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Mr. Ross Cranston (Dudley, North): Is it not the case that the quarterly system of corporation tax payment operates in the United States, Germany, France, Australia, Canada, Japan and a host of other countries, and that we are simply coming into line?

Mr. Lilley: I was just about to say that we have no objection in principle to a quarterly payment system; it is the use of that system, by arranging the transition to bring forward into this Parliament payments that previously would have been made years ahead, that is so iniquitous and devious. If the hon. Gentleman had had the courage to admit that it was being done to raise extra taxation rather than to smooth spending over the year, I should have had more respect for him and the Labour party.

We have no objection to a system of quarterly payments--something like that became inevitable once credits, foreign income dividends and the advance corporation taxation system on dividends went--but we object to it being used as a back-door method of increasing taxes on the business sector by stealth.

Mr. Dale Campbell-Savours (Workington): In the right hon. Gentleman's view, could we have had reduced revenue coming into the Exchequer while we had the reduced interest rates that the right hon. Gentleman has been calling for? Could we have had both together?

Mr. Lilley: I believe that, if we had encouraged, not discouraged, saving, it would have made it easier for the Bank of England to achieve a given inflation target with less emphasis on high interest rates and high exchange rates. By not taking steps to encourage consumers to save, but allowing the burden of taxation to fall on business and savings, the Government have exacerbated the problems that they diagnosed when they came to power.

Our amendment No. 1, which has not been selected for debate, would have required the Government, in introducing a quarterly payment system, to ensure that it did not result in any net take-out of companies' cash flow. It would have ensured that the effects of the system were fiscally neutral, and that the Government adjusted the timings and the transition period to ensure that.

As amendment No. 1 has not been selected, we shall vote against clause 30, and I shall invite the Committee to join us. Apart from the fact that clause 30 raises taxes by stealth, the most objectionable feature of the Bill and the clause is that they rely on the wholesale use of regulation-making powers, so that the Government can introduce complex but important measures in a way that cannot be amended, and which, in many cases, will not even be debated.

Hardly any of the key parameters of the new system of corporation tax payments are spelt out in the Bill. The Institute of Directors rightly protests:

They are not. Why have not the Government spelt out in primary legislation the key parameters of the system that they are introducing, to allow hon. Members the

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opportunity--preferably on the Floor today, but if not, later, in Standing Committee--to examine and consider the proposals, and to reflect in that debate representations from outside the House about the detailed proposals?

Mr. Cranston: Will the right hon. Gentleman give way?

Mr. Lilley: I shall continue with this point, if I may.

It is essential that we find out the Government's intentions, or that we ascertain that, in this respect, too, they have not yet thought out their plans, just as, when they announced the abolition of tax credits, they had not thought that it would make necessary a new system. Is it further evidence of their botched, muddled failure to think through their taxes when they make their announcements?

I shall happily give way to the hon. Member for Dudley, North (Mr. Cranston). If he is true to his duty as a Back Bencher, he will want to debate such measures in detail rather than pass them on the nod in the contemptuous way in which the Government sideline Parliament whenever they have the opportunity.

Mr. Cranston: I thank the right hon. Gentleman for giving way again. Did he in his long experience, including at the Treasury, never propose legislation containing a regulation-making power?

Mr. Lilley: I cannot remember proposing a clause containing 11 separate regulation-making powers. Not a single detail of the Bill has been spelt out or published previously so that the Committee would know what regulations would be made under the clause. The amendment would ensure that Parliament saw drafts of the regulations and voted on a resolution before the regulation-making process was completed.

Labour Back Benchers are numerous and could use the time on their hands to good effect by considering legislation properly and in detail, which is what their constituents sent them to Parliament to do, rather than letting Ministers bypass them and Parliament by taking general regulation-making powers that suggest that they do not even know what they intend to do. We shall listen intently to the Paymaster General for evidence that he knows what he intends to do any more than he and his colleagues did when they started the process nine or 10 months ago.

Mr. Malcolm Bruce (Gordon): The right hon. Member for Hitchin and Harpenden (Mr. Lilley), who leads the Conservative Treasury team, has worked himself into a synthetic stour about the clause. The Government's basic proposals have been out for consultation for several months, and, although hon. Members are entitled to ask for clarification of the legitimate concerns to which the right hon. Gentleman referred, I do not get the impression that there is enormous fulminating opposition to a measure that most business people acknowledge as reasonable in principle.

The Government's claim to want to open up the Budget process to greater debate, consultation and transparency is a genuine issue, however. The Chancellor announced the abolition of advance corporation tax and the introduction of quarterly payments in his pre-Budget statement, but did not say that there would be a substantial cash flow benefit.

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The Paymaster General will have to acknowledge that there will be a net flow of funds into the Treasury in the lifetime of this Parliament, and of the order of that to which the right hon. Member for Hitchin and Harpenden referred. In the interests of transparency and genuine debate, the Chancellor should have been more forthcoming about the cash flow benefit that the Government would achieve compared with the overall effect of the reduction in tax rates.

The measure will have a more severe impact on some businesses than on others. As regulations will be made, the Minister should say whether variations or adjustments will take account of the skewed revenue flows of some businesses, which could make quarterly payments a hardship. Most ordinary taxpayers who pay tax as they earn appreciate that paying tax substantially in arrears is beneficial because a company has use of the money on which it is liable to pay tax for a considerable period before paying it.

The Paymaster General should give hon. Members guidance, because it is difficult for some businesses to determine the outcome on which they would pay tax. Some businesses will pay additional tax over and above their liability, so it would be useful to know what negotiation and flexibility there may be in calculating quarterly rates to take account of variations.

5.15 pm

My plea to the Government is to follow through what I accept as a sincere intention to have a more genuine, open debate about taxation priorities. They have not got the balance right yet, and I had hoped for more consultation on other issues in the Bill. In their first Budget and in the pre-Budget statement, the Government introduced two substantial taxes on the corporate sector from which they have benefited substantially in revenue flows without being up-front in the Red Book or in overall projections, which would have enabled us to have had the sort of debate to which we are entitled. The Government would help hon. Members and business if they set out the real effects of the tax changes and how the balance between personal taxation and business taxation will settle.

The Paymaster General cannot be surprised that there is criticism of and cynicism about the fact that the Government thought that they could get away with substantial extra taxes on business while standing by their assurance that they would not increase the basic or higher rates of income tax. He and hon. Members will know that my party takes a different view and believes that both rates should have been increased by an agreed amount for specific purposes. [Interruption.] We have said specifically what we would do.

The Paymaster General may not have read our publication, though it must have been passed to him many times. I shall repeat what it says, at the risk of detaining the Committee--even the Prime Minister would benefit from reading the Official Report occasionally. We proposed a rate of 50 per cent. on personal incomes in excess of £100,000 and an additional 1p on the standard rate of tax to fund a reduction in tax for people on lower wages by raising thresholds and extra investment in

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education year on year throughout this Parliament. Labour Members would do themselves and their party good if they accepted my argument.

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