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Point of Order
3.34 pm
Miss Anne McIntosh (Vale of York) (Con): On a point of order, Mr. Speaker. Last week, I saw on the Order Paper that I had been fortunate enough to have a question selected for a response, most likely from one of the Under-Secretaries of State. The question related in every particular to the responsibilities of his Department—to a British standard for flood-resistant products in connection with planning policy statement 25. Imagine my surprise when I saw that my question was no longer to be taken today. I have not had an explanation. If I do not get a satisfactory explanation, will you, Mr. Speaker, look kindly on the issue as a subject for a future Adjournment debate?
Mr. Speaker: Transferring is a matter for a Department, but it is my understanding that the hon. Lady, or any hon. Member, should be notified. I will look for an explanation as to why she was not notified—that is unacceptable.
Transparent Taxation (Receipts)
3.35 pm
Mr. Nigel Evans (Ribble Valley) (Con): I beg to move,
That leave be given to bring in a Bill to make provision for all receipts printed in the United Kingdom to contain a figure for the total amount of tax paid on the goods and services purchased.
I declare my interest as the owner of a small retail store in Swansea.
The purpose of the Bill is to ensure that taxation is as transparent as possible. People rightly want to know how their money is spent, but it is also essential for the Government to be open about how that revenue is raised. The Government estimate that the Treasury’s receipts for 2007-08 will be £549.9 billion, projected to rise to £575.2 billion next year. The Bill would be particularly relevant to purchases that are subject to multiple taxes and duties. I am thinking specifically of fuel, tobacco and alcohol, which are everyday items bought, at one time or another, by the majority of the population. Each purchase soon adds up. On those products alone, the Government will rake in an estimated £41.2 billion in 2007-08. That is a huge amount of people’s hard-earned money, and they deserve to see exactly how it is collected.
The Bill would benefit the taxpayers of this country and have few, if any, cost implications for major businesses. It would not be an extra burden but merely a hassle-free way of making government as open as possible. Smaller businesses would not be targeted by any potential legislation; safeguards would be put in place to ensure that they were not adversely affected. Placing the amount of tax generated on each receipt next to the total price would make people better able to see how and where their taxes are collected. It is important that people see where their money is going; in that way, a Government can be held fully accountable.
In researching the Bill I have consulted representatives of the Adam Smith Institute and the TaxPayers Alliance, both of which have given their unequivocal support to the measures that I seek to introduce. Both those organisations have said that taxation should be more transparent and that people should have a right to know how much tax they are paying on a particular product. One of the most interesting concepts that surrounds taxation is that of tax freedom day, which shows how long we have to spend working for the Treasury before our money becomes our own. Last year, that meant working from 1 January until 4 June just to pay our tax bill. It is that sort of realisation that hammers home the need for open and understandable taxation.
I should like to take the three main products one by one. Fuel duty currently stands at 50.35p per litre and is scheduled to rise by 2p in October of this year—unless The Independent is wrong, Ministers get their way, and there is yet another U-turn. Then, of course, there is VAT at 17.5 per cent. As with all goods subject to duties—I suspect that a large number of people do not realise this—the Government tax the duty as well. Rather than paying VAT on the basic price of the fuel, we pay it on both the basic price and the 50.35p. In April 2008, according to the Library, unleaded petrol retailed at an average of 107.6p per litre—remember those heady days?—and the average diesel price was 116.5p per litre. According to further figures provided by the Library,
the pre-tax price would be 41.2p per litre and 48.8p per litre respectively. Putting those figures into context and including VAT, that means that 62 per cent. and 58 per cent. of the money that people pay for their fuel goes to the Treasury. As people will know, during the past few months, while I have been researching this Bill, fuel prices have risen considerably to about £1.20 per litre for unleaded and as much as £1.34 for diesel.
My Bill would ensure that people were aware of the rising amount of tax that the Government are creaming off. As a practical example, let us assume that I went to the petrol station and put £20-worth of unleaded petrol in my car. For the most part, the receipt would mention only the amount of VAT but, as I have stated, that is only a minor part of the taxation. Under the Bill, the bottom of my receipt would read, “Total—£20.00; total tax take—£12.40.” There would be no hidden costs, and when the Government talked about 2p rises the public would be able to see the exact effect as soon as it came into force.
