Lord Prescott
To ask Her Majesty’s Government why, when they are able to provide estimated tax liabilities due to tonnage tax on British shipping, they are not able to supply figures for revenue received.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, estimated tonnage tax liabilities were provided using database information from Her Majesty’s Revenue and Customs. This general approach is regularly used when answering questions on tax.
To construct reliable estimates of tax received would require HMRC checking each tax return, linking it with associated payments and estimating how much tax received related to tonnage tax. This exercise would be extremely time-consuming. However, revenues received will be broadly similar to those figures already given.
Lord Prescott
The Minister is aware that this is a successful tax. It increased the British fleet from 4 million tonnes to 18 million tonnes and that is an important factor. But I cannot accept his reply that he knows what the liability is and knows what the profits are but we cannot afford to find out what the tax liability and payments are because that would cost more, as he said in a letter to me, than a parliamentary reply. That is unacceptable. We are entitled to know.
However, I am more concerned about this tax.
Lord Prescott
The loss of the “Concordia” reminds us of the importance of having a captain and safe crew. The “Concordia” is owned by the American company that owns these ships. There are two standards on cruise liners, which is totally unacceptable.
Lord Sassoon
My Lords, I am not sure how I interpret that question, but I think the relevant bit relates to the original Question, which is to do with the numbers that I gave the noble Lord, Lord Prescott, in my Written Answer. I can assure him that it is standard practice to give numbers based on the liability in respect of years. That is done in innumerable Answers to Questions. The numbers in this case, as is normally the case, will be broadly reflective and close to the actual tax paid. It is simply that the tax paid gets paid at different times according to the individual circumstances of the company.
I am happy to recognise that the noble Lord, Lord Prescott, was Secretary of State for Transport and many other important things at the time that this important tax was introduced. Just to correct his figures, the gross tonnage of British shipping in 2000 was 5.8 million tonnes and, indeed, it has increased to 18.2 million tonnes since then.
Baroness Kramer
My Lords, perhaps I can help. One of the motivations for providing the option of a tonnage tax was significantly to enhance the training and safety of the shipping fleet. Has the tax achieved that purpose and are any records kept and tracking done on those issues?
Lord Sassoon
My Lords, the tax has achieved an estimated reduction of £45 million of tax which the shipping industry in this country would otherwise pay under conventional corporation tax. It means that we have a more vibrant and healthy shipping industry in this country. Of course there are many other associated issues that my colleagues in government keep under review and discuss with the industry.
Lord Davies of Oldham
My Lords, is the Minister not concerned that the obfuscation involved in his replies to my noble friend Lord Prescott's questions merely reinforces our anxiety, which has also been expressed by the Public Accounts Committee of the other place, that the Government may be guilty of treating large companies somewhat more favourably than ordinary taxpayers, and that this may be another instance of cover for a somewhat cosy deal?
Lord Sassoon
My Lords, I am surprised that there are any suggestions of some cosy deal. After all, this was a tax introduced by the noble Lord’s Government. He now says that he might have done a cosy deal. It has put British shipping ownership on a level playing field with other countries in Europe; it involves state aid, and the EU at some stage will review it. If anything, the complaint that we get is that other countries take unfair advantage of the EU dispensations.
As to what the other House has to say, I am sure that noble Lords will not need reminding that it was as recently as 1628 that this House stood up to another place on the question of tonnage and poundage and got us into frightful trouble, not least with the attempted impeachment of the Duke of Buckingham, who put forward the proposal. So I am certainly not going to cross swords with another place on this topic.
Lord Trimble
I listened with interest to the Minister’s reply to the noble Baroness, Lady Kramer. He said that the tax, by reducing the amount payable so far below what would be payable in corporation tax, led to a huge increase in tonnage. Does that not indicate that there ought to be a similar movement in corporation tax generally and that it would be hugely successful?
Lord Sassoon
My Lords, what it indicates is that tax competition and not having tax dictated on some uniform basis from Brussels is something that we will defend to make sure that where appropriate we can take advantage of that. We will have the lowest corporation tax regimes in the G7 and then one of the lowest in the G20. That will make our industry highly competitive on tax.
Lord West of Spithead
My Lords, I declare an interest as chairman of the Merchant Navy Association. I am sure that the Minister will agree that from our maritime colleges in this country we produce some of the best qualified deck officers and engineer officers who operate in ships around the world. Does he agree that we should give more support to cadets going through these schemes? I think that there is a requirement around the world for more of these people, and we could actually provide more assistance in the way of apprenticeships to enable that to happen.
Lord Sassoon
My Lords, I am certainly happy to agree with the opening premise of the noble Lord’s question, and he makes an interesting suggestion, which I will take away and refer to my colleagues.