Tax Avoidance and Evasion

Debate between Phillip Lee and James Cartlidge

Wednesday 13th April 2016 Commons Chamber

[Dr Lee]

I thank the hon. Gentleman for his contribution, but the political and philosophical point in it is that he does not believe that reducing the size of the state is necessarily in the interests of the majority. I do, and that is where we diverge, but the hon. Gentleman is right that there is a sense that the middle are carrying the burden and the very rich are not. However, all these things that we have been discussing, about which I have no knowledge—I wish I had money in trusts, offshore or elsewhere—are legal. If something is legal, I believe that it is legitimate. To those who believe that there is a moral component to paying tax, I say, “Get real.”

We probably need to look at the system first. Earlier, I referred to the corporation tax scandal, Google and the like. I know that the Government have made significant progress on reducing corporation tax, but corporation tax is out of date in a globalised economy. Let us just scrap it. We either make a decision not to spend £42 billion, or we move to a form of taxation that is not so easily avoidable, be it employee taxation, a sales tax or a property tax. However, the perpetuation of corporation tax in the world I see is plainly nonsense.

On the point about London property ownership, it is all about avoiding stamp duty. Scrap stamp duty. We should either not spend the £7 billion or find another way of levying the tax. Perhaps people should be taxed for ownership on an ongoing basis. Perhaps council taxes should be increased. I do not know—one can choose. However, corporation tax and stamp duty are clearly not fit for purpose and are easily avoidable.

The other challenge is intergenerational inequity. Significant sums of money are tied up in particular generations. Much has been said about the Prime Minister’s inheritance tax arrangements, which are totally to be expected—anybody with any wealth will mitigate inheritance tax. Who in that position would not? Let us not be hypocrites. The problem is that significant wealth is tied up in a particular generation, who were born post war. How will we facilitate the transfer of that wealth fairly and equitably? Answers on a postcard, please. At the moment, we do not have a system that works, and we need one.

I move on to transparency and the need for simplification. I am attracted to the Scandinavian—Norwegian and Swedish—model of publishing tax and wealth online. I support that; I have absolutely nothing—as far as I am aware—to hide. When I mention that to Conservative colleagues in particular, they worry about privacy. If that is founded—and those arguments are strong—the Prime Minister should not have published his tax returns, and nobody else should do so. It should be all or nothing. Each and every one of us in the Chamber, and indeed those watching in the Public Gallery, has a share in our democracy and in our Government functioning. For that share to be valued, we must all trust that it is legitimate and fair and that everyone is playing by the rules. I am therefore drawn to the Norwegian model, with all the necessary clarifications of legitimate application.

[James Cartlidge]

Which Norwegian model? There is one to do with the sex trade, there is another to do with negotiations for the referendum—is my hon. Friend talking about the tax one?

[Dr Lee]

Of course I am talking about the tax system. There have been some concerns about it, to do with extortion and potential for kidnapping the very wealthy. However, if the system is applied with a log in and all the necessary things that need to be put in place, I do not see a problem with it. In the first couple of years, everyone will be interested—twitchy curtains—in what everyone else is earning, but after that, things will settle down.

I have contributed today and I feel strongly about this because if we do not have trust, not just in us but in this establishment and in Government, we cannot achieve much. The challenges that the country faces with the long-term sustainability of health and welfare, particularly pensions, mean that there will be some difficult decisions for whoever is in power. For them to be implemented, we must be trusted. Everything that we do here should be about that. That is why I think that our priorities should be transparency, simplification and scrapping taxes that have long been out of date.