David Gauke
Main Page: David Gauke (Independent - South West Hertfordshire)Department Debates - View all David Gauke's debates with the HM Treasury
(9 years, 4 months ago)
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Mr Iain McKenzie (Inverclyde) (Lab)
3. What recent estimate he has made of how much the reduction in the additional rate of income tax to 45% is worth for a person earning £1 million a year.
The Financial Secretary to the Treasury (Mr David Gauke)
The cost of reducing the additional rate of income tax to 45% is estimated at about £100 million a year. That is set out in table 2.2 of Budget 2013. We have not broken down the impact by income ranges, because there is a significant behavioural response associated with the additional rate of income tax. That behavioural response is estimated in aggregate and reflected in the costing.
Mr McKenzie
Christmas is coming and it is a time for giving, but the truth is that this Government have been giving to millionaires for some time. The average tax cut to millionaires is worth £100,000 a year. Will the Financial Secretary confirm that that figure for the Government’s tax giveaway to millionaires is correct? How many of my constituents in Inverclyde have benefited from that reduction in tax?
Mr Gauke
What is a fact is that the proportion of income tax paid by the top 1% for the years since the 50p rate was cut has in every year been higher than in any of the years in which the 50p rate was in operation. It is this Government who have made changes to stamp duty land tax—that was just last week—and to capital gains tax, and who have dealt with reliefs and exemptions, to ensure that the wealthiest play a greater share than they have in the past.
Steve Baker (Wycombe) (Con)
Is it not the truth that people are able to change their behaviours to reduce their tax liabilities, and is it not the case that if the Government want to raise more from the wealthiest, it is necessary to lower the rate to a point where it encourages them to earn and to pay?
Mr Gauke
As I said a moment or so ago, in the two years since the 50p rate was reduced to 45p, a greater share has come from the top 1% than in the previous three years. There is a lesson to be learned there. It is probably the reason why the previous Labour Government had a 50p rate for only 35 days out of their 4,758 days in office.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
Will the Minister rule out a further cut to the additional rate of income tax for the top 1% of earners? Will he rule out another tax cut for millionaires?
Mr Gauke
The priority of the next Conservative Government will be increasing the personal allowance to £12,500, and the rate at which higher-rate taxpayers pay the 40p rate to £50,000 a year. The truth is that our focus is on ensuring that we can lift people out of income tax, which is not a record of which the previous Government can boast.
Shabana Mahmood
I will take that as a no. The Minister has failed to rule out another tax cut for the richest 1% of earners in our country. As he signalled in his answer, the Prime Minister has made £7 billion-worth of unfunded tax promises for the next Parliament. We did not find out in the autumn statement where the money is coming from to pay for these promises, so unless the Minister can stand at the Dispatch and categorically rule out raising VAT again, will not people just conclude that the only way the Chancellor can pay for his unfunded tax promises is with another Tory VAT rise?
Mr Gauke
Our plans do not require us to raise taxes. [Interruption.] The shadow Chief Secretary, the hon. Member for Nottingham East (Chris Leslie), is heckling, but I have to say that when he was asked that question on television last week, he refused to rule out raising VAT. Our plans do not require taxes to rise, unlike—I have to say—those of the Labour party.
Sir Tony Baldry (Banbury) (Con)
Does my hon. Friend agree that a fair tax system should see everyone contributing to reduce the deficit, with those with the largest earnings making the largest contribution? Am I correct that the top 1% of taxpayers actually pay nearly 30% of all income tax receipts at present?
Charlie Elphicke (Dover) (Con)
5. What estimate he has made of corporation tax receipts in each year since 2010; and if he will make a statement.
The Financial Secretary to the Treasury (Mr David Gauke)
Her Majesty’s Revenue and Customs publishes annual corporation tax statistics every August. They show that revenues from corporation tax, excluding the ring-fenced oil and gas regime, were £35 billion in 2010-11, £33 billion in 2011-12, £35 billion in 2012-13 and £36 billion in 2013-14. The Government have delivered major cuts to corporation tax, but increased growth and investment in the UK mean that revenues from the main regime were higher last year than in 2010.
Charlie Elphicke
Is my hon. Friend aware that non-oil corporation tax receipts have risen 16% over the course of this Parliament so far, compared with a rise of just 8% over the entirety of the previous 13 years? Does that not show that if you cut the rate, you up the take? [Interruption.] How will the diverted profits tax work?
