Budget Changes

Debate between Shabana Mahmood and David Gauke

Monday 21st March 2016 Commons Chamber

[Mr Gauke]

My hon. Friend is right to highlight that measure, which was announced last week. This Government are taking the issues of homelessness seriously and an important set of policies was announced last week.

[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

Given that the Chancellor has been warning us all about the so-called global cocktail of risks, and given that we learned from the Budget statement that our growth forecasts are down, as are those for our productivity, which is fast reaching crisis point, what possible justification can the Minister offer, considering all the other changes that have already been made to the Budget, for retaining the substantial cut to capital gains tax, which disproportionately benefits the better off and is simply a cut that, at this point, we do not need?

[Mr Gauke]

One of the important challenges that we face is improving productivity in this country. If we want to improve productivity, we want more investment. If we want more investment, we do not want high rates of tax that discourage investment. May I point out that in terms of capital gains tax, the rate is still higher than the one we inherited in 2010?

Finance Bill

Debate between Shabana Mahmood and David Gauke

Tuesday 21st July 2015 Commons Chamber

[Mr Gauke]

I am grateful to the hon. Lady for informing the House that the official Labour party position is to abstain. Will she clarify: is she speaking for her Back Benchers today, because it does not always follow?

[Shabana Mahmood]

That was not quite the cutting put-down that the Minister might have envisaged. That is our position, and that is what all our party will be doing today.

--- Later in debate ---

[Shabana Mahmood]

My hon. Friend makes an important point. I wonder whether we would have the tax lock had it not been for the VAT bombshell poster we unveiled or for the exchanges at Prime Minister’s questions ahead of the general election. Ministers were certainly very quick to write such a law, and despite the Chancellor having suggested in 2009 that passing laws to ensure promises on taxation are kept was a very bad idea, he was very quick to convert to that cause. Nevertheless, they are passing a law on the tax lock. It was Labour party policy, and we are very pleased that we pushed the Conservative party into our territory in agreeing that the rates for ordinary people on lower and middle incomes should not go up.

Another change we support is on the annual investment allowance. I am pleased that the direction of travel has been set out for the whole Parliament. That contrasts very strongly with what happened during the last Parliament, when lots of chopping and changing on capital allowances definitely undermined business investment. Even if the deal is less generous, with a decrease from £500,000 to £200,000, it is important that businesses at least know that the deal they are going to get will last a lot longer than it previously did.

As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) has mentioned with respect to the expected changes on corporation tax, there is a lack of concrete proposals for business rates. The Financial Secretary has raised expectations and hopes of real change on business rates when the consultation is finally unveiled later this year. We will certainly look at whether the business rates burden will come down for small and medium-sized companies.

[Mr Gauke]

The hon. Lady mentioned corporation tax. The Bill includes measures to reduce it first to 19% and then to 18%. Will the Labour party support those reductions, oppose them—after all, that was its position—or abstain?

[Shabana Mahmood]

As the Financial Secretary knows because we have already had such an exchange—I feel we are reliving our greatest hits—on a number of occasions in the past couple of years, our policy at the general election was our manifesto commitment not to go ahead with the corporation tax cut from 21% to 20%. We would not have gone ahead with that additional cut to 20%, but instead used all the money to pay for a cut to business rates this year and a freeze next year. It was a direct switch spend. We wanted to make a commitment to small and medium-sized businesses in our country to do something practical on business rates, but we needed to find a way to pay for that, and we chose to switch-spend in respect of the additional corporation tax cut. We of course lost the election, and the Government are proposing a further decrease of the corporation tax rate. We will support the corporation tax measures, but we will ask questions about what that means for the future direction of travel.

Following an intervention, the Financial Secretary mentioned the BEPS project. On corporation tax more generally, it is important—given how some companies seek to shift profits and game international taxation rules—to have international agreement. Concern has already been expressed in some quarters that some of the countries with which we need to do business and with which we need to agree international tax rules might start to see us as a tax haven. I disagree with such a characterisation, but there is such a risk in getting agreement within the OECD BEPS process. I would welcome it if Treasury Ministers could, in Committee, provide further details about what is happening and about how our friends in the BEPS process are reacting and responding to the Government’s proposal on the headline rate of corporation tax.

One measure we have already voted against relates to inheritance tax. Clause 9 introduces an additional residence nil-rate band for inheritance tax when a home is passed to the direct descendants of the deceased on or after 6 April 2017. The provision, which runs to more than 400 lines, is extremely technical, but it in effect allows parents to pass on a house worth £1 million to their children free of inheritance tax. We have made it clear that the focus of tax cuts should be to help people on middle and lower incomes and to tackle tax avoidance. The Treasury has admitted that 90% of households will not benefit from the Government’s inheritance tax policy. Their priority should be to help the majority of families and first-time buyers struggling to get a home of their own, rather than a further cut to the rate of inheritance tax at this stage.