Finance (No. 2) Bill

Baroness Primarolo Excerpts

Thursday 18th April 2013 Commons Chamber

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I beg to move amendment 1, page 1, line 7, at end add—

‘(1) The Chancellor of the Exchequer shall, within three months of the passing of this Act, publish a report on the additional rate of income tax.

(2) This report shall review the impact upon Exchequer receipts of setting the additional rate to 50 per cent. in tax year 2014-15.

(3) The report shall review what impact reducing the additional rate for 2013-14 will have on the amount of income tax currently paid by those with taxable incomes of

(a) over £150,000 per year; and

(b) over £1,000,000 per year.’.

[The Second Deputy Chairman of Ways and Means (Dawn Primarolo)]

With this it will be convenient to discuss the following:

Clause stand part.

Clause 16 stand part.

That schedule 3 be the Third schedule to the Bill.

[Catherine McKinnell]

It is a pleasure, Ms Primarolo, to serve under your chairmanship this morning. I shall speak to the Opposition amendment to clause 1 and about clause 16, which relate to income tax rates and reliefs.

The Opposition believe that politics is about priorities—about providing support to those who need it most, rather than to those with the broadest shoulders. This has never been more the case than in the country’s current economic climate—a parlous economic climate which, let us remind ourselves, has seen just 0.8% growth since autumn 2010, compared with the 5.3% that was forecast at the time. The economy continues to stagnate under this Government, leading to the independent Office for Budget Responsibility halving its predictions for 2013 and anticipating growth of only 0.6% this year, compared with the 1.2% forecast just four months ago.

We have surely now reached the stage where we must ask ourselves what further evidence the Chancellor needs before he accepts that his economic plan is catastrophically failing. Once again, I note the lack of Conservative Members on the Government Benches. Perhaps Back Benchers are demonstrating their lack of confidence in the Chancellor’s plan which, I am sure they would agree, is far from acceptable.

The latest criticism of this failure came on Tuesday, with the International Monetary Fund downgrading its forecast for UK economic growth to 0.7%, in contrast to its view a month ago, when the IMF said that growth of 1% could be expected. Having subjected the UK to the biggest downgrade of any developed country for 2013 and 2014, the IMF commented:

“In the United Kingdom, the recovery is progressing slowly, notably in the context of weak external demand and ongoing fiscal consolidation.”

It went on to say:

“Greater near-term flexibility in the path of fiscal adjustment should be considered in the light of lacklustre private demand”.

In simple terms, it is time for plan B.

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[Stephen Williams]

If you are going to quote from independent reports, you should not quote—

[The Second Deputy Chairman of Ways and Means (Dawn Primarolo)]

Order. I am not quoting anything.

[Stephen Williams]

The hon. Lady should not quote from reports selectively. Perhaps she should go on to say that the Institute for Fiscal Studies says that the top decile of income earners has been hit hardest by the combination of Government tax changes.

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[The Second Deputy Chairman]

Order. May I remind hon. Members that they are not asking the Chair of this Committee to answer questions or accusing the Chair of anything? The use of the word “you” addresses the Chair directly. It would be good practice to refer to “hon. Members” or “my hon. Friend” rather than using the word “you”, which makes things difficult.

[Catherine McKinnell]

Even some mild empathy from the Chancellor for those bearing the brunt of his catastrophically failing economic plan would be welcome to people up and down the country, who feel that he is extremely out of touch with the reality that they face.

To put the issue into context for Government Members, who have willingly voted through this year’s changes, I should say that a two-earner couple with children are losing on average £1,869. The average single parent in work will lose £1,226. A two-earner couple with no children will be £672 worse off, while a one-earner family with children will lose an average of £4,000 in 2013-14. Even worse, this is happening at the same time as 13,000 millionaires are getting a tax cut from this Government worth an average of £107,000. Worst of all, but not surprising given this Government’s shocking attitude towards women, is research showing that 94% of the cuts to household budgets will directly hit women, while 85% of those on incomes over £150,000—so 85% of those who are benefiting from the Government’s tax cut—are men.

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[Sheila Gilmore]

I welcome the hon. Gentleman to the debate, as we have been lacking a challenge up to now and it is always good to be challenged. He makes an argument about the Laffer curve. I am sure he would agree that if tax rates are zero, you do not get anything, and that if tax rates are 100%, you would probably not get anything either. However, the question of where it is right to draw the line in between, in any given economic situation, is surely a matter for debate. You cannot simply say, “Oh, the Laffer curve says we can’t put tax rates up.”