Mr Speaker
Order. The question was simply too long. The hon. Gentleman should have cut it off when he was winning, instead of going on for too long, which is what he then continued to do.
Mr Gauke
It is right that we have reduced the corporation tax rate. Next year, it will give us the lowest rate in the G20. That is resulting in greater investment in the UK. It would certainly be a mistake to reverse that policy, as the Labour party intends. In terms of the diverted profits tax, I would point out that it will help to deal with aggressive tax avoidance. We will publish the draft legislation on that tomorrow, setting out the full details of how it will operate.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The House knows that I am an avid listener of the “Today” programme. Did the Minister hear the interview this morning, which showed how ineffective it is to have this great gap between the rich and the poor in our country? The tax system is increasing that gap, not helping it. What is he going to do about it, because it makes our economy less efficient?
Mr Gauke
As it happens, the distributional analysis shows that our policies have narrowed the gap. The point is that we have made changes to our tax system to ensure a greater contribution from the wealthiest in terms of stamp duty land tax and capital gains tax. We have reduced some of the reliefs and exemptions that meant some high earners did not pay taxes. I am afraid that the idea that a 50p rate was effective in achieving such objectives—including raising revenue—is simply wrong.
Ian Swales (Redcar) (LD)
Further to the Minister’s answer on the diverted profits tax, will he confirm whether it will cover businesses that run substantial operations in the UK, but that invoice from Ireland or Luxembourg to avoid tax?
Stephen Timms (East Ham) (Lab)
The current corporation tax rate is the lowest in the G7 and there are good reasons why that is the case. However, on small business Saturday last weekend, many of us were reminded of the heavy burden of business rates. Would it not be better, instead of reducing the corporation tax rate further, to use the same money to reduce business rates?
Mr Gauke
I remind the right hon. Gentleman, who performed the role of Financial Secretary with great distinction, that in his time in office there were no measures to reduce business rates in the way that we have done in the last two autumn statements by putting in place a cap of 2%, bringing in a rebate for retailers and extending small business rate relief. This Government have an excellent record on business rates—a message that I am sure many hon. Members heard on small business Saturday at the weekend.
Jim McGovern (Dundee West) (Lab)
6. What estimate HM Revenue and Customs has made of the amount of uncollected tax in the UK.
Sarah Champion (Rotherham) (Lab)
14. What estimate HM Revenue and Customs has made of the amount of uncollected tax in the UK.
The Financial Secretary to the Treasury (Mr David Gauke)
HMRC published its latest tax gap estimates on 16 October 2014. The tax gap in 2012-13 was estimated to be £34 billion, which was 6.8% of the total tax due.
Jim McGovern
Last week in the autumn statement, the Chancellor announced plans to address tax avoidance. If he and the Treasury are serious about that, why did they vote down an amendment that said that the quoted eurobond—I am sorry, but I cannot quite remember the words. They did not support that amendment, costing this country £500 million per year.
Mr Gauke
The reason we have not pursued that policy is that, having looked at it carefully, we do not believe that it would raise anything like the revenue that has been suggested, nor that it would do anything for the UK’s competitiveness. The Government have consistently taken action on tax avoidance, tax evasion and aggressive tax planning. I would happily list the measures, Mr Speaker, but I suspect that you would not allow me the time to do so. By 2015-16, we believe that those measures will be bringing in £7.6 billion a year.
Sarah Champion
I thank the Minister for his answers to Question 5 and to these questions. Will he explain why I am fighting against funding cuts for families in crisis in Rotherham because the council does not have enough Government funding to support them, while some big companies are getting away with not paying a penny in corporation tax?
Mr Gauke
Very difficult decisions have had to be made to deal with the deficit that we inherited. On the contribution from larger companies, as we have heard, the tax take from large companies through corporation tax has continued to rise and we have continued to take measures to deal with tax avoidance. As I have said, just last week, we announced that we would operate the diverted profits tax, the details of which will be set out tomorrow. That is an example of where the Government are taking tough, practical action to ensure that everybody pays what is required under the law.
