Lord Tyrie
Main Page: Lord Tyrie (Non-affiliated - Life peer)Department Debates - View all Lord Tyrie's debates with the HM Treasury
(8 years, 9 months ago)
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Mr Gauke
I welcome the progress the Government have made over the past six years in ensuring that large companies pay more tax. At a time when we have been cutting the rate of corporation tax, corporation tax receipts, excluding North sea oil, have remained buoyant, partly because we have been more effective than ever at collecting tax from large companies. HMRC’s operational capability in this area has been strengthened—by the way, HMRC staff numbers are going up, not down, this year.
The shadow Chancellor mentioned the 3% figure. That is the very reason I drew attention to how corporation tax is worked out. It is worked out on the basis not of sales profits in a country, but of the economic activity and assets held in a country, and there would be severe dangers to moving in the direction of basing it on sales profits. He is right that every taxpayer should be treated fairly and has to pay the rate determined by the law; there is no lower, special rate for Google or any other taxpayer in this country.
We are collecting more tax, which is evidence of the steps we have taken, in both the BEPS process and the diverted profits tax, forcing companies to change their behaviour. That should be welcomed around the House. The real threat to collecting tax revenue from big businesses would be the anti-business policies of the Labour party.
Mr Andrew Tyrie (Chichester) (Con)
Last week, the Treasury Select Committee agreed the terms of reference for an inquiry into, among other things, problems with the corporate tax base. Does the Minister agree that Google might be a symptom but is probably not the cause of these problems; that those lie with the immense complexity of the tax system, which is rendered more problematic by the globalisation of tax liability; and that therefore fundamental reform of the corporate tax base probably now needs to be considered?
Mr Gauke
My right hon. Friend raises an important point. Our international tax system is based largely on that set up in the 1920s, but the world has moved on and the way multinational companies operate has changed significantly. That is why, some years ago, led by my right hon. Friends the Prime Minister and the Chancellor, we encouraged the OECD to establish the BEPS project. We are now seeing the first signs that that is working—that companies are changing their behaviour and the tax system is becoming better suited to the modern world.