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Notwithstanding that, there is the gap in the middle at the hub point, because the protection is given to the hub and the passenger does not have the same protection going forward. I think the hon. Gentleman will accept that there is also the additional costs issuethe additional handling charges and airport charges, and the need to land and recheck baggage.
That would not make it quite such an easy option, and would not necessarily make it a financially cheaper option.
Mr. MacNeil: I am a frequent air traveller. Unfortunately, I sometimes take between four and six flights a week. Are this Government saying that they are going to make life even more difficult for air passengers by ensuring that they have to check in again, and by not ironing out the rough edges? Their journeys are already stressful and annoying enough. Will they get even worse now as result of the consequences of the Governments measures?
Sarah McCarthy-Fry: The measures do not apply within the UK. [Interruption.] What I am saying is in the context of passenger choiceif they think that, to avoid APD, it would be cheaper and more convenient to travel via a different hub. However, it would not necessarily be so practical and easy, and it would not necessarily be so cheap. If it is a through-flight, the measures do not apply; if they are unconnected flights, they will apply.
Mr. Bone: I think that the Minister is not quite aware of the practice. Travelling non-stopdirectis more expensive, and airlines will try to attract people on an indirect route. Someone may well fly with Northwest airlines to Detroit and then down to the Caribbean, and that will be priced cheaper. That is because the airline is trying to attract peoples business and that break in flight is not essential. Interlining happens all the time and there is no difference in protection, because the interlining protection continues through. In practice, the Minister has not got that point exactly right.
Ms Abbott: On the incentive to use an interconnecting flight rather than a direct one, people going to the CaribbeanI am thinking, in particular, of families and Caribbean diaspora nationalswill find it tempting to break their flight in Miami. The Minister may not be aware that there is a large Caribbean community there. If it could be done more cheaply, it would make perfect sense to break a flight there and then go on to the Caribbean, and perhaps a couple of days could be spent visiting another set of relatives. I imagined that the environment was the underlying rationale behind the proposal, but a situation such as I have described will not help us with carbon emissions at all.
Sarah McCarthy-Fry: I take my hon. Friends point, but the point that I am trying to make is that such flights will not necessarily be cheaper because there may be other costs to take into account. It may not be quite as simple as some people have suggested.
Mr. Gummer: Will the Minister explain why it is sensible to have a higher tax on a flight to the Caribbean, given that such a journey can be made only by air, than on a flight to Manchester, which can be reached by train? Would it not be more environmentally sensible if things were the other way around? Has she not got it all upside down?
Let us move on, because I wish to come to suggestions made to amend our APD system in order to avoid the anomalies. Ticketing systems are based on national territories. As such, it is straightforward to base the tax on countries, and we think that the capital city is the most coherent and principled proxy. Where it is administratively simple to divide a territory at an appropriate point, as in the case of the Russian Federation, the Government have done so. Of course it is possible to determine the exact distances of flights, and I take the point that my hon. Friend the Member for Walthamstow made about the administration of that. Such an approach would be slightly more complex because of the ticketing systems that airlines use, and any consequent increases in cost could be passed on to passengers.
My hon. Friend was right when he mentioned the Chicago convention and the fact that the distance link might be so closely tied to fuel consumption as to raise questions about legality. He asked that we should focus our attentions on that, and I assure him that the Government continue actively to support international action at the International Civil Aviation Organisation. It administers that convention, which, as someone rightly said, was signed in 1944 and created the framework. The convention has been revised frequently, but we think that it is now in need of modernisation, and that is particularly true in relation to the environment. The UK and other like-minded states believe that the current practice of exempting aviation from fuel taxation is anomalous and we have succeeded in increasing our focus on the environment, but it has not yet been possible to reach consensus in the ICAO on specific economic instruments. I assure all hon. Members that we are committed to engaging actively, together with our European partners, to press for greater action on the environmental impacts of aviation.
There will be instances in any banding system where a capital falls either just within or just outside a band, or a territory covers a large area. Calls for exceptions to be made for a specific country or group of countries can generally not be met without breaking international law principles of uniform treatment. Making changes in the banding system to change the impact on one group of countries in particular could reduce the revenue from APD, thus requiring the money to be found elsewhere. It could also undermine the environmental signals from the tax and, in addition to legal considerations, it could raise distortion issues with comparable destinations.
Mr. Slaughter: My hon. Friend makes some good negative points about why the Opposition proposals may not work or why, in the case of the per-plane tax, they may even be more expensive. However, she must understand that the anomalies need to be corrected. When my hon. Friend the Member for Hackney, North and Stoke Newington (Ms Abbott) and I saw the Chancellor earlier this week on the matter, he said that it would be re-examined to see whether some of the anomalies, such as those relating to the Caribbean, could be addressed. Will the Minister suggest how that might be done?
