Finance (No. 2) Bill

Debate between Anneliese Dodds and Alex Chalk

Committee: 2nd sitting: House of Commons
Tuesday 19th December 2017 Commons Chamber

[Anneliese Dodds]

I absolutely agree with my hon. Friend on that. There is a particular onus on the Government to be steadfast and clear in their rejection of those legal challenges and the problems they potentially pose to our democracy. Of course it is just the BBC and The Guardian that have been threatened with legal action, not any of the other 90 or so media outlets based in other countries. It is UK-based firms and media organisations that have been threatened with that action, so I hope the Minister will make clear to us today whether or not he agrees with Appleby’s threat of legal action against those who revealed the details of the Paradise papers in the public interest.

Many of the measures in the Bill intended to prevent aggressive tax avoidance and evasion do not go far enough. I have already referred in this House to clause 21, which seems to adopt a confusing new approach to measuring profit shifting, rather than aiming to reduce it per se. Yet again, there sadly appears to be deafening silence here concerning the need for tax simplification, with only minor measures that do not meet the required standard of a thoroughgoing, holistic assessment of the overall impacts of tax reliefs, which we desperately need in this country if we are to have proper Government accounting.

Finally, we see in the Bill a number of additional measures that seem intended mainly just to clean up previous mistakes by this Government, many of them following criticism from Labour Members. In clause 35 and schedule 10, for example, we find anti-avoidance provisions in relation to payments and benefits made from offshore trusts, no doubt reflecting the concerns we raised about the potential misuse of offshore trusts by non-doms. Let us be clear, before this issue crops up yet again in this debate: this Government have not abolished long-term, non-dom status. The new measures do not apply to those whose parents are non-doms, as is often the case, and a 15-year window is provided for individuals to get their affairs in order. In another example, clause 28 closes the loophole introduced by the coalition Government in 2011 that allowed foreign companies to hold on to an asset-stripped subsidiary for six years until they were then able to claim loss relief in excess of any genuine economic loss to the group. Again, the measure tidies up a problem that was created previously by those involved with this Administration.

To conclude, this Finance Bill was a chance for strong action against aggressive tax avoidance and evasion, but, sadly, we have here a paltry Bill, which some Conservative Members have praised in some of these debates for being thin. It is not thin because it is concise; it is thin because, sadly, just like this Government, it is lacking in ideas and ambition. We need a change now, more than ever.

[Alex Chalk (Cheltenham) (Con)]

I welcome this Finance Bill, because it does three things so far as taxation is concerned: first, it prioritises increasing the total pot for public services while recognising the common-sense proposition that we must live within our means; secondly, it entrenches and enhances the fundamentally progressive nature of the tax system; and, thirdly, it redoubles our country’s efforts to tackle tax evasion and aggressive tax avoidance. The theme that unites those three strands is a relentless focus on discharging our obligation to the next generation: on ensuring that we are laying the foundations for a better, fairer country; one whose best days are yet to come. In doing so, we are observing our solemn duty to those who will come after us. We must not fail them, not just because history will condemn us if we do not, but because we ought to be able in this House to recognise that moral obligation for ourselves.

On tax avoidance and evasion, there has rightly been a sense that multinational corporations have been seeking to game the taxation system, using their market power to their financial advantage. That sticks in my craw, the craw of my constituents and the craw of Members across this House, because when we talk about the rule of law, that is about ensuring that we are all equal before not only the criminal law, but taxation law. Few things are more corrosive to public confidence in the enterprise economy than the sense that large corporations are wriggling out of their responsibilities to society—these responsibilities provide free healthcare and education, as well as a safe and secure environment to operate in. So I welcome the fact that the tax gap in our country has been driven down significantly, from 8% to 6%. That translates into an additional £12.5 billion per annum, which is more than the entire Ministry of Justice budget and far more than the entire annual spend on the prison system. We have the lowest tax gap in the world.