, levelling up growth across the UK and their impact on individuals and businesses. However, I am not aware of any active consideration of the APPG’s proposals.
Lord Leigh of Hurley (Con)
My Lords, IHT is an iniquitous tax and the noble Lords, Lord Palmer and Lord Wood, have a point, although full disclosure of any schemes has to be made in box K of IHT 100. Will my noble friend the Minister consider taking a look at the two major loopholes? The first is the definition of “business” within BPR and the second is the exemption for non-doms of non-UK assets?
Baroness Penn
My Lords, under the definition of businesses, certain criteria must be met in order to qualify for the exemption. It is restricted to trading businesses which provide goods and services and is not available to those dealing either wholly or mainly with securities, stocks, shares or land.