Finance (No. 4) Bill

Barry Gardiner Excerpts

Monday 16th April 2012 Commons Chamber

[Charlie Elphicke]

Aid charities have made the case that corporations headquartered in the UK should be paying more tax overseas. That is not our job. Our job is to secure our own tax base in the UK. That is what I want to focus on, and it is what the previous Government totally failed to do over many, many years. If we put a stop to it and raise the due amount of tax from companies not resident in the UK with anti-avoidance measures and proper tax reform, we could have lower fuel duties for hard-pressed families and a lower basic rate of tax—and goodness knows we could even pay down some more of the debt that the previous Government shockingly, disgracefully saddled this country with.

I hope that the anti-avoidance measures in the Bill will be widened in the following way: the first principle is that business tax rates should be low, simple and attractive. Britain should be open for business, but open for business on a level playing field for national and international companies. Businesses should have a social responsibility to pay a fair share of tax. Some object to the idea of morality in the tax system, but this is an issue of corporate social responsibility. Tax avoidance should be dealt with firmly and rules changed to stop the avoidance. I shall come to specific measures in a moment.

For many years, the European Union has consistently and systematically sought to undermine our tax base in its pursuit of a common corporation tax base. We need the EU to support member states in protecting tax revenues rather than undermining them with so-called anti-discrimination rules.

[Barry Gardiner (Brent North) (Lab)]

Could the hon. Gentleman enlighten the House as to his view of the patent box? The Chancellor first mentioned it in last year’s Budget—I think—although it was Lord Mandelson who introduced the concept in the first place.

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[Mrs Anne McGuire (Stirling) (Lab)]

It is a pleasure to follow the hon. Member for Dover (Charlie Elphicke). I am always interested to hear people say that they are a poacher turned gamekeeper, because I always want to know what they did when they were a poacher. The hon. Gentleman laudably admitted that he was a tax lawyer, and it would be interesting to know whether, in giving people professional advice, he ever recommended that they set up tax-efficient systems for managing their taxes. I point out to him that, in more than 15 years in this House, I never once heard a Conservative Member ask the Labour Government to do anything about tax avoidance rules. There is too much piety among Government Members as they try to suggest that we wilfully ignored the matter of tax avoidance. I hope the hon. Gentleman will reflect on what his party was doing during those 15 years, while he was being a poacher, not a gamekeeper.

[Barry Gardiner]

If my right hon. Friend looks at all the Budget measures put through by the Labour Government, she will see that the average figure achieved by each measure to clamp down on tax avoidance was £1.8 billion. The most that this Government have managed is £0.8 billion.

[Mrs McGuire]

My hon. Friend the Member for Leeds West (Rachel Reeves) dealt ably with that point earlier today, and I am delighted that my hon. Friend the Member for Brent North (Barry Gardiner) has echoed her comments.

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[Jacob Rees-Mogg]

I agree with my hon. Friend that VAT is a tax of immense complexity. However, it is an essential tax for the revenue-raising that this country needs and it has to include in it things that all of us like and would rather not be taxed. Equally, it will include things that some of us do not like, do not particularly wish to eat and do not mind how heavily taxed they are. If I am put the question, I would choose a sausage roll over a pasty, but I know that others have different views.

I also want to mention briefly the freezing of the threshold about which the right hon. Member for Stirling (Mrs McGuire) spoke interestingly. Again, the Government were right. Because the big step is being taken to raise thresholds altogether, it makes absolute sense, at no cash cost to any current pensioner, to freeze this level and allow it to even out so that we have one threshold. Every time we have variance in tax levels, be they rates or thresholds, we simply employ more people at Her Majesty’s Revenue and Customs, we have a more expensive cost of collection and we fail to achieve the objective of simplicity across the tax system.

This has been a great Budget and I wish to finish by speaking briefly about this terrible question of tax avoidance. I agreed with my hon. Friend the Member for Dover (Charlie Elphicke) when he cited that notable judge with his phrase about allowing the taxman to take the biggest shovel. If people avoid tax, that is legal because we, as Parliament, have allowed them to do so. The following clauses in part 1 of the Bill allow legal tax avoidance: 13, 14, 15, 16, 19, 20, 38, 39, 40 and 44. All those clauses in the first 50 allow tax avoidance of which the Government approve. We will all approve of some of them, because they allow MPs £30,000 tax free when they leave Parliament, allow cars that must be made secure because people are at risk to be tax free and allow people in particular situations and circumstances to pay less tax than they would in normal circumstances. The enterprise initiatives under clauses 38, 39 and 40 allow investment that the Government want to encourage. Those are all examples of tax avoidance that is liked by the Government.

We have to be fair to taxpayers. We can only expect them to follow the law of the land as it is written—the black letter law of the land. We cannot expect taxpayers to look at their affairs and say that the Government might like them, if they are feeling kind, to pay more tax than they are being asked for. None of us has an obligation to do that and it is wrong and dangerous to elide tax avoidance and tax evasion.

[Barry Gardiner]

Does the hon. Gentleman therefore disagree with the Chancellor, who said on Budget day that he wanted the approach to be applied not simply according to the black letter of the law, as the hon. Gentleman puts it, but according to the spirit of the law?

[Jacob Rees-Mogg]

I do not believe that the law has a spirit; that is unduly philosophical for my view of tax law. Tax law is what Parliament passes and I have grave doubts about a general anti-avoidance principle. I do not think that we can reasonably expect people to pay tax on the basis of what Parliament might want, as they can only do it on the basis of what Parliament has passed into law. To undermine that is to undermine the rule of law on which we all depend, and it is fundamentally unjust to elide tax avoidance and tax evasion.

Although I know that I have unlimited time and that people are gathering for the excitement that the winding-up speeches hold in store, let me reiterate that this is a great Budget and a good Finance Bill. The criticisms have been fundamentally trivial but the basic point is that we will have—as Tories always have and as they always have had when they have come in after Labour Governments—sound money.