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Taxpayers (Conscience)

6. Mr. Jeremy Corbyn (Islington, North): What policy is adopted by his Department in respect of taxpayers who do not wish to pay certain elements of taxation on grounds of conscience. [87061]

The Chief Secretary to the Treasury (Mr. Alan Milburn): There are no special arrangements for taxpayers to withhold tax on grounds of conscience.

Mr. Corbyn: Could the Minister consider whether it would be right to introduce such a measure? The Italian Parliament has draft legislation before it that would allow Italian taxpayers to divert a proportion of their tax from the armed services to peace building, and there are three relevant petitions before this House. Given the huge rebuilding costs that will fall to this country and others in Kosovo and elsewhere where there has been conflict, perhaps we should have a peace-building fund that could invest in conflict resolution, reconstruction and trying to prevent terrible wars and civilian conflicts.

British taxpayers have a right of conscience not to participate in the armed forces in time of conscription and should have a similar right in time of peace to ensure that part of their tax goes to peace, not war.

Mr. Milburn: We will deal with the costs of reconstruction in Kosovo in due course. Although I understand my hon. Friend's deeply held convictions on the issue--his view is shared by others in this House and elsewhere--the Government have a duty and obligation to make proper provision for our country's defences. That is precisely what we are committed to doing. I say in all candour that his proposal would undermine our ability to do that, and that is why the Government will not contemplate it.

Mr. John Wilkinson (Ruislip-Northwood): Is not the element of our taxes that taxpayers least like paying the net contribution to the European Union, over which they have no democratic control and which goes to such causes as the subsidy for tobacco growing and the misapplication of funds, waste and fraud?

Mr. Milburn: I congratulate the hon. Gentleman for two reasons: first, on the most imaginative bid for a place

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on the Front Bench so far, and secondly, for acting as a continual reminder to us that the Conservative party has been become a genuine one-issue party.

Mr. Tam Dalyell (Linlithgow): As my hon. Friend said that he would come to a question on Kosovo in due course, would he care to take the opportunity of answering Question 29?

Madam Speaker: But not yet!

Business Taxation

7. Mr. John Bercow (Buckingham): If he will make a statement on the level of business taxation. [87063]

The Financial Secretary to the Treasury (Mrs. Barbara Roche): The Government keep the level of business taxation under constant review.

Mr. Bercow: I acknowledge the hon. Lady's woefully inadequate reply. Can she tell the House whether it was through amnesia caused by stress that she failed to mention the proposed climate tax, the company car tax, the fuel tax, the vehicle excise tax, the windfall tax, the abolition of the tax credit on dividends and the huge hike in national insurance contributions under this Government? What about the crucial fact, emphasised by Sir Clive Thompson, the president of the Confederation of British Industry, that the cumulative effect of this Government's imposts will be to raise business taxes by £20 billion in the lifetime of this Parliament? Does she recognise that, if the Government continue at their present rate of confiscation, they will soon make Dick Turpin look like a charitable donor?

Mrs. Roche: I make some allowances for the hon. Gentleman because his mind is obviously distracted now that he has been elevated to yet another Front-Bench team. He does seem to be suffering; he has forgotten that the Labour Government have cut the main rate of corporation tax. We now have the best possible regime for businesses in this country--the small firms rate of corporation tax and the Small Business Service. I also remind him that, under the previous Tory Government, a business went bust every three minutes. That is why we have been able to get employment figures up; that is why we have been able to work with businesses in the way that we have. It struck me as somewhat odd that the hon. Gentleman did not mention that, in his very own constituency, there has been a drop in unemployment of 32 per cent. That came about because of our management of the economy.

Ms Joan Ryan (Enfield, North): Those in businesses in my constituency and across north London generally tell me and their representative groups, such as the North London chamber of commerce and the North London manufacturing action group--of which my hon. Friend will be aware through her own constituency work--that they are very happy with the positive approach that the Government have taken on business taxation and on other policies to support business, in order to help business to grow and hence to create jobs. Will my hon. Friend comment on what I have been told recently by business people? The main problem--as they see it--is the way

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the Opposition continually talk down our economy and undermine the efforts made by our businesses and their success.

Mrs. Roche: My hon. Friend is right. I know from my own experience--because my hon. Friend and I have the great privilege of representing constituencies in north London--the extensive contact that she maintains with the businesses in her constituency. The greatest threat to business in our country is the way in which the Opposition woefully ignore the business organisations in our constituencies and talk them down. The Opposition talk down our economy; they are clearly not acting in the national interest.

Dr. Vincent Cable (Twickenham): Following consultations that took place week between the Inland Revenue and representatives of hundreds of thousands of service workers in information technology, offshore oil and other knowledge-intensive industries, is the Financial Secretary aware of the considerable dissatisfaction in those industries, and of the fact that the Revenue simply does not understand how those flexible, freelance industries operate? Will she agree to issue a consultative paper, setting out in detail how the regulations will apply, so that the Government's legitimate concern to stop tax avoidance does not drive those crucial industries off shore or destroy them?

