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As the hon. Member for Christchurch implied, this is not about making people pay more national insurance. It is about ensuring that they pay the national insurance that the House, over decades, has decided that everyone should pay. It is a question of fairness. Unfortunately, however, all Governments faced the same problem. Governments would see a contrived avoidance scheme and close it down; the avoiders would then move to another highly sophisticated scheme, which would have to be targeted.
The current Government took a number of steps. I announced the first in a statement on 2 December 2004, making it clear not just that the Government would close the loopholes that they had identified so far, but that any future attempt not to pay the right amount of national insurance or tax would be prevented. The hon. Member for Fareham (Mr. Hoban), whom I welcome to his first debate as a member of the shadow Treasury team, said that that statement was unclear. Let me read a sentence from it, because I am not sure how people can claim to be confused by it or not to understand it.
"We intend that from today both tax and NICs legislation should achieve our objective of subjecting the rewards of employment to the proper amount of tax and NICs, however the rewards are delivered."[Official Report, 2 December 2004; Vol. 427, c. 41WS.]
The statement announced the closing of existing loopholes, which was dealt with by Finance Bill tax measures and is dealt with by measures in this Bill. It also introduced a strong deterrent. It said "Just don't do it, because however you do it, we will close down the scheme." The amendments would remove, or weaken, that deterrent. They effectively say to those in the tax avoidance industry "Let us continue to play this game of cat and mouse. You carry on finding ways not to pay tax, and we will close the schemes down after the Treasury has lost the revenue." That is not acceptable to any fair-minded or, dare I say, reasonable person.
The hon. Gentleman also brought up the question of consultation, and the roles of the commissioners and the Treasury. It was a good debating point, but was based on a fundamental misunderstanding of the workings of Her Majesty's Revenue and Customs. As the Bill only completed its passage through both Houses earlier this year, I find that a bit strange.
Her Majesty's Revenue and Customs is a statutory body, and Treasury Ministers represent it in Parliament. It is therefore appropriate for the Treasury to introduce the legislation. Both here and in the other place, there were debates on exactly what was meant by the term "Treasury" in legislation. It means the Treasury as a Department, meaning the Treasury and HMRC.
On the specific amendments, I have to ask why the Treasury and HMRC would not be working together on the regulations. Of course they would, so amendments
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Nos. 1, 4, 7, 10 and 11 are wholly unnecessary. Whenever Treasury regulations are to be made to supplement primary tax and national insurance contributions, officials from both the Treasury and HMRC always discuss and consult each other on the wording. It is simply unnecessary to enshrine such a normal practice, which has been accepted as straightforward administrative practice for an extremely long time, in the Bill. Doing so would be a waste of parliamentary and drafting time.
Conservative Members then went on to stress the need for consultation, but they know perfectly well that the regulations are subject to consultation and affirmative procedure. Anyone who wants to express their views on regulations can do so. The notion of consultation, as it appears in the amendments, is simply preposterous.
What of amendments Nos. 14, 15 and 17? I do not believe that the right hon. Member for Bromley and Chislehurst intends to destroy the Bill, but if he does, he should have said so when he moved his amendments, rather than dress up his aims in linguistic niceties about the meaning of "reasonableness" and "expedient". The amendments strike at the heart of the caveat of a deterrent. If the statement of 2 December 2004 holds in its deterrent effect, no legislation will be necessary because people will not try, through remunerationthis applies only to employment remunerationto avoid paying their proper taxes or insurance.
The idea that in those three amendmentsNos. 14, 15 and 17all that the right hon. Gentleman is doing is a bit of linguistic tidying-up is simply not the case. If he wants to know the use of "expedient", he needs to see it in the wider context. He knows full well that it is not about looking into whatever dictionary one cares to take off the shelf because the context of the word is important as well. In the particular case of proposed new section 4C, the expediency applies to certain specified purposes, which is quite right. If he wants precedent for using the word "expedient" rather than "reasonableness", he need look no further than to his own Government in 1992, although I can understand why he now wants to distance himself from decisions that he was happy to vote for at the time.
This has been an interesting debate, but it would have been better if the right hon. Member for Bromley and Chislehurst had been more straightforward with the House about what he was attempting to doto remove the strong and important deterrent effect of the regulations. If the right hon. Gentleman still wants to put his amendments to the vote, I ask my hon. Friends to oppose them.
It certainly has been a revealing debate and the Paymaster General's petulance gives the lie to some interesting aspects of the Government's attitudenot least the fact that she has reduced the commissioners to a mere cipher of the Treasury. I do not know what the commissioners think about that or whether the Government would want to view their role in those terms. We now have it on the record that the Paymaster General is asking why we should bother consulting the commissioners because they are one and the same with the Treasury and there would be no point in doing so. We can leave that matter hanging for future study and
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reference, but it has been a remarkable revelation from a senior Minister about the diminished role of those commissioners.
The Paymaster General's defence of the word "expedient" and her rejection of our attempt to introduce the word "reasonable" were equally revealing. She seems to be saying that any measures designed to counter tax avoidance must be expedient, or they would not work, and that any suggestion of reasonableness is unacceptable. Well, that is very revealing of the Government's attitude both generally and specifically. So from that point of view, this debate, through the vehicle of the amendments, has shone a searchlight not just on the Bill's wording but on the attitude of Ministers and Departmentsin this case, the Treasury.
Mr. Newmark: Is not the Paymaster General's earlier answer to my right hon. Friend a case in point? It may well have been an expedient response to his amendment, but it certainly was not a reasonable one. Perhaps we should look at this discussion in that context.
Having listened to what my hon. Friend the Member for Christchurch (Mr. Chope) said about my amendmentI indicated at the outset that I had a realistic view of what I was trying to achieveI beg to ask leave to withdraw the amendment. I understand, however, that my hon. Friend may wish to press his amendment No. 14 to a Division.
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