|Previous Section||Index||Home Page|
The Paymaster General (Dawn Primarolo): On the whole, the debate has been good and instructive, with hon. Members making positive contributions. I congratulate the hon. Members for Chipping Barnet (Mrs. Villiers) and for Falmouth and Camborne (Julia Goldsworthy) on their first major speeches from the Front Bench. I genuinely look forward to our debates in Committee, if only because all three political parties will be led by women. Let us hope that we can convince both hon. Members of the virtues of the Bill.
Although the hon. Member for Rayleigh (Mr. Francois) knows it as well as I do, I must tell other hon. Members who are not veterans of Finance Bill debates that my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) was only warming up this evening. How much I look forward to his contribution in Committee! Let me say to him, in the friendliest way, that brevity would help.
The Government believe in a modern and fair tax system that keeps pace with a changing world and, as my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) so eloquently summarised, encourages work and savings, ensures that everybody pays their fair share and delivers world class public services. The Bill contains measures that help the Government to achieve those objectives.
My right hon. Friend the Member for West Dunbartonshire (Mr. McFall), who chairs the Treasury Committee and introduced and highlighted parts of its report, reflected on several matters and common themes with the Government. Of course, we shall respond to the Committee in the usual way. However, like the Bill, he went on to focus on measures to support productivity, enterprise and competition, to help the environment and to ensure that the tax system is fair. He referred to targeted measures to tackle tax fraud and avoidance and market distortions, and to ensure that the tax system can respond to the challenges of globalisationa point echoed by many hon. Members.
Like my hon. Friend the Member for Wolverhampton, South-West and other hon. Members, my right hon. Friend the Member for West Dunbartonshire also spoke about the specific challenges to the environment. It is important to remind hon. Members that CO 2 levels will be 15 to 18 per cent. lower in 2010 than in 1990. Greenhouse gases will be 23 to 25 per cent. lower in 2010 than the base year levels. Business sector emissions will be 33 per cent. lower and domestic sector emissions will be 16 per cent. lower than the base levels in 2010. As hon. Members repeatedly pointed out, we have to ensure that we make genuine progress by 2020, that we have a long-term goal of
24 Apr 2006 : Column 459
reducing CO 2 emissions by 60 per cent. by 2050, and that that is based on a range of measures to tackle the emissions problem.
My right hon. Friend the Member for West Dunbartonshire and several other hon. Members mentioned air passenger duty. My right hon. Friend knows that the decision on air passenger duty is influenced by environmental concerns. It must also be considered in the context of wider social and economic factors, as the Chancellor said in evidence to my right hon. Friend's Committee. The aviation industry has been badly affected by 9/11 and by the present volatility in the oil market, and the Government believe that the most effective approach to dealing with aviation emissions is to ensure that the European emissions trading scheme is in place by 2008. In these debates it amazes me how quickly hon. Members and spokespersons for other parties rush to make commitments on which they will never have to deliver. They do not therefore have to consider the issues in the round. That said, I take on board the points that my right hon. Friend made.
The hon. Member for Chipping Barnet spoke about complexity, and I have listened with interest to the debate on the perceived complexity in the Bill. Its measures are designed to be as simple as possible while protecting revenue, encouraging growth and enterprise, and addressing market failures. Complexity is a notion that the Government take seriously, but the tax systems in the modern world are inherently complex, reflecting the complex economic and social realities with which we live.
My hon. Friend the Member for Wirral, West (Stephen Hesford) focused on deregulation. He will be aware that recent research carried out by KPMG found that the UK tax system imposes administrative burdens equivalent to about 0.4 per cent. of gross domestic product, which compares favourably with the rate in other countries. For example, it is lower than in either the Netherlands or Sweden. In answer to the point made by the right hon. Member for North-West Hampshire (Sir George Young), however, Her Majesty's Revenue and Customs has been set challenging targets to reduce that burden even further. Over the next five years it will reduce the time spent dealing with forms by 10 per cent., and with inspections by 15 per cent. My hon. Friend the Member for Wirral, West listed the deregulation measures in the Budget.