Tobacco is exactly the same. For those without a degree in economics, tobacco taxation is especially complicated. There are two duties on cigarettes. As of 12 March 2008, the specific duty is £112.07 per 1,000 cigarettes, there is an ad valorem duty of 22 per cent. of the retail price and—lest we forget—VAT. The Institute for Fiscal Studies has calculated that a packet of 20 king-size cigarettes would be subject to 217.03p specific duty and 109p ad valorem, which suggests that the VAT on a £4.95 packet of cigarettes is 86p. Under the Bill, the receipt would read, “Total—£4.95; total tax take—£4.12.”
The Budget immediately raised alcohol taxes by 6 per cent. above inflation, and there will be a 2 per cent. rise above inflation every year until 2013. That is projected to lead to a £600 million rise in revenue for the Treasury by 2008-09. From 17 March 2008, alcohol duty rates are £14.96 per 100 litres of beer and, on wine and spirits, £21.35 per litre of pure alcohol. To most normal people, such figures and statistics are not grounded in reality and everyday life. The Institute for Fiscal Studies has estimated that we currently pay 30.04p on every pint of beer, 134p on bottles of wine and 548p on bottles of spirits—and then there is VAT. Under the Bill, a receipt for a pint of beer that cost £3 would state, “Total tax take—83p.”
As with any proposed legislation, it is important to think about the unintended consequences. In the scenario that we are considering, the consequences would be minute, if not non-existent. As many hon. Members know, I am a convenience store owner in Swansea. I know that our till can be programmed to produce the type of receipt to which I have referred with minimal cost to the business, and that it could be done during the next servicing of the till. For businesses whose tills are not capable of that change, there would be no requirement to upgrade and no forced time limit, but the Bill would provide that when they purchased new machinery that could produce the requisite receipts, the till should be programmed accordingly. That way, smaller businesses would not be hit with an additional business cost, but naturally progress to the system that I propose.
Let me take the opportunity to reassure the House that there is no intention to impose any negative effect on small businesses—after all, they employ 58 per cent.
of the UK’s private sector work force. However, it would be in the spirit of the Bill for smaller premises to display signs that specified the tax take on average cigarette, alcohol and fuel products. By the same reasoning, there will be no additional cost to the companies that make the tills. The technology required for that is already available and used in a huge number of tills.
That leaves the consumer. I do not believe that a single argument could be made to suggest that the Bill would not be beneficial to consumers. It represents an uncomplicated way of creating a more transparent taxation system, in which the general population can experience at first hand exactly how, where and when they are being taxed. It will lead to greater understanding of the taxation system and, I hope, mark the beginning of the end of stealth taxes, with which the incumbent Government have become synonymous.
There is not enough time to go through examples of every tax, and no one would want me to do so. [Hon. Members: “Go on!”] Well, we certainly do not have time to go through all the taxes that the Government have introduced since they came to power in 1997.
The Bill is in the spirit of open government. It is relatively cost and hassle free, and there would be great benefit to the public with no extra burden on them or the retailer. In short, it is a simple measure that would lead to a better understanding of the tax system, allow transparency and provide greater appreciation of how taxes are collected. At a time when hard-working families are feeling the pinch of higher prices on food, fuel, energy, tobacco and alcohol, it is only right that the Government should also tighten their belt, and let the public see the total tax as well as the total tax spend.
Bill ordered to be brought in by Mr. Nigel Evans, Mr. Brian Binley, Mr. Graham Brady, Mr. Christopher Chope, Philip Davies, Christopher Fraser, Mr. Paul Keetch, Patrick Mercer, Mark Pritchard, Mr. Robert Syms, Ann Winterton and Sir Nicholas Winterton.
Mr. Nigel Evans accordingly presented a Bill to make provision for all receipts printed in the United Kingdom to contain a figure for the total amount of tax paid on the goods and services purchased: And the same was read the First time; and ordered to be read a Second time on Friday 17 October, and to be printed [Bill 127].
finance biill [ways and means]
Income tax: basic rate limit
That provision may be made in the Finance Bill about the basic rate limit.— [ Jane Kennedy .]
Effect of transfer of rights to payment etc
That provision may be made in the Finance Bill about cases in which a right to be paid, repaid or credited with a sum by the Commissioners for Her Majesty’s Revenue and Customs has been transferred from one person to another.— [ Jane Kennedy .]
Insurance special purpose vehicles
That provision may be made in the Finance Bill for the making of provision (including provision having retrospective effect) in relation to insurance special purpose vehicles.— [ Jane Kennedy .]
Orders of the Day
Finance Bill
Not amended in the Committee and as amended in the Public Bill Committee, considered.
