Mel Stride
Main Page: Mel Stride (Conservative - Central Devon)Department Debates - View all Mel Stride's debates with the HM Treasury
(7 years, 5 months ago)
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Bob Stewart (Beckenham) (Con)
5. What assessment he has made of how to balance the needs of (a) business and (b) the Exchequer in setting the corporation tax rate.
The Financial Secretary to the Treasury (Mel Stride)
This Government believe in a tax regime that is fair and competitive. Since 2010, we have reduced the headline corporation tax rate from 28% to 19%, allowing companies, big and small, to invest in expanding their business, boost wages, create jobs and lower prices. Onshore corporation tax receipts have also increased by over 50% despite the rate being lowered.
Bob Stewart
Does the Minister agree that if we raise corporation tax, it is normally passed on by business to customers, and that if we lower it, we hope that prices will come down?
Mel Stride
My hon. Friend is entirely right. It is important to remember that the burden of corporation tax does not just fall on shareholders. If we were to follow Labour’s policy of increasing corporation tax, we would see less investment, lower growth, lower productivity and, as the Institute for Fiscal Studies has said, lower wages and indeed higher prices.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Earlier, the Chancellor acknowledged that productivity is the key to economic growth and eliminating our public sector deficit. When manufacturing businesses invest, they often lose any benefits of corporation tax reduction because of higher business rates. That acts as a disincentive to invest and increase output and productivity. Why does he not cut business rates instead?
Mel Stride
This Government have done a great deal in terms of providing business rate reliefs, which were announced in previous Budgets and are, I think, well known to the House. There will be more to come on that in the Finance Bill.
Mr Philip Hollobone (Kettering) (Con)
Will the Minister tell the House by how much the corporation tax take has gone up since the corporation tax rate was cut?
Mel Stride
This is an important point. As the corporation tax rate has decreased to 19%—it will go down further to 17%—we have seen a 50% increase in the take, which is an amount in the order of £18 billion.
Annaliese Dodds (Oxford East) (Lab/Co-op)
Most economists prioritise building business confidence and improving infrastructure and skills over cutting corporate tax rates. Is the Minister aware that lowering corporate tax rates now presents the appearance of Britain trying to undercut countries with which we need to agree a decent Brexit deal—at a time when businesses are not confident in the Government’s leadership, but are instead “aghast” and “confused” at their approach to Brexit?
Mel Stride
We have seen a huge increase in employment in this country to a record level, and a record drop in unemployment to the lowest level since the mid-1970s. A lot of that has been driven by business. If the hon. Lady is seriously suggesting that the recipe for increasing the confidence of business is putting up its corporation tax to 26%, she has, I am afraid, missed the point.
Nicky Morgan (Loughborough) (Con)
8. What assessment he has made of recent trends in economic growth.
Catherine West (Hornsey and Wood Green) (Lab)
11. What plans he has to introduce measures to tackle tax avoidance and evasion carried out through non-domiciled status and offshore trusts.
The Financial Secretary to the Treasury (Mel Stride)
The UK has effective legislation to tackle avoidance involving offshore structures and we have announced our intention to legislate further, making it harder for non-doms to avoid paying tax on funds withdrawn from trusts. I am also pleased to say that we have been at the forefront of international work that has seen 100 countries commit to exchange financial information automatically.
Catherine West
The Conservative manifesto said that the Government would
“take a more proactive approach to transparency”.
Does the Minister believe that enough is being done to tackle companies that promote tax-avoidance schemes, or is there still a tendency for the big four accountancy firms to regulate the big four, via the big four, in order to protect the big four?
Mel Stride
The hon. Lady asks if enough is being done to clamp down on tax avoidance. I can assure her that it certainly is. Since 2010, we have raised £160 billion by way of clamping down on exactly those behaviours. In the forthcoming Finance Bill there will be further measures to make sure that over the scorecard period we are bringing in between £7 billion and £8 billion in addition, in corporate tax avoidance measures.
Robert Courts (Witney) (Con)
Will the Minister confirm that due to steps taken by this Government, the top 1% of people now pay 27% of income tax, and that that is a higher proportion than under the previous Labour Government?
Mel Stride
My hon. Friend is entirely right. The Labour party would constantly have us believe that somehow we are being soft on the wealthy and hard on the less well-off when the precise opposite is true. The top 1% pay over 27% of tax, and the wealthiest 3,000 people in our country pay as much as the poorest 9 million. Under Labour, the poor paid more tax relative to the wealthy, not less. No wonder that under our policies income inequality is at a 30-year low.
Neil Parish (Tiverton and Honiton) (Con)
12. If he will make an assessment of the potential merits of merging income tax and national insurance.
The Financial Secretary to the Treasury (Mel Stride)
The Government are committed to simplifying the tax system. In 2015, we asked the Office of Tax Simplification to provide an independent assessment of the alignment of income tax and national insurance contributions. We have already taken action in a number of places highlighted by the report. However, alignment now would cause significant upheaval for millions. Now is not the right time for further reform in this area.
