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Mr. Lilley: I shall endeavour to be brief so that we can move on to the other two amendments to clause 30.

The hon. Member for Gordon (Mr. Bruce) said that there had been relatively little detailed criticism of the clause. The reason is, of course, that there is rarely detailed criticism until regulations and details are published. They were not published until Friday, they are not yet in the Vote Office or available to hon. Members, and they have not been seen by the outside world ahead of this debate. Consequently, there was no possibility of people making informed submissions that could be considered by Conservative Members or, if they were remotely interested, by Labour Members. That is what is so wrong with the procedures and mechanisms that the Government are pursuing in this matter.

There has been quite a lot of opposition to the fact that the Government are proceeding with the use of regulations on an unprecedented scale. Regulations have always had a place, but when everything is delegated to regulations and none of the detail is in the Bill or published in time for consideration in Committee, that is wrong. My hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb), in a powerful speech that will pay the Paymaster General dividends if he reads it, quoted a series of accountants to the effect that what is proposed is perilously close to a constitutional abuse--and so it is.

My hon. Friend the Member for Grantham and Stamford (Mr. Davies) made a characteristically compelling speech in which he asked the Government why they had not simply drafted a one-clause Bill stipulating that the Treasury should have the power to introduce any tax by whatever measures it thought appropriate in the appropriate regulations. I fear that he is putting ideas into their heads. I saw many of them perk up at the thought.

The process moves from paying tax in arrears to paying it in advance. Inevitably, that involves a period of double taxation. After beginning blusteringly by saying that he would be transparent and open, the Paymaster General dodged answering the question of how much extra tax will be raised by the clause. We are used to his dodging his taxes; now he is dodging telling us how much other people will have to pay in taxes as a result of his measures. That is not satisfactory. We will come back to this time and again. He pretends that industry is happy with the proposals. The CBI welcomed the mitigation of his original, more onerous proposals--

The Second Deputy Chairman of Ways and Means (Mr. Michael Lord): Order. The right hon. Gentleman has just mentioned tax dodging. I am not sure that that is the right phraseology to use, and I would be grateful if he withdrew it.

Mr. Lilley: Of course I withdraw. The Paymaster General is well known for dodging answering questions about either his own taxes or the taxes that he is imposing on others. That is a well-established fact.

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We believe that the Government should come clean on the amount of tax involved and recognise that industry does not welcome the extra tax that it is having to pay. What they propose will be welcomed even less when it accumulates with the other burdens they are imposing on business, which threaten a manufacturing recession that is likely to spread in due course to the whole economy.

Amendment negatived.

Mr. Lilley: I beg to move amendment No. 3, inpage 16, line 29, at end insert--


'(c) for special payment arrangements for companies making seasonal profits, enabling such companies to pay instalments based on actual tax-adjusted results for the previous six month period.'.

The quarterly process will inevitably increase taxes on business by requiring companies to forecast their future profits and pay taxes on them before they have been earned. If companies underestimate, they will have to pay interest on the underpayment at a rate designed to discourage understatement. That is a particularly tough requirement on the many firms with highly seasonal business; retailers, for example, who depend on the Christmas season to make any profit at all will have to pay taxes on quarters three and four before they have earned anything at all. The amendment would allow such companies to pay less in the first half of the year.

International experience shows that corporation tax systems can be reformed to help seasonal businesses. In the United States, for example, businesses pay tax by quarterly instalments, but the system is modified to allow seasonal traders to pay each instalment of tax according to the proportion of annual profits earned at each payment date, using previous years' estimates. Seasonal businesses are not looking for any preferential treatment, but for a corporation tax system that acknowledges their distinctive trading patterns.

It must be wrong to force seasonal businesses to pay tax in advance of earning enough revenues to have any profit at all over the year as a whole. Retailers have come to me with detailed suggestions about how to resolve the problem. The Paymaster General should listen to them and act on what they have to say.

To be eligible to use the method we propose, retailers suggest that a company's profits earned in the first six months of the accounting period must be consistently less than their profits earned for the complete financial year. In the US, the proportion is set at 30 per cent. or less of total profit for the year. It would be easy to determine the estimates by looking at established trading patterns over the previous five years, as disclosed in published interim reports. I hope that the Paymaster General will seriously consider the amendment, which should not be costly for the Treasury to accept and introduce and would meet a valid concern of which he should take due note.

Mr. Malcolm Bruce: I support the amendment. Some companies--in agriculture, farming and fruit, for example--have business that is exclusively summer or Christmas related, and it is reasonable to suggest that the Bill should take some account of that. Otherwise, the cash flow benefit to the Treasury may be significant, but the difficulties for individual companies may be real. If the Conservative party intends to divide the Committee on the amendment, we will support it.

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Mr. Dafydd Wigley (Caernarfon): I, too, support the amendment. I represent a constituency where there is a considerable seasonal distortion to economic activity. Tourism is one of the major industries in my area; agriculture--when it is not going through a depression, as it is now--is the other.

The fact that major companies in the tourism sector have large amounts of money coming in over a limited period and then have low levels of activity the rest of the year leads to knock-on effects on a host of service industries associated with the demand from the tourism sector. In Llandudno, for example, the population goes up from 20,000 to 200,000 in the summer. That gives an indication of the impact of seasonal business on the business fraternity in the area. The amendment would be helpful in terms of cash flow for such companies, and I hope that the Government will seriously consider it.

6.45 pm

Mr. Geoffrey Robinson: The Committee is rightly considering the amendment in a reasoned tone. Like the right hon. Members for Hitchin and Harpenden(Mr. Lilley) and for Caernarfon (Mr. Wigley), the Government have received representations on it. We met the British Retail Consortium, which suggested something similar to the amendment; it would confine the measure to companies consistently making less than 30 per cent. of their profits in the first half of the year.

The amendment might help a few large companies, but there cannot be too many firms that make upwards of70 per cent. of their profits in the second half of the year. The Committee will realise that the amendment would add considerable complexity to the rules. The right hon. Member for Hitchin and Harpenden refers to the American situation, but I am sure that he is aware that, in other respects, the American system is less favourable. The whole of the tax, as opposed to half, is paid in the year in question. I do not think that the British Retail Consortium, or anybody else, would want that because it would be so disadvantageous. We would not have received the support that we have received for the changes over a four-year transitional period if we were to move to the American system as a whole.

It is unwise to cherry pick--to have one bit from America and another bit from France--as we would end up with a mish-mash that would not achieve the principled reform we are looking for. I am not inclined to accept the amendment or the proposal from the British Retail Consortium, but we will consider the matter carefully and return to it.

Mr. Lilley: I am grateful to the Paymaster General for that assurance; we will not press the amendment to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Lilley: I beg to move amendment No. 4, in page 16, leave out lines 37 and 38.

We have drawn attention to the fact that clause 30 in particular--like the Bill in general--makes excessive use

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of regulation-making powers. I invite the House to consider particularly the proposed new section 59E(5), which states:


    "Regulations under this section--


    (a) may make such modifications of any provisions of the Taxes Acts, or


    (b) may apply such provisions of the Taxes Acts,


    as the Treasury think necessary or expedient for or in connection with giving effect to the provisions of this section."

It is, in short, a Henry VIII clause--a clause that enables the Government, by regulation, to change primary law elsewhere without proper consideration by the House.

We know that the other place has found such legislative provisions particularly abhorrent, but it will not have the chance to vote on the Finance Bill. We should eliminate that subsection and ensure that if the Government want to change primary legislation, they must bring the change to the House in an open and democratic fashion by the normal procedures of the House and may not publish regulations that cannot be amended or debated.


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