Sarah McCarthy-Fry: I was about to come to that. I have asked my officials to consider the matter further. Although my hon. Friend said that my points appear to be negative, I was trying to explain the difficulties and why we have not been able to introduce the proposal until now. That does not mean to say that we are not still looking at it.
Ms Abbott: One of the arguments that the Minister made against doing anything about the zones was that to do so would reduce the revenue. I am genuinely committed to taking action on the environment and to green taxes. The Government must make up their mind about whether the measure is designed to reduce carbon emissions or to produce revenue. Leaving aside the broader question on the Caribbean, which is the thing that concerns me in this debate, I fear that if the Government devalue the notion of green taxes by using them as a cover for raising revenue, the public acceptability of such taxes in future will be much reduced.
Sarah McCarthy-Fry: I certainly take on board my hon. Friends point but, as I said, we must recognise that we want the aviation sector to pay its fair share towards the public finances. The sector is not highly taxedit does not pay fuel duty or VAT on fueland we have a joint way of ensuring that we can secure a contribution to the public finances while trying to find a sensible way of strengthening the environmental signal. We consulted on the case for a per-plane tax and, as I have said, we decided not to proceed with that.
Mr. MacNeil: The hon. Lady is saying that this is a straightforward revenue-raising tax, but it is hoped that it might give an environmental signal. She is saying that the tax is simply about raising money and has nothing to do with the environment. Is that correct?
Sarah McCarthy-Fry: My point is that we are trying to make our reformed APD system give a better environmental signal and better match the distance travelled. We cannot do that under the Chicago convention, which we are trying to change, if the proxy is too close to emissions. The banding system gives a better signal towards that.
Mr. Jeremy Browne: Before the hon. Lady finishes her speech, will she engage with my entirely constructive proposal, which is not to abandon her proposalI understand that she might not wish to do thatbut to modify it in a way that addresses the concerns raised by the hon. Member for Hackney, North and Stoke Newington (Ms Abbott), my hon. Friend the Member for Brent, East (Sarah Teather) and others? The Minister could explore the possibility of having eight bands, rather than four, and the determination of which band a plane journey fell in would be made on the basis of the actual distance travelled, rather than the distance from the UK to the capital city of the country. That would ensure that the bands much more accurately reflected the actual distance travelled, while being less administratively complicated than measuring the distance of each flight. We could keep a band systemthere would probably be more bandsbut the determination would be about the actual journey made, rather than the journey to the capital city. Does she think that that would be a good way forward?
Sarah McCarthy-Fry: We have examined many ways forward along those lines, but so far we have come up with negative reasons, as my hon. Friend the Member for Ealing, Acton and Shepherds Bush (Mr. Slaughter) put it, as to why that is not a practical way to proceed. As I have said, I have asked my officials to continue examining the matter. We had consulted on the basis for a per-plane tax, but after careful consideration we decided not to proceedour reasons are outlined in more detail in the document. I therefore ask the hon. Member for Hammersmith and Fulham (Mr. Hands) to consider withdrawing the amendment.
Mr. Hands: This has been a wide-ranging and extremely helpful debate on amendment 1, and we have heard from a significant number of diverse speakers on a number of different topics. A number of common themes emerged, the main one being the unworkability of the Governments clause and schedule that we are discussing. The hon. Member for Hackney, North and Stoke Newington (Ms Abbott) spoke passionately and with great knowledge, making powerful points about Caribbean communities and the need to have a more environmental basis to this taxation that I had also made. The hon. Member for Taunton (Mr. Browne) also made a number of important points about the crudeness of schedules 5 and 5A, as well as a number of more general points with which Conservative Members agree.
The hon. Member for Walthamstow (Mr. Gerrard) commented on the actual distance flown, which I know we discussed at the meeting of the all-party group on the Caribbean. I was interested in the Ministers response that she is looking at ways of reforming the Chicago convention. I would be grateful if she could update the House, at an appropriate time, on how those negotiations are proceeding. My hon. Friend the Member for Wellingborough (Mr. Bone) made similar points about the Caribbean and India, well illustrated with a letter from his constituent, one of the 60,000 people who have signed the petition and written to their MPs.
The reasons given for rejecting the plane tax amendment are flimsy, as we have seen from the Ministers response and the Governments consultation document. We can have no confidence in the Governments reasoning, which shows a confused logic on whether this is an environmental tax or purely revenue-raising. Several hon. Members raised serious concerns about the particulars and the generality of the Governments proposals, and we would urge a rethink before it is too late. Having said that, we had a Division on this matter in Committee and we are not minded to do so again today, given that we are already two hours into todays proceedings and there are several more groups on the amendment paper. I therefore beg to ask leave to withdraw the amendment.
Stewart Hosie: I am delighted once again to make the case for bingo and speak out against the Governments damaging tax increases. We discussed this only a few weeks ago, on 13 May, and I have reread the report of the debate. The then Exchequer Secretary said:
We have had a small, boutique, but extremely well proportioned debate.[ Official Report, 13 May 2009; Vol. 492, c. 977.]