[The Second Deputy Chairman of Ways and Means (Dawn Primarolo)]

Order. I remind the Committee that the guidance on conventions and courtesies is quite clear on the language to be used in the Chamber. Hon. Members will know that “you” refers to the Chair as all remarks are made through the Chair. I would therefore be grateful if hon. Members would refer to each other by their constituency names, or as “the hon. Member”, “my hon. Friend” or “the Minister”. They should desist from saying “you”; otherwise, I might feel the need to answer the debate as well, and then we would have disorder. We do not want that, do we, Mr Rees-Mogg?

[Jacob Rees-Mogg]

Ms Primarolo, your answer to the debate would be so fine that it would hold the rest of us silent.

The hon. Member for Edinburgh East (Sheila Gilmore) is absolutely right. It is difficult to say at exactly what point on the Laffer curve revenue is maximised. As I understand it, however, the latest academic studies suggest that around 37% is the level at which income tax revenues would be maximised. That is why I would favour the Government going further and reducing the rate of income tax to the level at which it was kept by the Labour party when it was in office.

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[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I beg to move, That the clause be read a Second time.

[The Temporary Chairman (Sir Roger Gale)]

With this it will be convenient to discuss the following:

New clause 4—Air passenger duty: Wales

‘Schedule (Air Passenger Duty: Wales) has effect’.

New schedule 1—‘Air Passenger Duty: Wales

‘Air Passenger Duty: Wales

Part 1

Rates of Duty from 1 April 2013

1 Section 30 of FA 1994 (air passenger duty: rates of duty) is amended as follows.

After subsection 4D insert—

“(4DA) Subsection (4DA) applies if—

(a) the passenger’s journey is a relevant Wales journey, and

(b) apart from subsection (4C), subsection (2) would not apply to the journey.

(4DB) The applicable rate in subsection (2) applies to the journey instead of the applicable rate in subsection (3), (4) or (4A) (as the case may be).

(4DC) A passenger’s journey is a “relevant Wales journey”—

(a) in the case of a journey which has only one flight, if the flight begins in Wales, and

(b) in any other case, if the first flight of the journey—

(i) begins in Wales, and

(ii) is not followed by a connected flight beginning at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A.”

The amendments made by this Part of this Schedule have effect in relation to the carriage of passengers beginning on or after 1 April 2013.

Part 2

Devolution of Wales Long Haul Rates of Duty

2 Chapter 4 of Part 1 of FA 1994 (air passenger duty) is amended as follows.

3 (1) Section 30 (rates of duty) is amended as follows.

(2) After subsection (1) insert—

“(1B) Subsection (1) does not apply to the carriage of a chargeable passenger to which section 30B below (Wales long haul rates of duty) applies.”

(3) Omit subsections (4DA) to (4DC) (as inserted by paragraph 1 above).

(4) The amendments made by this paragraph have effect in relation to the carriage of passengers beginning on or after the relevant day as defined in section 30B of FA 1994 (as inserted by paragraph 4 below).

4 After section 30A insert—

30B Wales long haul rates of duty

“(1) This section applies to the carriage of a chargeable passenger if—

(a) the carriage begins on or after the relevant day,

(b) the only flight, or the first flight, of the passenger’s journey begins at a place in Wales,

(c) the passenger’s journey does not end at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A, and

(d) if the passenger’s journey has more than one flight, the first flight is not followed by a connected flight beginning at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A.

(2) Air passenger duty is chargeable on the carriage of the chargeable passenger at the rate determined as follows.

(3) If the passenger’s journey ends at a place in a territory specified in Part 2 of Schedule 5A—

(a) if the passenger’s agreement for carriage provides for standard class travel in relation to every flight on the passenger’s journey, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph, and

(b) in any other case, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph.

(4) If the passenger’s journey ends at a place in a territory specified in Part 3 of Schedule 5A—

(a) if the passenger’s agreement for carriage provides for standard class travel in relation to every flight on the passenger’s journey, the rate is the rate set by an Act of the National Assembly for Wales with the purposes of this paragraph, and

(b) in any other case, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph.

(5) If the passenger’s journey ends at any other place—

(a) if the passenger’s agreement for carriage provides for standard class travel in relation to every flight on the passenger’s journey, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph, and

(b) in any other case, the rate is the rate set by an Act of the National Assembly for Wales for the purposes of this paragraph.

(6) The rate of £0 may be set for the purposes of any paragraph.

(7) The same rate may be set for the purposes of two or more paragraphs.

