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My concern is that this language is somewhat open-ended. I recognise that there is a need for subjective judgment by the Revenue, but can the Chief Secretary explain to the House and put on the record exactly the conditions that he and the Government have in mind? Subject to the answers to such questions, we are willing and happy to support this important correction to the original Bill.

Government amendments Nos. 54 to 56 refer, as the Chief Secretary said, to what we know as off-plan sales. During the convivial debates—as he seems to remember them—that took place in Committee, there were occasions when, among that conviviality, it appeared that there were very large holes in the Bill. These amendments, among the many others, are intended to fill one such hole: the question of how the Government intend to treat off-plan sales. May I be the first to welcome the Government's U-turn on this issue? [Interruption.] I can see that the Chief Secretary does indeed accept what I have just said. I understand from his comments that these amendments will seek to fulfil the terms of our own proposal as presented in Committee, which was that off-plan sales should be exempt. Indeed, we withdrew that proposal in Committee only in order to allow the Government to introduce their own solution.

As I and other Members have had only 48 hours in which to consider these amendments, along with the other 42 Government amendments, I do have a couple of brief questions, as the Chief Secretary might expect, and I should be grateful if he would respond to them. Which representative bodies did the Government consult in drawing up the amendments, and can he name the organisations that have expressed support for them? Can he confirm whether the Government intend to include all off-plan sales, or are there any that they are seeking to exclude through these amendments?

The Government have tabled a series of amendments that are intended either to correct previous omissions or to provide clarity. Naturally, we welcome any attempt to clarify this legislation, but it has to be said that had the Government consulted properly in the first place and allowed sufficient time in Committee, many of the amendments would not have been required.

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In fairness, I do welcome amendment No. 74, which seeks to include provision for appeals under clause 90. I accept that that seems a sensible move. Do amendments Nos. 93, 94 and 95—they apply to schedule 17, which deals with appeals procedures—represent an enhancement or a diminution of an appellant's rights? I appreciate that many people will have assumed that the former is the case, but I should appreciate his confirming that that is indeed so.

I turn to Government amendments Nos. 58, 57, 59 and 81, which seek to amend clause 58. Members of the Committee will recall that we, Her Majesty's official Opposition, sought to amend this clause. The underlying problem is that the Bill as drafted would permit people to part-exchange their home for a new one, but only if they are trading up to a more expensive property. The result would be the bizarre situation in which a multi-millionaire could benefit from such relief by trading up to a new mansion, but an elderly couple hoping to trade down would in fact face a tax bill. Despite the earlier protestations from Ministers—I remember them, but perhaps the Chief Secretary is happier to gloss over them—they have now at last relented. I should therefore like to welcome the amendments: on this occasion—but perhaps only on this occasion—it is true that the Government have actually listened.

Mr. Stephen O'Brien: I think that the Chief Secretary missed that.

Mr. Prisk: Indeed, but I hope that he will be listening later.

I turn to our amendments and to the substance of the issues behind them. Amendment No. 8 relates to clause 42, which introduces an entirely new tax. I did enjoy the exchanges involving my hon. Friend the Member for Tatton (Mr. Osborne), but the truth is that when something is called a tax, it is a tax; the Chief Secretary will, we hope, learn that soon. Supported by 82 other clauses and 17 schedules, this provision represents the single most important tax element in this year's Budget and in the Bill before us. Amendment No. 8, together with its consequential amendments, would correct the name of this tax to reflect what it is seeking to charge. It also highlights the fact that, despite the Chancellor's promises of last year, this initiative is about not tax reform but raising tax revenues.

Clause 42 describes this new tax as a "stamp duty land tax", yet any first-year lawyer knows that stamp duty and land tax are two entirely different things, both in law and in practice. Stamp duty is a charge on authorising documents; land tax is applied to real estate—in this case, to land and to property transactions. So the bizarre idea of bolting the two together in the hope that no one will notice is most peculiar: it is to create something that, in tax terms, is both fish and fowl; it is a contradiction in both term and tax. As someone said to me recently, it is an attempt to create a push-me-pull-you tax, but I suppose that it is no surprise that this Government should wish to face both ways at once.

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The real reason why the Government have chosen this oxymoronic name is to hide the fact that they have broken their promise to modernise stamp duty. Their consultation document promised that the reforms would create a system that


Most important of all, we were promised that this new reform would deliver fairness for all, and yet, almost immediately after the consultations began last year, things went horribly wrong for the Revenue and the Government. Their choice of discount rate was shown to bear no relation to the open market, and the leading experts on their consultation committees described their preferred charging for leases as


It was then pointed out that the Government had forgotten to account for the thousands of hotels, restaurants and shops that pay variable rents. So by January of this year it was clear that the position was irretrievable. That is why, on 21 January, Ministers instructed the Revenue to stop consultations immediately and without explanation. The result is that this property transaction tax—for that is what it is—is neither fair nor modern. It is an ill-conceived tax, and, after a heavily guillotined parliamentary programme, it remains ill considered.

