Finance (No. 4) Bill

Debate between Karl McCartney and Jonathan Edwards

Wednesday 18th April 2012 Commons Chamber

[Jonathan Edwards]

I am grateful for that intervention. I am coming to that. Unfortunately, the papers did not report Labour’s shameless record on some of these issues.

Monday’s Second Reading saw Members from both sides continuing to trade a barrage of figures to explain why the additional rate should be cut or remain as it is. I thought the contribution from the hon. Member for Pontypridd on Monday night was excellent in explaining the political and economic value of the 50p rate. It is clear that there is no agreement over the mechanics of the issue, and given that Labour’s agreement to the 50p rate in the first place was based on revenue-raising rather than principle, that is a very important fact.

The Treasury should therefore instigate a report on the income-shifting and avoidance measures used to lower the amount of tax paid under the additional rate, and on possible revenue from a 50% and a 45% rate, taking into consideration the outlying factors that always impact heavily on the first year of any tax innovation. Such a report would clarify the situation and allow the House to make a considered judgment one way or the other in the next Finance Bill. As always, the majority of people pay the tax that they should, but there are some who will always try to avoid as much as possible.

The artificial shock of the Chancellor at the scale of tax avoidance suggests that he takes Members of this House for fools. Although I accept the argument for a relationship between a lower taxation rate and economic growth and perhaps larger revenues, I find that argument counter-intuitive for income tax rates on this occasion. The majority of those who seek to avoid paying income tax at 50% will, I suspect, also seek to avoid paying it at 45%—and, as the Government contend over the 50% rate, they will have the resources to avoid doing so.

My amendment 76, which would require a review, neatly coincides with the Opposition’s amendment, so I assume that when my amendment is pressed to a vote they will join us in the Lobby. After all, they have already signed up to my amendment 7, which, I shall explain for the benefit of the Committee, is consequential on the additional rate changes relating to dividend and trust payments, the transferring of retirement benefits to a non-additional rate tax payer and the notional tax credit attached to some capital payments. We look forward to dividing on amendment 76 at the appropriate time.

[Karl MᶜCartney (Lincoln) (Con)]

It is a great pleasure to follow my hon. Friend the Member for Christchurch (Mr Chope), the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) and, of course, the hon. Member for Rhondda (Chris Bryant), who should take heart from the fact that although our initial reaction on the Government Benches perhaps disproves the adage that everybody goes crazy about a sharp-dressed man, we agreed with some of the points he made, which were valid. I will cover in my speech some of the points on which I perhaps do not agree with him.