Taxation: Avoidance

Lord Forsyth of Drumlean Excerpts

Tuesday 11th December 2012 Lords Chamber

[Lord Newby]

I do not remember the noble Lord quite espousing those lines when he was in my position. The Government are working very hard with low-tax jurisdictions to make sure that we get the tax that is due. This is why the Liechtenstein disclosure facility has been so productive and why the agreement with Switzerland will yield many billions of pounds that we never got before. We also have the newly expanded exchange of information, announced with the Isle of Man, which sets an example that we hope to expand to other tax havens. We are trying to bear down slowly on them so that one after another they become less desirable as places for people to put money to evade taxes.

[Lord Forsyth of Drumlean]

My Lords, on the problem of leakage of tax revenue to tax havens with lower rates, is not the answer to lower the rates of corporate taxation in this country? In answer to a previous question of a similar nature, my noble friend told me that it was an accounting problem. It is not an accounting problem that leads people to base their company headquarters in countries such as Luxembourg—it is because they pay less tax there. If we wish to maximise revenue, should we not cut corporation tax still further in the way that my right honourable friend did in the Autumn Statement?

[Lord Newby]

We are reducing the rate of corporation tax but there is a danger of a race to the bottom. Corporation tax brings in a substantial amount of money and is an important contributor to the Exchequer.