| Previous Section | Index | Home Page |
'(4) Sub-paragraph (1) has effect subject to—
(a) paragraph 126 (application of Schedule to fungible assets), and
(b) paragraph 126A (certain assets acquired on transfer of a business treated as existing assets).'.
Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 15 to 18.
John Healey: I shall be brief. Amendments Nos. 14, 15 and 18 are designed to correct a mismatch which has come to light between schedule 29 and the capital gains rules on company reconstructions. Amendments Nos. 16 and 17 deal with a problem in the drafting that was identified by the hon. Member for Arundel and South Downs (Mr. Flight) in Committee. The hon. Gentleman was assiduous throughout our proceedings in Committee, paying great attention to detail. I promised further consideration when he withdrew his amendments in Committee. Amendments Nos. 16 and 17 are the result of that further consideration. They will help to ensure that
the major reform of corporation tax treatment of intangible assets will now work in a way that all those with an interest in these matters would wish.Amendments made: No. 15, in page 437, line 28, at end insert—
126A (1) This paragraph applies where—
(a) an asset that is an existing asset in the hands of a company ("the transferor company") is transferred to another company ("the transferee company"), and
(b) the transfer is one in relation to which—
(i) section 139 of the Taxation of Chargeable Gains Act 1992 (reconstruction or amalgamation involving transfer of business), or
(ii) section 140A of that Act (transfer of UK trade to company resident in another member State),
applies with the effect that the transferor company is treated for the purposes of that Act as disposing of the asset for a consideration that secures that neither a gain nor a loss accrues to that company.
(2) Where this paragraph applies the asset shall be treated for the purposes of this Schedule as an existing asset in the hands of the transferee company.
(3) This paragraph does not apply where the transfer mentioned in sub-paragraph (1) occurred before 28th June 2002.'.
No. 16, in page 437, line 39, leave out sub-paragraph (3) and insert—
'(3) If the asset—
(a) was acquired before the beginning of the first accounting period to which this Schedule applies in relation to it, and
(b) is a chargeable intangible asset immediately after the beginning of that period,
it shall be treated for the purposes of Part 7 (roll-over relief on realisation and reinvestment) as if it had been a chargeable intangible asset at all material times between its acquisition and the beginning of that period.'.
No. 17, in page 438, line 16, leave out sub-paragraph (4) and insert—
'(4) If the asset—
(a) was acquired before the beginning of the first accounting period to which this Schedule applies in relation to it, and
(b) is a chargeable intangible asset immediately after the beginning of that period,
it shall be treated for the purposes of Part 7 (roll-over relief on realisation and reinvestment) as if it had been a chargeable intangible asset at all material times between its acquisition and the beginning of that period.'.
No. 18, in page 444, line 5, at end insert "(and see paragraph 126A)".—[Dawn Primarolo.]
Schedule 31
Amendments made: No. 35, in page 456, line 40, leave out—
'and also includes any debentures'.
No. 36, in page 456, line 41, at end insert—
'and also includes any debentures'.
No. 37, in page 458, line 20, leave out sub-paragraph (2).—[Dawn Primarolo.]
Schedule 37
Mr. Alex Salmond (Banff and Buchan): I beg to move amendment No. 11, in page 478, line 29, at end insert—
'(3A) In subsection (3) at end insert—
"(g) it consists wholly of uncrushed aggregates to be used for harbour sea defence projects or coastal erosion protection.".'.
We were making such good progress too, but now we come to something slightly more controversial, and something significant to the economic life and environmental concerns of many coastal communities throughout the United Kingdom.
I have debated the issue several times with the Minister's predecessor in a number of different places, including Westminster Hall and a statutory instruments Committee. Given that that Minister was promoted to the Cabinet half way through these debates, it could only be that his promotion was based on his superb ability to deliver a very bad case in a really eloquent way. That is what delivered the right hon. Gentleman's promotion. I commend the present Minister, however, and perhaps he could deliver a much better case in an eloquent way. Who knows where he might end up if he were able to do that? A number of Members across the House would appreciate a reasonable concession on this important issue.
The amendment is specifically about exempting coastal protection defences from the imposition of the aggregates levy. We have had debates in other places at other stages of consideration on the aggregates levy as a whole, and I do not intend to repeat these arguments, except to say that there are aspects of the levy that should cause concern even for those who say that it was justified on environmental grounds.
