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12 Feb 2003 : Column 969—continued

6.38 pm

Dawn Primarolo: I begin with the point made by the hon. Member for Torridge and West Devon (Mr. Burnett) about awards for bravery. My understanding is that there has been no change, but I will check with my officials. As we have tried to demonstrate through the tax law rewrite project, we want to make the legislation clear.

It might help if I explain how minor changes are made to legislation in the rewriting process and how the tax law rewrite project undertakes consultation. Ministers receive the tax law rewrite project only when it has been completed and moves into its parliamentary stage. I said that I would give examples of minor changes to the legislation, such as new provisions to fill gaps in the existing legislation—for instance, the incorporation of extra-statutory concessions—the abolition of obsolete material or the correction of minor anomalies.

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The project must first exercise judgment in deciding whether a proposed change is minor enough to fall within its remit. It identifies all proposed changes in the various consultations and asks for comments. That request does not come to Ministers. If respondents all agree that the change should be made, as part of the rewrite, it is placed in the Bill and flagged up so that Parliament may consider it. If the reaction is unfavourable, the change is generally dropped and a reason for it not being included is given. For example, an extra-statutory concession might need to continue.

In cases of doubt or mixed reaction to the consultation, guidance is sought from the Joint Committee, whose membership, of course, includes Members of both Houses; this evening, compliments have been paid to their work. Ultimately, it is for Parliament to decide whether the Bill should make those minor changes. Up to that point, however, the project is all embracing and, for Treasury Ministers, an unusual exercise in that it allows those outside the House who use the legislation to give their opinion on whether the change should be made. The hon. Member for Eddisbury (Mr. O'Brien) asked for examples of such changes and I shall provide them in a moment.

The next issues are not directly related to the Bill, but I hope that with your tolerance, Mr. Deputy Speaker, I may refer to them in passing. The hon. Member for Yeovil (Mr. Laws) raised the vexed question of complexity and simplicity, as if we lived in a perfect world in which the tax authorities never had to consider the practice of individuals or commercial organisations in respect of tax legislation and whether it followed the intent of Parliament in passing the legislation. The problem we have is mainly with anti-avoidance legislation, which is long and complex because it responds to complex relationships. The hon. Gentleman asked me to speculate on how we might overcome that. Could we get tax planners to agree a truce, under which they would stop their creative tax planning and we would not need our anti-avoidance legislation? I live in hope, but I think not.

Mr. Laws: The Paymaster General's comments notwithstanding, would she accept that a Chancellor can pursue a policy of tax simplification and reduce the number of taxes, as Lord Lawson did in the 1980s, or he can introduce new tax allowances and reliefs that complicate the tax system—as most people believe the present Chancellor has done since 1997?

Dawn Primarolo: With respect, the hon. Gentleman has never been in the position—and probably never will be—of receiving Budget submissions, be they from the CBI, the Institute of Directors or even the Liberal Democrats and the Conservatives. Without fail, those submissions ask the Government to intervene to assist in a particular area; they can be hugely beneficial.

For instance, the legislation on the research and development tax credit was widely celebrated and acclaimed by businesses small and large. I seem to remember that it took up some 90 pages, and that Liberal Democrat Members supported it in this House. However, when it comes to the question of simplicity and complexity, some hon. Members seem splendidly unaware that the UK economy is part of the global economy. Tax planners arrive at intriguing and

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interesting interpretations of tax law, and so the matter is never as straightforward as some hon. Members suggest.

I agree, however, that the idea that the Government set out to make tax law complex is rubbish. Even so, hon. Members must turn their minds to the challenges faced by all tax authorities, not simply by the authorities in this country. The hon. Member for Yeovil may be right to say that legislation that is easy to understand may not be so easy to get around; I doubt that but, again, I live in hope.

The hon. Member for Eddisbury (Mr. O'Brien) asked several questions about parliamentary drafters. A dedicated team of drafters is part of the tax law rewrite project, and that is taken fully into account in the resource planning for that office. That will continue. The PAYE regulations will be out in the spring, and the next tax law rewrite Bill will be available in the later part of this year or early next.

The hon. Member for Eddisbury asked about regulatory impact assessments. I know that he is familiar with the argument that they are difficult to achieve when the tax law remains unchanged. However, the assessment for this Bill makes it clear that when the rewritten legislation has been up and running for a number of years, the Government will work in conjunction with the relevant interested parties on the long-term and short-term cost of the Bill. In that way, a more meaningful understanding of how to proceed would be arrived at.

The hon. Member for Eddisbury asked for examples of minor changes. I draw his attention to the clause dealing with the exemption of certain lump sums from pension income, which now provides that the lump sums provided under retirement annuity contracts are exempt from income tax, as long as they are provided under the approved rules of the scheme. That change is in principle in the taxpayer's favour. Another example is the reporting requirements for the acquisition of shares. Those requirements used to be 30, 60 and 92 days, but the Bill sets them all at 92 days. That minor change introduces simplicity, and is clearly in the taxpayer's favour. The supporting material always makes clear whether a change is in the favour of the taxpayer or of the tax authorities. With only a couple of exceptions, the changes are all in favour of the taxpayer.

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There are many examples of discarding obsolete provisions, but I shall give just one. Section 648(A)(2) of the Income and Corporation Taxes Act 1988 has not been rewritten. Explanatory note 2381 makes it clear that that transitional measure is no longer needed.

The redraft of the PAYE regulations will be out in the spring, and I hope that they will come before Parliament later this year. However, the third rewrite Bill will be published in draft in the first half of next year—not later this year, as I suggested. I apologise for that error. It will cover income tax, property income, trading income, savings and investment income and foreign income.

Mr. Laws: Will the next tax rewrite Bill resolve any of the problems alluded to in today's Treasury Committee report, which touches on the issue of tax avoidance by the Inland Revenue?

Dawn Primarolo: I have been in the Chamber all day, and I have not had a chance to read the report to which the hon. Gentleman refers, but I am sure that, when this business concludes, I will rush out and study it avidly.

The hon. Member for Eddisbury also asked about flow charts. I agree that they are helpful and that they can be used, but there is a slight problem with incorporating them in legislation: it is very difficult to frame legislative amendments to flow charts. We shall be as helpful as we can, but I wonder whether that might just be a trick question.

It is not for us to submit the Bill to the Plain English Campaign, but I am sure that those involved in the campaign will study it, although I do not think that they are necessarily noted for looking at technical legislation. I concur with the hon. Gentleman's view that the Bill is an excellent piece of drafting and that it is well understood.

I was asked about electronic consultation. All the tax law rewrite project drafts and draft Bills are published in paper form, announced in press releases in paper form and are accessible to everyone in every way.

Finally, I thank all the professional bodies, the Inland Revenue team, the tax law rewrite team and the Members of Parliament involved in the tax law rewrite project. I also thank all those hon. Members who have stayed in the Chamber this evening and made this debate so fascinating, if a little varied at times. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

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Mid-Term Review of the Common Agricultural Policy

[Relevant Documents: European Union Documents No. 7964/00, Special Report No. 8/2000 of the Court of Auditors on the Community measures for the disposal of butterfat, No. 12457/01, Special Report No. 6/2001 of the Court of Auditors on milk quotas and No. 12782/02, Special Report No. 5/2002 of the Court of Auditors on extensification premium and payment schemes in the common organisation of the market for beef and veal. The Third Report of the Environment, Food and Rural Affairs Committee, Session 2002–03, on The Mid-term Review of the Common Agricultural Policy (HC 151).]


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