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Lord Pearson of Rannoch: My Lords, before the Minister sits down, when he comes to answer the questions about the water costs, will he put a copy in the Library? I am, of course, aware of the study which took place in 1994--I was a member of your Lordships' Select Committee at the time--and we found that it was entirely inconclusive. Not only did we not have the faintest idea what any other country was doing at the time, but the Commission refused to answer the British Government. I do not know whether the new Government's charm offensive in Brussels has been so successful as to encourage the Commission perhaps to give an answer about what other countries are up to with these incredibly expensive water directives.
Lord Falconer of Thoroton: My Lords, as to the first point, of course I will place the answer in the Library. As to the second point, Members can read the report for themselves and form a judgment as to what its effect would be. As to the third point, the idea of a cost benefit analysis would lead to such contention that it would be extremely difficult to produce something that would command widespread support.
Lord Pearson of Rannoch: My Lords, a 1994 report is a 1994 report; it is therefore completely out of date. Most of the expenditure we are contemplating under the water directives will take place after that date. Can we not find out what the other countries are doing? If we do not know the scale and effect of these directives they fall under Article 5 of the Treaty of Rome, as amended by Amsterdam; and if the European Union has not put out a cost benefit analysis on all these water directives, it falls under what used to be Article 130R. So we need not carry out these wretched things if we do not want to.
Lord Willoughby de Broke: My Lords, I am most grateful for the contributions of all noble Lords who have taken part in the debate. Perhaps I may deal with one or two of the points that have been raised. The noble Lord, Lord Bruce of Donington, the noble Lord, Lord Taverne, and the Minister made the point that it would be impractical to ask businesses, the consultees, to
I was very impressed by the foresight of my noble friend Lord Pearson of Rannoch in bringing the condom directive with him. Being a Friday, it is probably something for the weekend. The noble Lord, Lord Stoddart of Swindon, referred to an error or a failing in my Bill. I hope that we can amend it. We should, of course, have time to debate the impact statements when they are produced in Parliament. We will have the opportunity to amend that when we come to the Committee stage. I will have to take advice as to whether Clause 3 should include secondary legislation.
I am sorry that the noble Lord, Lord Taverne, did not think that I talked as much sense in my Bill as I thought he talked sense in his speech in the genetically modified crops debate; I very much agree with what he said then.
Despite the opposition of the Government, which I quite understand--they do not want to do any more work or expose the shortcomings in some of the legislation they have pushed through under European directives and regulations--the Bill is worth while. I believe that such shortcomings should be exposed, as do many businesses, particularly small ones.
Lord Waddington: My Lords, I beg to move that this Bill be now read a second time. The purpose of this Bill is to require this and any future government to obtain the approval of Parliament and the public before agreeing to any proposal to limit further our right in Britain to decide on our own taxes and our own tax rates. That does not seem to me to be a very unreasonable requirement.
Not so many years ago it would have been thought unthinkable that any independent sovereign country would give up its right to levy whatever taxes it thought appropriate. A country's freedom to decide what to tax, and how much, is the bedrock of national sovereignty, one of the hallmarks of a free independent nation. The power of our elected representatives to decide what tax the voters should pay is a fundamental part of our democracy; and if this or any future government really are persuaded that there would be some advantage for the British people in our agreeing in some particular area to accept further inroads into our sovereignty, and
The Bill comes before the House only a few days after the European elections. If the results show anything, they show that in Britain there is a deep-seated hostility to our giving up the pound, and that the brainwashing--the public money spent to convince people of the inevitability of our joining the euro--has had only limited effect, that people see nothing extreme or anti-European in keeping our own currency and something very extreme in the ambitions of others to surrender our national currency and monetary institutions. They certainly see that there is something terribly defeatist and absurd in the notion that the world's fifth largest economy, a country with membership of the European Union and free access for its goods into the European Union but with worldwide interests, cannot keep its own currency, while countries like Canada, New Zealand and Australia can keep theirs.