For example, there is regional disparity in the impact of the levy. The levy is gathered on aggregates as produced. The Government announced that there was to be a fiscally neutral measure and proceeded to offer a small rebate on national insurance contributions. However, areas that have few people but many aggregates—for example, rural areas such as Scotland, Wales, much of Northern Ireland and much of the north of England—could end up paying a substantial proportion of the tax, whereas areas with large numbers of people will get a rebate in the form of national insurance contributions.
An example that I shall give concerns Peterhead Bay Authority. The impact of the aggregates tax on its proposed breakwater is an extra £1.2 million imposition. In return, it will receive a rebate of about £650 in national insurance contributions. I accept that that is an extreme example, but even when a tax is announced as neutral by the Treasury, it is as well for many people in many areas carefully to count their fingers to assess what the impact will be in practical terms.
I have a real concern. Unlike the oil tax, which, as we debated yesterday, was a surprise to many people, not least some Labour Members representing constituencies in the north-east of Scotland, the aggregates levy, to be fair to the Government, was announced several Finance
Bills ago. It went through exhaustive consultation and debate with the industry. There is nothing wrong with a consultative process in terms of the levy, but basically the problem with the tax is that the Government, after that consultation, went for a sharp change in direction, which took in things such as coastal defences and the aggregates that are used for those defences. Originally the Government had intended them not to be taxed, but that was an unintended consequence very late on in the process of consultation.The Government originally envisaged that aggregates used for coastal defences would be untaxed because by and large these are uncrushed, unprocessed and unmachined aggregates. The environmental impact of such aggregates is much less than the ones that have gone through an industrial process. The Government's intention in introducing the tax was to try to substitute reclaimed and recycled aggregates for machine-processed aggregates. In Peterhead Bay Authority's proposal, 99 per cent. of the aggregate to be used for a breakwater in my constituency is uncrushed, unprocessed aggregate from a quarry five miles away. There is no environmental saving whatsoever in taxing that aggregate, as large blocks of rock will be taken from one part of Buchan and moved five miles along the road to another.
4.30 pm
There is no environmental gain from putting the finances of that breakwater in jeopardy, but there will be a substantial environmental and economic loss if it is not built. The bay authority, like many small harbour trusts and boards the length and breadth of the country, is responsible for sea defences, protection against the erosion of beaches and sea walls, and other aspects of coastal protection. If we are to believe Government forecasts, there is a genuine possibility that much of southern England may be under water, or at least under threat, within a hundred years or so. On balance, that is bad thing, although it is a close call.
Given those environmental problems, we can expect a greater call for coastal defences in the next generation. Many of the organisations with responsibility for defences are not multi-million-pound or billion-pound bodies—they are small trust ports or harbour authorities charged with the task of securing the defence of the coastline. In my constituency, Peterhead Bay Authority has been husbanding its resources for 10 years, and has saved up £10 million in revenue. It undertook an extensive consultation to produce the breakwater project, which will provide a calm harbour 365 days of the year—arguably the best deep-water port on the east coast of Scotland—and secure coastal defences. Late in the day, as an unintended consequence of the imposition of the aggregates levy, the authority was faced with an additional bill of £2 million, which has subsequently been reduced to about £1.2 million, but which still makes the economic viability of the project marginal.
To be fair to the Minister, whom I met this morning, and his predecessor, every Minister or Government spokesman to whom I have spoken is sympathetic to the project in my constituency, and I am sure that they would be sympathetic to ports and bay authorities contemplating similar harbour defences throughout the country. Everyone agrees that such projects are a good thing for the environment and the economy, so why are they being taxed under the aggregates levy? It has been argued that
the objective of the levy is to secure more recycled aggregates. The technical specifications for the breakwater in my constituency make it impossible to use recycled aggregates. The authority has reduced the use of aggregates to the minimum needed to secure the calming of the harbour for which they have statutory responsibility.It is invidious to tax a body that is trying to discharge its responsibilities for protecting the environment and providing an infrastructure to stimulate the economy in north-east Scotland. It would be wrong to make a similar imposition on other authorities which are trying to do comparable things. It is not as if there are not exemptions from the levy. In fact, there are a total of some 22 exemptions, including, for example, the sand for children's playground sandpits. Clay pigeons are exempt from the levy—good news for clay pigeon fanciers across the country.
| Next Section
| Index | Home Page |