Mrs. Roche: I notice that the hon. Gentleman mentioned the legitimate concerns of Government. That is why my hon. Friend the Paymaster General is consulting so widely; that is why we shall listen to the representations that businesses make. I am sure that the hon. Gentleman will agree that it is most important that there be a level playing field, and that the people who are legitimately required to pay tax pay it. Of course, there is no question on our part of trying to get at legitimate businesses. We are trying to achieve a balance in this matter and that is what we shall do.

Climate Change Levy

8. Mr. Peter L. Pike (Burnley): What progress has been made in deciding the details of the proposed climate change levy. [87064]

The Economic Secretary to the Treasury (Ms Patricia Hewitt): We are working closely with business on the detailed design and implementation of the climate change levy, which will make a significant contribution towards reducing greenhouse gas emissions. The levy will entail no increase in the overall burden of tax on business, as the revenues will be fully recycled; and, following the recommendations of Lord Marshall, we recognise the special position of the energy-intensive industries, given their high energy usage and their exposure to international competition. We intend to set significantly lower rates of the levy for energy intensive sectors that agree targets for improving their energy efficiency. Detailed negotiations are now under way with the sectors concerned.

Mr. Pike: I thank my hon. Friend for that helpful answer. While everyone accepts the main objective of environmental improvement, does she recognise that the

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manufacturing industries that are high-energy users have genuine fears that we may drive them and their investment out of the country, resulting in a loss of jobs and an adverse effect on our balance of payments? That will not have a beneficial effect on the world environment. Does my hon. Friend acknowledge that there should be a special case for combined heat and power schemes, which could perhaps be exempt from the levy?

Ms Hewitt: I thank my hon. Friend for that question. Of course we understand the concerns of manufacturing industry. That is why we have said that we will not take an across-the-board approach to the levy but will set significantly reduced levy rates for energy-intensive sectors that agree our targets for improving energy efficiency.

On the issue of renewables, we have not ruled out the possibility of an exemption. We are consulting on how to treat combined heat and power schemes within the climate change levy, as they can make a substantial contribution to improving energy efficiency, thereby cutting greenhouse gas emissions.

Mr. David Heathcoat-Amory (Wells): After the fiasco of road fuel duties--which have effectively made the British haulage industry uncompetitive in European terms--why are the Government planning to do the same on a wider basis next year by imposing a general energy tax on the rest of industry? How will the Minister answer the many international firms that have explained to her that, even at a lower or rebated level, they will have to respond to the additional business tax by switching their operations and their investment away from the United Kingdom?

How can the Government expect to be taken seriously on this issue when, at the same time, they are forbidding many of the same firms to invest in gas-fired electricity generating plants, which would cut carbon dioxide emissions? When will the Government sort themselves out on this issue and remove this threat to competitiveness, jobs and industry, which will do nothing for the environment in the longer term?

Ms Hewitt: The right hon. Gentleman is wrong about the transport industry and wrong about the impact of the climate change levy. As Lord Marshall proposed, there must be recognition of the special position of the energy-intensive sectors. That is why, following his recommendations, we said that there will not be an across-the-board approach to the levy. There will be significantly reduced rates for those industries, providing that they agree the targets for energy efficiency improvements.

We are in detailed negotiation with industry about this issue, in line with our statement of principles on environmental taxation. Meanwhile, the right hon. Gentleman has been reduced to making offensive remarks in the Finance Bill Standing Committee about Lord Marshall, who has done so much to move this debate forward, particularly in the business community. It shows once again how completely out of touch this extremist Conservative party is with the business community.

Mr. Ian Pearson (Dudley, South): Is my hon. Friend aware that the proposed climate change levy would

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be a nightmare for many small and medium-sized manufacturing businesses in my constituency; and that cutting a deal with major energy users will be of little or no help to them? Does she agree that measures that lead to booming supermarket profits but busts in large swathes of the manufacturing sector are absolutely no good for the British economy? Will my hon. Friend look to reducing the proportion of national insurance rebates, increasing the amount of money allocated to energy efficiency schemes, and ring-fencing some of them for small and medium-sized businesses?

Ms Hewitt: Perhaps I should remind my hon. Friend that, as my right hon. Friend the Chancellor said in the Budget statement, the new climate change levy will entail no increase in business taxation because the revenues will be recycled both through a reduction in employers' national insurance contributions, thus helping to promote employment, and through specific support--as my hon. Friend suggests--to small and medium-sized enterprises to help them achieve greater energy efficiency.

We made it very clear in our statement of intent on environmental taxation that we would always design environmental taxation in order to protect and, where possible, enhance the international competitiveness of British industry. That is what we are doing in our negotiations with industry, and I trust that my hon. Friend will support us in seeking not only to protect competitiveness but to reduce environmental damage.

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