Finance (No. 2) Bill

Debate between Harriett Baldwin and Kit Malthouse

Report stage
Tuesday 20th June 2023 Commons Chamber

[Harriett Baldwin]

I rise to speak to new clause 2 and amendment 7, which were tabled in my name and those of all the other members of the cross-party Treasury Committee.

“Taxes are far too complex.”

Those are not my words but the words of the Chancellor of the Exchequer when he gave evidence to our Committee. The amendments to which I am speaking would give legislative effect to the recommendations of the report we published last week on the work of the Office of Tax Simplification. The report is on the Table, and I encourage all hon. and right hon. Members to read it.

Across the House, I think we can all agree that, regardless of the level of tax, the tax system itself has become far too complex. To give an example, as a result of the Committee’s current inquiry on tax reliefs, we have finally found out how many tax reliefs there are in the tax code—1,180. The unnecessary complexity in our tax code makes the tax system expensive and difficult for HMRC to administer, makes the tax system confusing and makes it difficult for taxpayers to understand the choices on offer and the consequences of those choices for their after-tax income.

A complex tax system can be hugely costly for taxpayers and for those responsible for compliance with the tax code. The Financial Secretary to the Treasury was kind enough to give evidence to our Committee on the VAT system last week, and she described it as the “most complex” part of the tax system. VAT creates a crippling compliance burden for small businesses and, as a result, there is a massive pile-up of companies just underneath that £85,000 turnover threshold. This shows that small, potentially dynamic, growing businesses—the engines of our economy—would rather stay under the threshold than deal with the VAT system.

Unfortunately, the VAT threshold is far from the only cliff edge in our tax and benefits systems. At worst, these cliff edges result in people being worse off for earning more money. In recent evidence to a joint session of the Treasury Committee and the Work and Pensions Committee, we heard how people can suddenly find themselves much worse off, after losing entitlements such as free school meals and council tax support, when they earn only a little more money. Indeed, next winter a person who earns an extra £1 will take home £900 less because they lose the cost of living support entitlement, which we reflected in a recent report. People would actually be better off by working less, or perhaps not working at all, and surely that is something we do not want to see in our tax and benefits systems.

[Kit Malthouse]

My hon. Friend is making a powerful point, but does she accept that complexity can lead to gaming of the system? It often feels as if the accountancy profession and tax planners are streets ahead of the Revenue, to the extent that we now have to have a general anti-avoidance measure so that, if they find something we do not like, they are not allowed to do it, even though it may be within the rules. That is a direct product of this complexity, which is creating a whole other industry around finding loopholes.

[Harriett Baldwin]

I agree with my right hon. Friend’s excellent point. Not only do the wealthiest get the best tax advice, but general financial advice has now become so expensive in this country that only 8% of our constituents can afford to pay for it.

Oral Answers to Questions

Debate between Harriett Baldwin and Kit Malthouse

Monday 14th December 2020 Commons Chamber

[Harriett Baldwin (West Worcestershire) (Con)]

What steps her Department is taking to tackle county lines drugs networks.

[The Minister for Crime and Policing (Kit Malthouse)]

We are determined to dismantle county lines, which is why we are investing £25 million over two years to surge our law enforcement response to these ruthless criminal gangs. This includes investment in the national county lines co-ordination centre, targeted operational activity in three major exporting police force areas, and increased disruption on the road and rail network.

[Harriett Baldwin]

With schools often having to send children home this year, very vulnerable young people have been preyed upon by these terrible gangs. Will my right hon. Friend welcome the decision of West Mercia’s police and crime commissioner, John Campion, to commission the Children’s Society to provide extra help and diversionary activities for these young people?

[Kit Malthouse]

My hon. Friend rightly recognises that these gangs particularly prey on and target vulnerable children when they are outside the school environment, often those who have, sadly, fallen out of school and cease to attend. So initiatives such as the one she outlines sound absolutely on the money in terms of the type of work we need at a granular level in constituencies across the country. Having worked with the Children’s Society as a Back Bencher, I know what enormous value and experience it can bring to these efforts, and I applaud the efforts of her local PCC to do this.