Neil Parish
I welcome my right hon. Friend to his new ministerial role. Last year the Office of Tax Simplification said that bringing national insurance and income tax closer together would create a simpler and fairer system for business and taxpayers. As national insurance and income tax revenues go into the same pot, would it not be simpler and clearer to merge the two and have one single income tax?
Mel Stride
As I said, we recognise the value of merging national insurance and income tax where that is practical and achievable, and there are some measures coming up in the Bills in the autumn that will address that in certain circumstances, but to do it right across the piece at this stage is perhaps a long-term aspiration rather than one we will be addressing in the short term.
Geraint Davies (Swansea West) (Lab/Co-op)
The Minister will know that as people go into the higher tax threshold they stop paying more national insurance, so would one of the impacts of merging the two be to reveal that the British tax system is not as progressive as people think, and make the case for those with the broadest shoulders to pay more?
Mel Stride
The hon. Gentleman needs to recognise that national insurance and income tax function in different ways and have different roles in the tax system. We have one of the most progressive tax systems in the entire country. If we look at, for example, those earning above—[Interruption.] Well, by raising the personal tax allowance we have taken 3 million to 4 million people out of income tax altogether. For those earning over £100,000, where we removed the allowance, that, plus national insurance, means that the marginal rates are up to 62% at that level of income.
Diana Johnson (Kingston upon Hull North) (Lab)
14. What assessment he has made of trends in the level of public sector pay since 2010; and if he will make a statement.
The Financial Secretary to the Treasury (Mel Stride)
Since 2010 the headline corporation tax rate has been cut from 28% to 19%. Despite that, onshore corporation tax receipts have increased by more than 50%, from £36.2 billion in 2010-11 to £55.1 billion in 2016-17.
Jeremy Quin
According to KPMG, we have the second-most competitive tax regime anywhere in the G7. Does my hon. Friend agree that that encourages businesses to locate here and boosts our tax receipts?
Mel Stride
My hon. Friend is entirely right. The OECD has made it very clear that corporation tax increases are the most harmful tax increases for economic growth. By keeping business taxes down, in 2015-16 we saw a record number of inward investment projects creating more than 1,600 jobs per week.
Mr William Wragg (Hazel Grove) (Con)
T1. If he will make a statement on his departmental responsibilities.
Paul Masterton (East Renfrewshire) (Con)
T4. The UK Government have a strong record of supporting Scottish businesses, and the British Business Bank has provided nearly £1.5 million of support to small businesses in East Renfrewshire. However, many businesses in my constituency are disadvantaged compared with competitors and counterparts in England due to the Scottish Government’s approach to business rates. Will my right hon. Friend join me in calling for the Scottish Government to reverse their decision to double the large business supplement, restore rates parity on both sides of the border and allow Scottish businesses to compete on a level playing field?
The Financial Secretary to the Treasury (Mel Stride)
My hon. Friend is entirely right. The large business supplement is a devolved tax matter and the supplement in Scotland is double that in England. The consequences were best summed up by Liz Cameron, the chief executive officer of the Scottish Chambers of Commerce:
“Here in Scotland, we must ensure that we are seen to be the best place in the UK to do business and that will require a fundamental reassessment by the Scottish Government of its tax policies.”
Heidi Alexander (Lewisham East) (Lab)
The Chancellor will know from his own officials’ analysis that the difference between staying in the European economic area and a Canadian-type deal, which is essentially what the Government are now aiming for, is a hit to GDP of £16 billion, which is equivalent to a 4p rise in the basic rate of income tax. How can it not be right to stay in the EEA, at least for transition?
Bob Stewart (Beckenham) (Con)
T6. Several of my Beckenham constituents have suggested that the winter fuel allowance might be a taxable benefit. Is that being considered?
Ian Murray (Edinburgh South) (Lab)
One of the best boosts to economic growth is Government infrastructure spending, so will the Chancellor look down the back of the sofa where he found the £1 billion for the deal with the Democratic Unionist party and find more change to sign the Edinburgh city growth deal?
Craig Tracey (North Warwickshire) (Con)
Does my right hon. Friend agree that lowering corporation tax to 19% has incentivised business investment in North Warwickshire and Bedworth by companies such as Aldi, which has its headquarters there, and throughout the UK?
Mel Stride
My hon. Friend is right, and he is rightly a champion of business in his constituency. There is no doubt that lower taxes create wealth and in turn pay for the public services that we all desire—contrary to the party opposite. I share one exchange with the House—when my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) asked the shadow Chief Secretary if he was
“aware that tax as a percentage of GDP is going to be at its highest level since Harold Wilson was Prime Minister?”,
his response was:
“Let me put it like this: if we had a Labour Government, the percentage would be even higher.”—[Official Report, 18 April 2017; Vol. 624, c. 579.]
Margaret Greenwood (Wirral West) (Lab)
The TUC estimates that nurses, firefighters and border guards face losing more than £2,500 in real terms by 2020. For ambulance drivers, who earn significantly below the UK average wage, the figure is more than £1,800. Does the Minister agree that it is about time that we gave hard-working public sector workers the pay rise they deserve?