Most people can see that although it is perfectly possible to have a single currency and still have different tax levels--just as, for that matter, it would be possible for us to keep the pound and have the same taxes as others--the single currency in Europe is but a step to full economic and monetary union. There can be no disguising that fact, and if noble Lords want evidence of that, they need only look at the words of the president of the Bundesbank when he said recently,
First, the withholding tax, where almost every day a new spin is being put on the Chancellor's step-by-step approach towards what looks like being an abject surrender. Let us go over the history. At first the Chancellor told us:
"My feeling is that in principle there is a willingness to compromise". How could Mr Eichel have got that impression if Mr Brown had done and said nothing to warrant it? The answer is that he could not, and that Mr Brown had done something to warrant it. It turns out that he agreed to draw up a paper detailing ways in which a directive could be altered not to remove but to limit its impact on the London market. That was only a week or so after he had told the House of Commons that Britain would not accept any directive requiring member states to introduce a withholding tax.
Let us look at the plans to do away with so-called unfair tax competition. Unfair tax competition, which of course has nothing to do with tax evasion or illegal activities such as money laundering, is a concept beloved by those whose own improvidence and profligacy prevents them from matching the tax incentives offered by their neighbours to businesses looking for a congenial environment in which to operate. In the European context, it has been invented by Germany as a device to staunch the investment flight from Germany to states with lower labour costs and more friendly tax regimes.
Our rates of tax are below the European average, so when a country such as Germany talks of unfair tax competition, it is looking at Britain not as a fellow victim of unfair competition but as the villain of the piece. In short, Germany looks upon tax harmonisation as a way of undermining the advantage we now have as a result of lower tax and lower social security contributions, which allow us to attract business that it cannot.
The chosen instrument to bring about this harmonisation is the European Union Code of Conduct Group, chaired by Dawn Primarola, and set up in May last year to decide whether any business taxes or reliefs in member states constituted harmful tax competition.
Well, we know how Jacques Santer described the British decision to sign up to the code. He said, last November, that Britain's signing up to the code had the effect of nullifying the British veto and was a device to side-step the European Union treaties that require unanimity before tax harmonisation can be legally enforced. Perhaps the Minister will tell us in due course whether Jacques Santer was right or wrong on that, but
So where have we got to with this exercise? We may well ask. For the Government, which are for ever telling us of their dedication to open government, did their level best to conceal what was going on from the British people. Despite constant questioning in Parliament, the Government refused to disclose the list of taxes and reliefs under consideration by the Code of Conduct Group. The full extent of the exercise became public only after someone went to a Dutch Government website, and we then learnt that 185 tax measures and reliefs had been singled out for possible harmonisation or elimination.
We discovered that the ground was being prepared for British surrenders on capital allowances for small and medium-sized businesses in Northern Ireland; incentives for the film industry; roll-over relief on the disposal of ships; regional incentives such as enterprise zones; and various measures affecting the Channel Islands, the Isle of Man and the Dependent Territories. And now I read that we are in the ludicrous position of the EU committee chaired by a UK Treasury Minister also having in its sights some of the flagship measures recently introduced by Mr. Brown, which he said were measures necessary to boost Britain's productivity. I refer to 100 per cent capital allowances for scientific research and 40 per cent first-year capital allowances for small businesses.
What has finally given the lie to the Government's claims that they are against tax harmonisation has been their unstinting support for the declared federalist and tax harmonisation designs of their comrades in the socialist parties in Europe. Mr. Blair did not merely give token support for the socialist manifesto for Europe, The New European Way; the Chancellor's own adviser, Mr. Ed Balls, drafted it--including the commitment to deeper European integration, including tax harmonisation. Mr. Robin Cook, the Foreign Secretary, was the co-author with the leader of the French socialists of the European Socialist manifesto in the European elections. Mr Cook and his friends called for,
"we want a tax harmonisation plan covering capital [dividends, capital gains, withholding tax] and corporation tax, with the abolition of the national veto in the Council of Ministers".
"The single market was the theme of the 80s, the single currency was the theme of the 90s, and we must now face the difficult task of moving towards a single economy and a single political union".
It is absolutely plain that the abandonment of the right to set our own taxes--the harmonisation for which these leaders in Europe and the European Commission yearn--can only mean that our taxes overall will rise to European levels rather than that European taxes will come down to ours. That means our taxes rising by at least one sixth and our business and top rates of income tax going up. Incidentally, if experience is anything to go by, as our taxes as a proportion of GDP rose to European levels our growth rate would fall and everyone would be the poorer. The message could not be plainer: if Britain wants to keep low taxes and continue to prosper it must stay outside Euroland, oppose the single currency and resist further attempts to transfer the power to tax from Westminster to Brussels.
"a single economy and a single political union".
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