I shall give the House two simple examples of why this tax is wrong. When the Government promised us last year that they were going to modernise stamp duty and achieve fairness, everyone assumed that would include removing what is known as the slab effect. This term refers to the tax's rate structure, whereby a single rate applies to the whole purchase price. Thus, a young couple buying their first home at £250,000 would be liable for £2,500 in tax; but were they to pay a pound more, they would have to spend £7,500 in tax—three times the lower figure. This iniquity is repeated at each threshold: at £60,000, at £250,000 and at £500,000. So this was a great opportunity for the Government to sweep away this ancient and unfair tax legislation, yet what do we find? Through this Bill, they have written that iniquity back into legislation. What a wasted opportunity. What a failure to reform.

Just as bad is the Government's determination to persist with applying this tax on VAT on any consideration. Despite our apparently convivial discussions in Committee, and all the pleas from the professional bodies, the tax as it stands tonight will still be charged on any VAT paid. It is therefore a tax on tax.

Will the Chief Secretary explain the logic behind the proposal? In what possible way is it modern commercial practice? In what sense is it fair? In respect of the slab effect—the tax on tax—the Government had the opportunity to deliver on their promise of fairness and modernity, but they have failed in both.

As the Chief Secretary anticipated, our concerns about the tax go further. Most important of all is the way in which the new tax hits leasehold occupiers—hence our amendments Nos. 9 and 10. At present, stamp duty on leases is calculated by reference to the lease length and the average annual rent. Under clause 56 and schedule 5, the new tax will be charged at 1 per cent. of the value of the rent payable over the whole lease term.

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In practice, as all the outside experts have shown, that would lead to exceptional tax rises. I should add that the Chief Secretary admitted in Committee that those rises were over and above any revenue that would come from clamping down on tax avoidance. This is extra money that businesses will have to pay.

For example, retailers face an additional tax bill of £130 million on new store openings. Dixons told me that it faces a tax bill of £2 million if the tax is implemented, and B&Q advises me that, for an average store, the tax bill will rise from £35,000 to £285,000—an eightfold increase.

Mr. Simmonds: My hon. Friend is making a powerful and articulate case. Is he aware that the latest figures from the British Retail Consortium show that the annual additional cost to retailers would be £238 million?

Mr. Prisk: I am grateful to my hon. Friend. As always, there appears to be a gap between the reality perceived by the Government and the reality that Opposition Members deal with. He is right: this is a bill that businesses will have to pay, and that is the problem.

With a starting threshold of £150,000, the new tax—despite the Government's warm protestations—will catch most occupiers with an annual rent of between about £12,000 and £15,000. That includes the vast majority of companies in the Chief Secretary's London constituency, and most companies in our major cities. Thus the Royal Institution of Chartered Surveyors has shown that, for example, a factory of 1,000 sq ft in London on average rents for 11 years will pay £5,251 more in tax. An office of 1,000 sq m in Leeds, however, on average rents for a 10-year period, will pay £17,000 more in tax. In Glasgow—and this may be of particular concern to you, Mr. Speaker—a 500 sq m shop on average rents for 15 years will have to pay another £50,537 in tax. That is a fivefold increase.

Opposition to the Government's plans does not come only from the retail sector. It is much wider than that—pubs, clubs, bars and restaurants are all up in arms. The Association of Licensed Multiple Retailers has highlighted the fact that pubs, for example, tend to operate on longer leases of between 10 and 30 years. Assuming an average pub rent of £30,000 over an average lease term of 20 years, the value of the transaction would be about £600,000. At present, the existing stamp duty would amount to £600, but the new tax would cause the cost to rise tenfold, to £6,000. How does the Minister justify that rise? The ALMR has said that it would result in


What is the Chief Secretary's response to that?

In his Budget speech, the Chancellor specifically cited tax avoidance as the key reason for tackling lease duty, and the Chief Secretary repeated that today. I can perhaps understand that argument when it is applied to the abuse of special purpose companies, but it makes no sense when applied to organisations taking out leases. Is the Chief Secretary seriously telling the House that businesses choose to lease a shop or office just to avoid tax? It is nonsense.

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Moreover, in his Budget speech the Chancellor also excused the changes by telling the House that


Loyal to his boss as ever, the Chief Secretary has repeated that statement today. Yet, when challenged—as it has been in recent weeks—the Revenue has been unable to provide any information about the statement, or even the data on which it was based. Many people suspect that it was wrong.


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