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Ruth Kelly: Of course, the hon. Gentleman has not had the benefit of the discussions at the Economic and Finance Council that I was privileged to be party to in July this year. In them, the very subject of a European tax was discussed and the Belgians, who placed it on the agenda, found no enthusiasm for it anywhere in Europe. The Chancellor forthrightly put the UK case that there will be no European tax.
Mr. Bercow: I do not find that argument remotely persuasive, for reasons that I am happy to explain. I am afraid that all the Economic Secretary has done is—
Dawn Primarolo: Lengthened the hon. Gentleman's speech.
Mr. Bercow: Yes, she has. In view of what I said about the Economic Secretary's intellectual ferocity, I had hoped that she would come up with something better than she has just volunteered to the House.
We know that the Chancellor of Exchequer has said that he opposes tax harmonisation but we also know that, on the continent, it is commonplace, when tax harmonisation is writ large in the tabloid newspapers in this country, to employ a different lexicon. Instead, we are told that the EU would gradually like to advance the cause of tax co-ordination. We can then involve ourselves in a semantic debate on the difference between harmonisation and co-ordination.
We know that taxes come in a variety of forms and through a series of disguises. The Economic Secretary has made her point about tax intentions and she will be aware that the Belgian Prime Minister, Guy Verhofstadt, has called for a direct EU tax. He thinks that that tax should be levied on all citizens and he is backed by the Belgian Finance Minister and, importantly, by the European Union Commissioner for the Budget, Mrs. Michaele Schreyer. She suggested that the tax should be in the form of an imposition on savings, and Ministers will also be aware of the verdict of Hans Eichel, the German Finance Minister, who argued for an EU-wide tax on 14 June this year.
It is no good the Chief Secretary simply saying that
- "any change to the tax regime in Europe is a matter for unanimity . . . we do not accept the need to introduce new taxes."—[Official Report, 3 July 2001; Vol. 371, c. 143.]
We know that a tax is not simply just something that is called a tax. If the Economic Secretary is in doubt about that, we can refer to what the EU has said about the use of alternative instruments to affect taxation measures. I refer to the Commission communication "Tax Policy in the European Union—Priorities for the Year Ahead", which said:
- "while it remains the Commission's view that a move to qualified majority voting at least for certain tax issues is indispensable, the legal basis will, for the present, remain unanimity."
- "Given the difficulties in reaching unanimous decisions on legislative proposals, which will be compounded by enlargement, the Community should also consider the use of alternative instruments."
That point is so blindingly obvious given all our experience with partners in the EU that only an extraordinarily clever person could fail to see it. I do not know whether the Paymaster General wishes to volunteer for that description, but a danger exists and—without wishing to overstate it—it would be very foolish to ignore it.
Mr. Edward Davey: Will the hon. Gentleman confirm two points? The first is that he is arguing that charges
could be made on the British people without the British Government having the chance to veto them at Brussels. If so, will he provide rather more substantive legal back-up than he has done hitherto? Secondly, can he confirm that his argument of the past 10 minutes has nothing to do with the Bill?
Mr. Bercow: I am very concerned to relate my remarks to the Bill. Although the hon. Gentleman is putting in a job application to replace you, Mr. Deputy Speaker, I am happy to be guided by your judgment rather than his.
The hon. Gentleman challenges me to provide a legal basis and precedent to justify my point that what is being planned is effectively a denial of the veto. He will know perfectly well that instruments of the EU can be used for a variety of purposes. I refer, for example, to the introduction of the working time directive as an EU health and safety measure, when it manifestly is not that. It was introduced on that basis, because the EU knew perfectly well that it would be not be able to get it through otherwise. Introducing it under qualified majority voting provided an alternative route.
The hon. Gentleman will be aware that all sorts of measures have been justified in the name of single market legislation and the greater approximation to a level playing field in matters of trade and commerce than has existed hitherto. If he is so naive as to suppose that to raise revenue we need to have what is formally described as a tax, he greatly underestimates the wizardry and sophistication of his masters in the EU. I strongly suggest that he do something about that.
On Second Reading, my right hon. Friend the Member for Wokingham drew attention to several measures that have come in already to the disadvantage of the UK, violating entirely the hon. Gentleman's cardinal principle—he would have us believe that it is his cardinal principle—of a right of a national veto on taxation. The art levy has already done considerable damage to the UK art market, and it will have a further detrimental effect. There also is the serious risk of an energy tax.
Dawn Primarolo: To reveal all the facts, will the hon. Gentleman explain which Government agreed to the introduction of the art levy?
Mr. Bercow: The Paymaster General is playing the party game, but I am very happy to deal with her point. I have always been opposed to droit de suite, and many Conservative Members have consistently opposed it. We regard it as detrimental, but her Government are enthusiastically pursuing it even though it was not the preference of the Conservative Government. She knows that, on that subject, she has not a leg on which to stand.
I am conscious of what Mrs. Schreyer said on behalf of the European Commission in response to a question asked by my colleague, the Conservative finance spokesman in the European Parliament, Theresa Villiers. When, on 31 July, Mrs. Schreyer was asked about the autonomous resources that might be planned, she said:
- "An objective could be to replace the existing financing system of the European Union's budget with one or more European taxes".
- "without imposing an additional financial burden upon European citizens."
We know in any case that on taxation measures the Government's hands are not clean. My cup runneth over today, because the Paymaster General has done us the great courtesy of a visit. If the hon. Lady's record on these matters were as widely known as it should be, it would not commend itself to the electors of Bristol, South. We know, and she may be proud of the fact, that shortly after the 1997 election, a code on business taxation was established in the European Union. Shortly afterwards—I do not remember precisely when, but I feel certain that the date is imprinted on her mind—she was put in charge of an EU-wide working party on the investigation of methods to give effect to that code. Specifically, from March 1998 onwards, she was charged with the responsibility of identifying what was described as unfair tax competition.
There is a genuine debate to be had about whether genuine tax competition can be unfair. There are those of us who believe very strongly in the desirability of tax competition, although I am not sure that the hon. Lady is among us. I have been disturbed by two phenomena of late. The first was the identification by the Paymaster General of 88 examples of tax reliefs, credits or benefits that helped the United Kingdom and which she was volunteering to give up within the European Union, to the manifest disadvantage of British trade and commerce. It struck me as an extraordinary state of affairs for her to countenance.
Mr. Bercow: The hon. Lady is understandably sensitive on the point, so I give way.
Dawn Primarolo: I am just trying to help the hon. Gentleman to ensure that he does not inadvertently say something inaccurate to the House. There were not 88 British measures. This is not the subject of today's debate, so I will not engage him any further, but I should be happy to do so at another time.
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