She was right. It encapsulated every one of the arguments that surround this issue. The hon. Member for Hammersmith and Fulham (Mr. Hands) made an important contribution to that debate, especially given the circumstances of the last week. I shall return to that point later.
Before I make my argument in detail, I want to say how astonished I was last week when the bingo sector held a demonstration in Old Palace Yard. It was a bright, noisy, colourful demonstration, and it will probably be the first and last time that I ever see people travelling from Caerphilly and Bristol, together with Caribbean dancing girls, to protest against Government tax proposals. Those people had come from around the country, not to represent the interests of the bingo companies, but to express the passion that communities have for their bingo clubs and their desire to protect them. I was delighted that many hon. Members attended the demonstration, including the hon. Member for Llanelli (Nia Griffith). Unfortunately she voted with the Government on 13 May, but I hope that now she has seen her bingo club players and the Plaid Cymru candidate at the demonstration, she will change her mind tonight. That would be very helpful, and it would be welcomed by the many women who made the six-hour journey to attend that demonstration last week. I am sure that they will pay great attention to how the hon. Lady and many of her colleagues vote tonight.
The key point of principle in this debate was clearly laid out on 13 May. It concerns the unfairness of taxation levels on bingo in comparison with other forms of gambling. Online bingo, casinos and poker are taxed at 15 per cent. Online sports betting is taxed at 15 per cent., as is sports betting in a betting shop. The football pools and betting exchanges are also taxed at 15 per cent. Only casinos are taxed differentlyon a sliding scale between 15 and 50 per cent., but I am reliably informed that if bingo clubs were taxed on the same basis as casinos, each and every onewithout exceptionwould pay tax at 15 per cent. We need some fairness, and to avoid bingo being uniquely taxed at 22 per cent.
Mr. Bone: The hon. Member makes an important point, but does he detect a trend in this Finance Bill? The Government seem to want to hit the poorest the hardest. We have seen no compensation for the doubling of the 10p rate. We have just seen the APD proposals that will affect the poorest, and now they will be hit hardest by these proposals.
In an attempt to build an all-party consensus on my amendment, I might not follow the hon. Gentlemans logic in its entirety. It might be more
accurate to suggest that, with a national debt approaching £1.6 trillion, complete chaos in the current account, and the Governments finances in turmoil, they are simply scrabbling about trying to fill the black hole from everyones pockets in whatever sector they can find.
Stewart Hosie: I am almost at a loss; the temptation is too great. It is a good thing that the hon. Member for Crewe and Nantwich (Mr. Timpson) can comfortably go to the bingo with his wife. The hon. Member for Barnsley, Central (Mr. Illsley) can also go to his local club. More Labour Members should go to their bingo clubs, which are mainly in working class communities, and see that those who go there are normal people. The Government should not be afraid of the working class, and nor should they tax them so outrageously.
Mr. Jeremy Browne: I visited Mecca bingo in Taunton on Friday and met many people who, in the past, may have considered voting Labour, although I suspect that they will not do so in future. The hon. Gentleman mentioned revenue. I am told that Mecca bingo will pay some £10 million a year more as a result of being taxed at 22 per cent. rather than 15 per cent. To put that in context, £10 million is the additional borrowing that the Government run up every half an hour. The idea that the extra bingo taxes are likely to plug the hole in the public finances is fanciful. The reason must be something more serious or vindictive.
Stewart Hosie: I was not aware of those figures, but they are very interesting. The public finances are in such a perilous condition that the Government are scrabbling around to fill the hole with whatever they can possibly raise.
Even if bingo clubs were taxed on the same basis as casinos, they would pay only 15 per cent. and that would be fair. However, if unamended, the Finance Bill will set in statute this profound unfairness, and that is what amendment 4 seeks to address.
Mr. Don Foster (Bath) (LD): The hon. Gentleman is right to reflect on the debate that we had on 13 May. During that time we all kept quoting the figure of 22 per cent., as he just has. Is it not the case that the actual rate that the bingo clubs will be paying is 27 per cent. because the Government failed to take account of the effective rate, which includes the unrecoverable VAT, worth a further 5 per cent.?
On the point of the unrecoverable VATor of VAT in generaland the most recent history of the Governments appalling behaviour in relation to bingo, there is one qualitative difference between the debate today and that on 13 May. It is highly relevant to what
we are talking about today. HMRC, as I understand it, has announced its intention to appeal the recent High Court decision, which followed the May and August VAT and duties tribunal that upheld Rank Groups respective claims that the inconsistent application of VAT on interval bingo and gaming machines contravened the EU principle of fiscal neutrality. We do not yet have a date for the Court of Appeal hearing, but it is likely to be next year.
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