Finance (No. 3) Bill

Lord Mackay of Clashfern Excerpts

Monday 18th July 2011 Lords Chamber

[Lord Mackay of Clashfern]

My Lords, I congratulate my noble friend’s committee on its excellent report. I am also extremely glad to notice the development of a consultation system on detailed tax provisions. When I was at the Bar, I spent quite a lot of my time trying to understand the tax provisions that were then extant in order to try to advise people as to how they might conduct their affairs. It was not easy then but, looking at the tax legislation that has come along in the quite long time since, the problems are no easier now than when I was looking at them. I hope that this system will indeed make it easier for advisers reliably to tell people what their tax liabilities will be if they pursue a particular course of action.

My principal point is not on what is in the Finance Bill but, rather, on what I would have liked to see in it in relation to marriage being recognised. The noble Lords who preceded me have shown that this Government agreed in their coalition, as I understand it, to recognise marriage in the tax system. I am in the happy position of having been born before 1935, so I may have the benefit of the provision to which the noble Lord who immediately preceded me spoke. I am therefore not talking about anything affecting me personally. However, I believe that this is a very important and fundamental part of dealing with the situation in our society. Those of your Lordships who were in the House then will remember that, towards the end of the previous Conservative Government, I spent quite a lot of time trying to put through a Bill to ameliorate the situation when marriages broke up. I am glad to say that the Bill was passed and is still on the statute book but, so far, it has not been implemented. I hope that may some day be rectified.

What is apparent is that if nothing is done soon on this matter, the projections are that the tax burden on one-earner married couples with two children on average wages will rise so that it is more than 50 per cent above the OECD average by 2012-13. If your Lordships look at that as against the burden in the OECD on a single person, it will increase to an incredible 80 per cent while the comparable burden in the OECD is just 52 per cent. It is obvious that this is going to get considerably worse. The primary reason for that is that when tax goes up on the individual, unless the marriage is recognised it becomes worse from the point of view of comparing a married couple with two children and a single person with no dependents.

It would perhaps take some development of the Inland Revenue computer system to recognise marriage easily in the tax system. I believe that it is important to make the necessary preparations. Apparently they are able to do it for older people without too much difficulty, as far as I can judge. I hope that they may be able to do it for the younger people as well, but I believe that that may require some preparation.

The commitment given by the coalition could wait until towards the end of the coalition period which, as we know, in the first instance will be in May, at the end of the five-year Parliament that has been provided for. That five-year period is the timetable within which this ought to be done if it is to be implemented. From my point of view, the system is so damaging to the institution of marriage that the sooner it is done, the better. Therefore, rather than leave it to the very end of their commitment, it would be extremely wise and beneficial for the Government to do it soon. I hope that my noble friend can give us some encouragement that the Government intend to do just that.