Stephen Mosley (City of Chester) (Con)
Will my hon. Friend confirm that, as a result of the investment and effort that have been put into tackling tax avoidance and evasion since the general election, a record number of people are being prosecuted, with 2,600 people having been prosecuted in this Parliament alone?
Mr Gauke
Yes, my hon. Friend is correct—we have substantially increased the number of prosecutions in that area. The yield brought in by HMRC as a consequence of its enforcement action has also increased substantially, and in the autumn statement it was announced that that yield is anticipated to be £26 billion in 2014-15—around £9 billion more than when we came to office.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
The Minister has made much of what the Government are doing on tax avoidance, but will he tell the House by how much tax receipts were revised down in the autumn statement?
Mr Gauke
It is the case that tax receipts were revised down, but so was expenditure on debt interest payments. This country continues to face the major challenge of living within our means, and it is important to have a Government who stick to the long-term economic plan that delivers that.
Cathy Jamieson
The Minister gave a very partial answer because he did not mention the fact that the Institute for Fiscal Studies has said that tax receipts have been revised down by £25 billion by 2018-19. Is one key reason for that the fact that wage growth has been revised down again, and that the Government’s failure to raise living standards for working people is why they have also failed to meet their promise to balance the books by next year?
Mr Gauke
The answer to increasing wage growth is not just to observe that it would be nice if wages went up but to have no policies to do that. If we want wage growth, we need investment in the UK, which we are getting. We want more people in jobs, and a record number of people are in jobs. We want to improve our training and education system, and record numbers of people are taking up apprenticeships. We want to improve our transport infrastructure, and the Government have committed to the biggest road building programme since the 1970s. If we want wage growth, we must stick to the long-term economic plan.
Jackie Doyle-Price (Thurrock) (Con)
7. What recent estimate he has made of the level of employment.
Stephen McPartland (Stevenage) (Con)
9. What recent steps he has taken to reduce tax avoidance.
The Financial Secretary to the Treasury (Mr David Gauke)
We set out the next set of steps in our plan to tackle tax avoidance in the autumn statement last week. We are introducing a new diverted profits tax from 1 April 2015 using a 25% rate to counter the use of aggressive tax planning techniques used by multinational enterprises to divert profits from the UK. We are also strengthening the disclosure of tax avoidance schemes—DOTAS—regime, coupled with a further suite of measures that build on the work we have already done to tackle marketed tax avoidance such as accelerated payments of disputed tax in avoidance cases.
Stephen McPartland
My constituents work hard and pay their taxes and rightly expect other people and businesses to do the same. Does the Minister agree that the autumn statement last week showed that it is Government Members who are serious about delivering fairer taxes for all?
Mr Frank Roy (Motherwell and Wishaw) (Lab)
If the Government are serious on tax avoidance, why has the much-heralded Swiss tax deal brought in only a third of the projected income?
Mr Gauke
That particular measure has not brought in as much as was forecast, but I can point to others that have brought in more than was forecast. One example is disguised remuneration, which the Office for Budget Responsibility highlighted last week and has brought in more than was anticipated. We anticipated that it would bring in £750 million a year; it will bring in more than that. By the way, that measure was opposed by the Labour party.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
10. What recent assessment he has made of the effect of the housing market on the economy.
Mr Philip Hollobone (Kettering) (Con)
17. What the basic rate personal tax allowance was in May 2010; what that rate would have been in May 2015 if indexed to inflation; and what that rate will be in May 2015.
The Financial Secretary to the Treasury (Mr David Gauke)
The tax-free personal allowance was £6,475 in May 2010. It would have risen to just £7,485 by May 2015 through inflation, but the Government announced at autumn statement 2014 that the personal allowance would be increased to £10,600 from April 2015, and this is being legislated for in the Finance Bill 2015.
Mr Hollobone
By next May how many people does my hon. Friend estimate will have been taken out of paying income tax altogether in (a) Kettering, (b) Northamptonshire, and (c) the country as a whole?
Mr Gauke
By April this year the Government’s measures, including increases in the personal allowance for those born after 5 April 1948, are estimated to have taken about 3.4 million individuals out of the income tax system altogether. Some 248,000 of these individuals live in the east midlands region, which of course includes the constituency of Kettering in Northamptonshire.
Fiona O'Donnell (East Lothian) (Lab)
T1. If he will make a statement on his departmental responsibilities.