The size of the Bill was also discussed. The Government have a strong record of engaging with business and we intend to continue that dialogue. In that context, a large proportion of the measures in the Bill
24 Apr 2006 : Column 460
follow extensive consultation with business, to ensure that the legislation is modernised to effect the changes that the business environment needs. Those measures include the research and development tax credits, the new film tax credits and the creation of the real estate investment trusts
Many hon. Members, including the hon. Members for Chipping Barnet and for Gosport (Peter Viggers), my right hon. Friend the Member for West Dunbartonshire and my hon. Friend the Member for Wolverhampton, South-West, referred to trusts, in particular two types of trustthe accumulation and maintenance trust and the interest in possession trust. There is no clear rationale for privileging those trusts.
It has been clear for some time that wealthy individuals are using trusts primarily to shelter their wealth from inheritance tax. The Government believe that it is unfair for people to gain such an advantage, and we have therefore taken action to ensure that inheritance tax exemptions apply only when trusts are set up to cater for certain prescribed circumstances. Those are, broadly, when they provide for bereaved minors, for the disabled, or for only one beneficiary. In other cases, the normal charges for trusts will apply, preventing them from being used as shelters.
There has been a great deal of speculation in the media that this measure will affect millions of people. Much of that speculation is groundless and has raised people's fears unnecessarily. For the avoidance of doubt, however, and in response to several issues raised this evening, I want to confirm a number of points about trusts.
Life assurance policies that were placed in trust before 22 March 2006 will continue to be regarded as being in pre-Budget trusts. My hon. Friend the Member for Wolverhampton, South-West asked two specific questions. First, he asked whether discretionary trusts still have a 10-year anniversary charge. The answer is that existing tax regimes for discretionary trusts remain, including the 10-year provision. His second question related to wills, for example, in relation to an individual who has Alzheimer's. Wills can still be changed up to two years after death by using a deed of variation, which still applies in that case. When someone dies without having made a will, their bereaved spouse or civil partner will continue to get the spouse relief. Spouse relief will continue to be due when an "interest in possession" trust is set up under a will giving a life interest to a bereaved spouse or civil partner, where someone takes the asset outright.
The hon. Member for Gosport referred to the use of trusts at the age of 18 or 25. Using trusts beyond the age of 18 will still be possiblethe Government are just bringing those into the mainstream tax rules at 18. All
24 Apr 2006 : Column 461
the organisations quoted, including the Legal and General, say that the tax charge is not enough to stop people setting up a life insurance policy. The Government therefore reject statements that the provision might affect millions of people. We recognise how important trusts are, but we believe that the tax system should not apply artificial incentives for setting them up.
Many Members referred to the home computer initiative and to clause 61, which removes the tax exemption. With effect from 6 April, a tax charge will arise on computer equipment made available by employers to their employees for private use. It will not, however, change the position for an employee who has been provided with computer equipment solely for business purposes and where private use is not significant.
The hon. Member for South-West Hertfordshire (Mr. Gauke) raised specific points relating to European Court of Justice rulings. In addition to what I have already said, I reassure him that we will continue to defend UK tax law against challenges before the ECJ. We will keep the tax regime under review. There are good grounds to defend UK tax law consistent with our objectives. We have every reason to believe that we will continue to be able to do that.
My hon. Friend the Member for Northampton, North (Ms Keeble) asked a series of questions with regard to charities. She sought an assurance with regard to specific clauses. I reassure her that the three measures to defend charitable reliefs against misuse do precisely thatthe rules are targeted on areas of misuse, and charities using the reliefs correctly will not be affected. To give her further reassurance, the Charity Finance Directors Group has said that it believes that it is essential that the charity brand is protected and not tainted by association with tax avoidance schemes. The Charities Tax Reform Group strongly welcomed the introduction of measures to prevent the exploitation of tax reliefs for charities by donors of large amounts, to their benefit. [Interruption.] [Hon. Members: "Give way."] I can tell by the noise in the Chamber, as I am sure that you can, Mr. Speaker, how riveted Members are by discussion of the Finance Bill. I therefore look forward to seeing them all in Committee.
|Next Section||Index||Home Page|