(8) Subsections (5) to (7) and (10) to (12) of section 30 apply for the purposes of this section as they apply for the purposes of that section.

(9) “The relevant day” means the day appointed as such by an order.

(10) Section 42(4) and (5) does not apply to an order under subsection (9).

(11) A Bill containing provision authorised by this section may not be passed by the National Wales Assembly except in pursuance of a recommendation which—

(a) is made by the Minister of Finance, and

(b) is signified to the Assembly by the Minister or on the Minister’s behalf.

(12) “Passed”, in relation to a Bill, means passed at the final stage (at which the Bill can be passed or rejected but not amended).

(13) Duty paid to the Commissioners in respect of the carriage of chargeable passengers to which this section applies must be paid by the Commissioners into the Consolidated Fund of Wales.”

5 (1) Section 33 (registration of aircraft operators) is amended as follows.

(2) After subsection (2A) insert—

“(2B) If the Commissioners decide to keep a register under section 33B below, an operator of a chargeable aircraft does not become liable to be registered under this section just because the aircraft is used for the carriage of chargeable passengers to which section 30B above applies.”

(3) In subsection (3)(b) after “applies” insert “or, if the Commissioners have decided to keep a register under section 33B below, that no chargeable aircraft which he operates will be used for the carriage of chargeable passengers apart from the carriage of chargeable passengers to which section 30B above applies.

(4) In subsection (7) after “section 33A” insert “or section 33B below.

6 After section 33A insert—

33B (1) The Commissioners may under this section keep a register of aircraft operators.

(2) If the Commissioners decide to keep a register under this section, the operator of a chargeable aircraft becomes liable to be registered under this section if the aircraft is used for the carriage of chargeable passengers to which section 30B above applies.

(3) A person who has become liable to be registered under this section ceases to be so liable if the Commissioners are satisfied at any time—

(a) the he no longer operates any chargeable aircraft, or

(b) that no chargeable aircraft which he operates will be used for the carriage of chargeable passengers to which section 30B above applies.

(4) A person who is not registered under this section and has not given notice under this subsection shall, if he becomes liable to be registered under this section at any time, give written notice of that fact to the Commissioners not later than the end of the prescribed period beginning with that time.

(5) Notice under subsection (4) above shall be in such form, be given in such manner and contain such information as the Commissioners may direct.”

7 In section 34 (fiscal representatives) in subsection (5)—

(a) in paragraph (a) after “33A” insert “or 33B”.

8 After section 41B insert—

41C (1) An officer of Revenue and Customs may disclose to the Secretary of State, the Treasury or the Department of Finance in Wales any information for purposes connected with the setting of rates of duty under section 30B above, including (in particular) to enable the setting of rates under that section to be taken into account (payments by Secretary of State into Consolidated Fund of Wales).

(2) Information disclosed under subsection (1) above may not be further disclosed without the consent of the Commissioners (which may be general or specific).

(3) In section 19 of the Commissioners for Revenue and Customs Act 2005 (wrongful disclosure) references to section 18(1) of that Act are to be read as including a reference to subsection (2) above.”

9 In section 44 of CRCA 2005 (payment into Consolidated Fund) after subsection (2)(cb) insert—

(cc) sums required by section 30A(15) of the Finance Act 1994 (air passenger duty: Wales long haul rates of duty) to be paid into the Consolidated Fund of Wales,”.

10 In column 2 of the Table in paragraph 1 of Schedule 41 to FA 2008 (penalties for failure to notify), in the entry relating to air passenger duty, after “33A(4) “insert “or 33B(4)”.

11 The amendments made by this Part of the Schedule have effect in relation to the carriage of passengers beginning on or after 1 April 2013.

12 The rate of duty in force under this Schedule shall not be greater than the rate which would be in force if the Schedule had not been enacted.’.

Clause 183 stand part.

Clause 184 stand part.

[Mr MacNeil]

I shall speak to new clause 3 and against clause 183 stand part.

Air passenger duty is fast becoming one of the most damaging interventions by the Westminster Government in the Scottish economy, which over the past 30 years has provided more tax per person per year than across the United Kingdom as a whole. The chairman of VisitScotland, Mike Cantlay, says he is “extremely fearful” of the long-term impact of air passenger duty levies on the long-haul market to Scotland, which have left the country at a competitive disadvantage compared with countries such as Ireland. He added:

“To say to a potential visitor to Scotland from Australia, for example, that before you even book you will be paying hundreds of pounds extra for the sake of coming here, because the UK has a deficit to fund, is not an easy sell. It is lunacy for our industry.”