[Relevant document: Thirteenth Report from the Treasury Committee, Budget Measures and Low- Income Households, HC 326.]
That the order in which proceedings on consideration of the Finance Bill are taken shall be: New Clauses relating to income tax; amendments relating to Clauses 1 to 3 and Schedule 1; New Clauses relating to the powers of HM Revenue and Customs; amendments relating to Part 7; New Clauses relating to inheritance tax; amendments relating to Clause 8 and Schedule 4; New Clauses relating to information about and simplification of taxation; amendments relating to Schedule 3; New Clauses relating to vehicle excise duty and fuel duties; amendments relating to Clauses 15 and 75 and Schedules 7 and 17; remaining proceedings.— [ Jane Kennedy .]
‘(1) For the tax year 2008-09 the amount specified in—
(a) section 35 of ITA 2007, and
(personal allowance for those aged under 65) is replaced with “£6,035”.
(a) section 57 of ITA 2007, so far as relating to the amount specified in section 35 of that Act, and
(b) section 257C of ICTA, so far as relating to the amount specified in section 257(1) of that Act,
(indexation) do not apply for the tax year 2008-09.
(3) This section does not require a change to be made in the amounts deductible or repayable under PAYE regulations before 7 September 2008.’.— [Jane Kennedy.]
Brought up, and read the First time.
3.45 pm
The Financial Secretary to the Treasury (Jane Kennedy): I beg to move, That the clause be read a Second time.
Mr. Speaker: With this it will be convenient to discuss the following:
Government new clause 12— Basic rate limit.
New clause 1A— Interim statements to Parliament —
‘On any occasion when the Chancellor of the Exchequer or a Treasury Minister announces to Parliament any change or intended future change to—
(c) income tax personal allowances,
other than in the course of a statement to Parliament presenting a Budget or Pre-Budget Report, the Treasury must publish a current forecast of—
(a) public sector net borrowing,
(b) growth rate of gross domestic product, and
for the current fiscal year and each of the subsequent four fiscal years, updated to take account of that announcement.’.
New clause 4— Income tax rates —
‘(1) The amendments made by the provisions of this Act specified in subsection (2) shall cease to have effect at midnight on 5 January 2009 unless the conditions set out in subsection (3) have been satisfied.
(2) The provisions referred to in subsection (1) are—
(b) section 3(7)(a) and Schedule 1 (in so far as they relate to the starting rate).
(3) The conditions referred to in subsection (1) are that—
(a) the Chancellor of the Exchequer shall have laid before the House of Commons a statement setting out the measures taken, or intended to be taken, to mitigate the effect of the amendments made by the provisions of this Act specified in subsection (4), when taken together, on those for whom such effect is a net increase in income tax payable, and
(b) the House of Commons shall by resolution have approved such statement.
(4) The provisions referred to in subsection (3) are—
(a) sections 1, 3(2) and 3(3),
(b) section 3(7)(a) and Schedule 1 (in so far as they relate to the starting rate), and
(c) any other provision of this Act the effect of which is to change the bands of income on which income tax is charged.’.
New clause 6— Harmonisation of income tax and national insurance contributions —
(a) the personal allowance under section 35 of the ITA 2007 (c. 3) is set at an amount which is not equal to the amount of the primary threshold under section 5 of the Social Security Contributions and Benefits Act 1992 (c. 4), or
(b) the sum of the personal allowance and the basic rate limit under sections 35 and 10(2) of the ITA 2007 (c. 3) is set at an amount which is not equal to the upper earnings limit under section 5 of the Social Security Contributions and Benefits Act 1992 (c. 4),
the Treasury shall within one month of the passing of the Act which sets the personal allowance or basic rate limit lay before Parliament a report explaining the matters set out in subsection (2).
(a) why the amounts have diverged for the year, and the expected future path of the amounts in relation to each other; and
of operating a system of divergent thresholds and the savings that are expected to result from a convergence of those thresholds.’.
New clause 10— Personal allowances —
‘(1) The Treasury must by regulations made by statutory instrument vary section 35 of ITA 2007 (personal allowances for those aged under 65) so as to achieve the outcome specified in subsections (2) and (3).
(2) For the tax year 2008-09 50 per cent. of income in excess of £6,400 (up to a maximum of £600) shall be added to the personal allowance, subject to subsection (3).
(3) That addition shall be withdrawn at the rate of £10 for every £100 of income in excess of £7,600, so that—
(a) a taxpayer with an income of £7,600 receives an addition to the personal allowance of £120, and
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