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Dawn Primarolo: The hon. Gentleman is making a thoughtful speech on important aspects of taxation and I would like to make two points. First, I remind him that his party, when in power, committed the then Government and successive Governments to the current regime. Secondly, I am glad that he acknowledged that important point about maintaining the competitiveness of the UK's tax system, but before he concludes his remarks can he offer us any thoughts about how exactly that might be done?
Mr. Gauke: I am grateful to the Paymaster General for her complimentary remarks. It is not the first time that she has made such remarks; it appears to be habit-forming and, as I have said before, I fear that it may have consequences for my career.
I acknowledge that in some cases the judgments of the ECJ relate to the single market. I do not want to argue the historical point. I am not pointing the finger at the Government for introducing legislation or signing treaties that may have caused the problem, but political society as a whole has not addressed it and given it the profile that it should have received. I am trying to highlight the concern, but as a country our options for addressing it are somewhat limited. We should consider amending treaties. We may need to consider taking a tougher line at intergovernmental meetings. We must always bear in mind the consequences to our tax system when we evaluate our relationship with the EU.
My concern this evening is simply to highlight that issue, which does not receive the attention in the House or outside that it should. We are talking about very large
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sums of money. We are talking about a cost to the Exchequer of £7 billion. We have rightly argued about the proposals on trusts, which the Treasury estimates will cost about £15 million, and about the home computing initiative. We are talking about relatively small amounts of money in those cases, but large sums are being lost to the Exchequer and large administrative burdens are being placed on British industry and business as a consequence of such judgments. There is a need for a greater awareness of what the ECJ is doing to our corporate tax system. The effect is substantial and very concerning, and it is highly regrettable in my opinion that we are losing the ability to legislate for ourselves the corporate tax system that should apply in the United Kingdom.
Ms Sally Keeble (Northampton, North) (Lab): As a member of the Treasury Committee, I should like to join my right hon. Friend the Member for West Dunbartonshire (Mr. McFall) in paying tribute to the staff who prepared our inquiry and report at very short notice. In the brief time that I have this evening, I want to deal with two general issues and then two very specific ones, one of which has not been dealt with before.
I completely disagree with the hon. Member for Gosport (Peter Viggers), who also serves on the Select Committee, about the overall approach to the Budget and the Bill and about the management of the economy in general. Having heard what he said, I wonder whether he was at the same Select Committee inquiry as the one that I attended. The overwhelming consensus of all the witnesses was that our economy has been remarkably stable. Indeed, that is stated in the introduction to the Select Committee's report, which no one demurred from at all.
The overwhelming consensus was also that that stability is the envy of the worldcertainly, it has been very well recognised internationallyand that the stability and success that we have achieved is largely owing to the stewardship of the economy by the Government and, in particular, the Chancellor. Some of the protestations from Opposition Members were driven by envy of a Government who have succeeded in managing the economy well for the same period that the Conservative party managed to precipitate two of the most disastrous recessions that this country has ever seen. Indeed, the Chancellor recognised some of the challenges that we face in this economycertainly, those of increasing productivity and tackling povertyand measures to tackle those problems are clearly set out in the Budget.
Quite a number of hon. Members have talked about the trust fund proposal. I completely disagree with the hon. Member for Chipping Barnet (Mrs. Villiers), who said that it was a tax on the aspirational classes. My constituents are second to none in their aspirations. Indeed, an awful lot of them moved to Northampton to have a better life, to do better for themselves and their families, to find jobs and to get better houses. I have not heard any of them remotely say that they feel that that proposal will affect their ability to provide better for their children's future.
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My constituents rightly understand that their aspirations for their children are well-served by the Government in providing for education services, in increasing children's chances of university education and in ensuring that they have the prospect of finding decent jobs. They obviously want to ensure that their children's financial future is safeguarded by raising the inheritance tax threshold. The Government have certainly made some progress in that respect. I am very pleased that the level is above the average value of houses in my constituency, but I should like it to be moved higher.
I want to deal with two issues that have not been dealt with before. The first relates to clauses 54 to 58, which deal with charities. I have a particular interest in that because I was deputy chair of a commission of inquiry that was set up by the Association of Chief Executives of Voluntary Organisations, which was very much concerned about the income and funding for charities and their tax treatment. Some of the proposals in the Bill are good; some seem to be not quite so good. I hope that my right hon. Friend the Paymaster General will be able to comment a bit more on those. I am sure that they will also be dealt with in Committee.
Clause 54 relates to charities' dealings with major donors. As I understand it, it is largely a way of cutting down on tax avoidance. I trust that it will be presented and implemented in that way. Will my right hon. Friend confirm that? Clause 55 is a bit more complex and deals with non-charitable spending. It is a means of restricting tax relief. It serves the dual purpose of providing more flexibility and introducing measures to deal with tax avoidance. I very much welcome the flexibility, especially where it seems to allow charities more leeway in managing their finances when they hit financial difficulties. I assume that that will be more carefully explored in Committee. I ask my right hon. Friend to look very carefully at the implementation of that.
Some of the charities that will be affected by the proposals are extremely small, because the Bill proposes the lifting of the de minimus £10,000 level. The regulations are complex, so I hope that my right hon. Friend will ensure that those small organisations can deal with those difficult issues.
Clause 56 removes the risk that charities with trades that are only primary purpose could lose tax relief on the whole trade if the non-charitable part of the business is large. That touches on some issues that came up in the scrutiny Committee of the earlier Charities Bill. As I understand it, the provision would affect, in particular, those charities that support their charitable purpose with a business that is run purely as a business. We had the good example of a museum that also had a conference centre and used the income from the conference centre to support the museum. Will my right hon. Friend say whether that will be the impact of the clause and whether it will give the help to those innovative charities that I expect and hope it will?
Clause 57 improves the arrangements made for subsidiary companies of a charity to donate their profits to parent charities using gift aid. When a subsidiary decides to give its money to more than one charity, it will still be able to gain the tax exemption. Charities play an incredibly important role in our society and the Government have always been keen to support them. The ability of charities to operate effectively obviously depends to a great extent
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on their being able to raise their funds through voluntary activity and also, of course, on having a tax regime that is supportive of them and is comprehensible and easy for them to implement. I hope that my right hon. Friend will give some reassurances on that in her winding-up speech and also provide some indication of whether the Government will look more favourably in general at the tax treatment of the charities and voluntary organisations that perform such an important role in our society.
My second small point relates to clause 61 and the home computer exemption. I am not sure whether the matter has already been raised. I take on board all the points about the change to the price of computers and the fact that many people have them now, but the measure has been extraordinarily popular in my constituency. The Communication Workers Union has started a petition to support the retention of the tax relief because many local people were using it to buy computers. I ask the Government to look again at the measure. They should not assume that just because computers have become cheaper and more people have them, the measure, which is small, does not still serve a useful function in our society.
I support the Bill in almost all its details. It is part of one of the cornerstones of the Government's success: the fine management of the economy, which has served my constituents well and allowed them to enjoy a decent quality of life and realise their aspirations for their children. I am sure that the Bill will be welcomed and sent on its way by the House tonight.
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