Oral Answers to Questions
Debate between Mel Stride and Alistair Carmichael(5 years, 8 months ago)
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Mel Stride
The Barnett formula has been honoured. As the hon. Gentleman will know, there are Barnett consequentials where moneys are allocated to devolved matters within England. That is not the case in the recent additional amounts to support the Northern Ireland budget. It is also the case that in the recent autumn Budget the Chancellor announced changes that resulted in an additional £950 million for the Scottish Government.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
The economy of rural Scotland would suffer serious damage if the Government’s proposals for tariffs on foodstuff were ever to be implemented. The National Farmers Union of Scotland has called for that to be rethought. Are the Government listening to it?
Mel Stride
The Government are most certainly listening to all those who have concerns about the introduction of tariffs where they are not in existence, as is currently the case between ourselves and the EU27. Once again, that is why the deal that is before the House, which has been negotiated with the European Union, is so important—because that would mean that we would not run into those particular difficulties.
Oral Answers to Questions
Debate between Mel Stride and Alistair Carmichael(5 years, 10 months ago)
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Mr Alistair Carmichael (Orkney and Shetland) (LD)
The Financial Secretary to the Treasury (Mel Stride)
The loan charge is not retrospective. The schemes that were entered into and to which the loan charge relates have always been defective—they never worked, including at the time when they were entered into. That has been evidenced by a number of court cases, including one put before the highest court in the land, the Supreme Court.
Mr Carmichael
Her Majesty’s Revenue and Customs is allowed to go back to 1999 to look at tax records. Records that it can look at include those in otherwise closed years. If that is not retrospective, I do not know what it is. What word would the Minister use to describe the loan charge to my constituent, who tells me that he started a business working in the oil and gas industry, living in Orkney but working across the globe, doing everything the Government would want him do? How does he now find himself facing bankruptcy, before his 29th birthday?
Mel Stride
An important principle lies at the heart of the whole debate around the loan charge, which is that individuals should pay the tax that is due. If they enter into arrangements that basically mean they disguise income as a loan that they have no intention of ultimately repaying—money that is, more often than not, routed via low or no-tax jurisdictions overseas, via a trust, then brought back into the United Kingdom by way of payment—the Government believe that that is wrong, and the tax should be paid.
Tourism Industry: VAT Reduction
Debate between Mel Stride and Alistair Carmichael(6 years ago)
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Mel Stride
The hon. Gentleman raises the issue of VAT specifically in Northern Ireland. As he will be aware, we undertook a call for evidence, which we announced at the Budget before last. We have now reported on that and will continue to look at the issue of VAT, although we are currently constrained by virtue of our membership of the European Union, as I will argue later. Northern Ireland actually has some advantages over the Republic of Ireland when it comes to VAT. For example, we have the highest VAT threshold for businesses that have to charge VAT in the European Union and the OECD, including the Irish Republic.
The right hon. Member for Orkney and Shetland mentioned the specific support we provide for tourism. We provide some £60 million per year for our GREAT Britain campaign, £20 million per year of which goes to VisitBritain. Our tourism action plan looks at regulation, transport, skills and all the other things that underpin tourist activity as well as money and taxation. Some £40 million goes to the Discover England fund for promoting tourism outside London.
At the heart of the right hon. Gentleman’s ask is clearly a reduction in VAT, particularly with regard to food and beverages, attractions and accommodation— the areas that he cited when he mentioned the VAT directive and the derogations in items (7), (12) and (12a). The Government recognise the strength of feeling on this matter. We have met campaigners over many years, and I have engaged extensively with Members right across the House. We will keep VAT and VAT on tourism under review, but unfortunately there are some issues from which we cannot hide away. One of those issues is the fact that, if we are to make a change, under the current arrangements with the European Union that change would have to be UK-wide. It would therefore come with quite a hefty price tag.
The Treasury estimates that, in the first year at least—although one recognises there are dynamic effects of reducing taxes, increasing activity and therefore perhaps getting more tax revenue further down the line—we would be looking at a cost of about £10 billion for reducing VAT from 20% down to 5% in the categories that I mentioned. That would be about £7 billion on food and beverages, £2 billion on accommodation and £1 billion on attractions. Some of that loss, or some of the relief that we would be providing, would be dead weight in the sense that it would not necessarily solely apply to supporting tourism.
Mr Carmichael
There is one important factor of which we should not lose sight, which is that our tourism sector is enormously competitive. Therefore, there would be every incentive for the operators in the industry to pass on the money that would be available to them by having a reduced rate of VAT. As a consequence, we would see that recycling effect accelerated in a way that we probably would not see in any other industry.
Mel Stride
The right hon. Gentleman makes a very important point. As somebody who philosophically believes in lower taxes, I think that is a very strong argument. However, unfortunately there is the cost argument. To use the same kind of principles to the right hon. Gentleman’s argument on recycling, clearly if we were bringing in less by way of taxation as a consequence of the reduction, there would be less to spend on other things that arguably might help tourism, including improved infrastructure and maybe even tax reliefs in other areas, such as the progress that we have made in reducing small retailers’ business rates.
We have one of the highest VAT thresholds of any country in both the European Union and the OECD, which is an advantage to us and our tourist sector.