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Madam Deputy Speaker: Order. The House has decided that the Bill should be proceeded with as a tax simplification Bill. The House is bound by that procedure, the consequence of which is that the House must consider the Bill, the limited purpose of which the House is well aware. The wider considerations of which the right hon. Gentleman speaks relate to matters beyond the limited purpose of the Bill. I advise him now to return to that limited purpose.
Mr. Lilley: I entirely accept your guidance, Madam Deputy Speaker. I would not suggest that we could or should distort the procedures under which we are operating to bring about greater changes which I may think desirable and the House may think desirable, but which we cannot incorporate in the Bill.
I am sorry, Madam Deputy Speaker; I am responding to a sedentary intervention from the usually speechless Whip, who thought that I was reverting to proposals to introduce a cashflow system of treatment of capital allowances. I have moved on from that point.
Mr. Jack: On a point of order, Madam Deputy Speaker. I am listening carefully to my right hon. Friend. Is it in order that he should continually be interrupted by sedentary interventions, which are diverting him from his clarity and train of thought?
Madam Deputy Speaker: I have already called the hon. Member for Weaver Vale (Mr. Hall) to order, and suggested to the right hon. Member for Hitchin and Harpenden (Mr. Lilley) that he limit his remarks to the purpose of the debate.
Mr. Lilley: We must recognise that chapter after chapter of the Bill--admirable though it is for the clarity of its language and the consolidation of the previous legislation, which was scattered among various Finance Bills--exist to make distinctions between buildings and plant and machinery, between software and hardware, between cars and other vehicles, between short and long-life assets, between hired, leased and bought assets, and between ships and offshore facilities. Those distinctions, which require complex legislation, are the result of policy decisions to discriminate between different classes of assets. If we go ahead with this measure, we shall enshrine those distinctions and discriminations, albeit in a clearer and more lucid form. Alternatively, we could abolish them and save ourselves the trouble of an unnecessary Bill. That would save the tax profession from having to adapt to a Bill that will subsequently be overtaken by further Bills that will render it unnecessary.
We must recognise that all attempts to simplify legislation, of which this measure is a laudable example, are constrained or affected by one of the Lawson's laws of taxation. The more onerous the burden of tax, the more complexities have to be incorporated in the legislation. The more onerous the burden, the more necessary it is to have loopholes and easements where the shoe pinches too tightly, and the greater the political pressures to incorporate special concessions for the more powerful interest groups that are affected by the burden of tax.
The measure is good as far as it goes, but it will impose costs on people who will have to adapt to it. It is a missed opportunity for the Government to move towards simpler taxation. They will get simpler taxation only if they reduce the tax burden. Sadly, we shall not get that from the Labour party. We shall have to wait for a general election, a change of Government and a change of philosophy. We shall then get simpler taxation.
Mr. Lilley: I shall make my response to the hon. Gentleman doubly brief. I am delighted to contest a point with him--when he stood against me he lost. We could have a 90 per cent. rate, but the only time we did so was for the petroleum revenue tax. We only have to consider how complex that was to realise the validity of the point that I was making in my closing remarks.
Mr. David Ruffley (Bury St. Edmunds): I thought that I would welcome large chunks of the Bill, but I have had the great benefit--nay privilege--of listening to important and powerful contributions from my right hon. Friends the Members for Wokingham (Mr. Redwood) and for Bromley and Chislehurst (Mr. Forth). They said that we were being invited to believe that there could be a rewrite project that would merely simplify existing primary legislation, such that no substantive change to that existing law would take place in the process of the rewrite. As my right hon. Friend the Member for Wokingham said, combining simplification with not changing substantive tax law might be a trick that could not be achieved. The more we meditate on that conundrum, the more we recognise the potential inadequacies of the Bill.
I have some experience of the thought processes of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), who was Chancellor of the Exchequer when it was decided to proceed with the rewrite--and, indeed, of the thought processes of my right hon. Friend the Member for Fylde (Mr. Jack), then Financial Secretary to the Treasury. I had the honour of being a special adviser to the Treasury in 1995-96. We also benefited from the wisdom and sage advice of the tax specialist adviser, Mr. Edward Troup, now renowned in his new incarnation as a tax commentator and practitioner of great distinction with Messrs Simmons and Simmons in the City of London.
When the decision was made formally in December 1996 by my right hon. and learned Friend the Member for Rushcliffe, following the Inland Revenue's report "The Path to Tax Simplification", published in December
The decision to proceed with the rewrite was, I think, a great tribute to the deregulatory instincts of the then Chancellor, his Ministers and, indeed, every other member of the Government. I well remember the objectives of the rewrite that has resulted in this Bill. The aim was to achieve a more logical structure in rewritten tax legislation, involving shorter sentences, briefer, more lucid definitions--indeed, better definitions--and more modern language.
Mr. Ruffley: I fancy that hints of new Labour lay behind that sedentary intervention, but there is nothing wrong with modernisation in its proper context. I trust that, when my right hon. and learned Friend decided to modernise language via the tax rewrite project, he used the term "modernisation" in the best, Conservative sense, and not in the degraded sense in which Labour Members choose to use it.
Mr. Redwood: My hon. Friend brings considerable interest and expertise to the debate, knowing the attitude of our right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) when he initiated the process. Was our right hon. and learned Friend saying at that stage that he hoped that 903 pages of legislation, annexes and explanatory notes would result, just for the purpose of capital allowances? Does my hon. Friend think that that is the kind of simplification and condensation that he had in mind, or would he have been a little disappointed that we have 903 pages before us now?
Mr. Ruffley: I have always hesitated to speak for my right hon. and learned Friend before consulting him first, but I venture to suggest that my right hon. Friend is right in surmising that he would be gravely disappointed at the outcome of the rewrite project that he set in train in December 1996, which has resulted in the considerable weight and density of documentation with which we are dealing now.
My right hon. and learned Friend the Member for Rushcliffe would be surprised that the proposition to which we are invited to assent is that the tax rewrite project could indeed result in changes, albeit minor, to the substantive effect of pre-existing tax legislation. We have already had an extensive debate about the meaning of a minor change, but, so far as I am aware, what was not in the contemplation of Ministers in 1996 was that the tax rewrite project could make substantive changes to pre-existing tax law. Therefore, I am greatly surprised--I put it no higher than that--that the Bill purports to permit exactly that: substantive changes to pre-existing primary tax legislation.
The Bill relates merely to capital allowances, but we have various treats in store. We have already been advised that the tax rewrite project will begin with the Bill, but it is but part of a suite, if you will, of tax rewrite Bills. We are led to believe that there will be a first income tax
I return to the original purpose of the tax rewrite project, which was initiated in December 1996. The ambition of the project was brilliantly and amusingly summed up by my right hon. and learned Friend the Member for Rushcliffe in his Budget speech. He referred to it as a project that was