Amendment of the Law

Debate between Tessa Munt and Helen Goodman

Friday 23rd March 2012 Commons Chamber

[Helen Goodman]

My hon. Friend is absolutely right. Government Members are completely unrealistic about what business needs and simply do not understand that what is needed is a co-operative approach between the public and the private sectors, and long-term investment. The North East Chamber of Commerce told us that its checklist for the Budget was an increase in capital allowances and the industrial buildings allowance; a reduction in employer national insurance contributions for young people; and more support for apprenticeships. None of that appeared in the Budget this week. The Government simply have no strategy for jobs or growth.

We have heard a lot from Government Members about the benefits of cutting the 50p rate, but even the Chancellor of the Exchequer does not have the gall to put cutting the top rate of tax into the “enterprise and growth” section of his Budget. The distribution effects of this Budget are shocking. It is grotesque to give a millionaire an extra £40,000 while cutting the tax credits of those on the minimum wage who work 16 hours a week by £4,000. That is a complete disgrace. As the Leader of the Opposition pointed out on Wednesday afternoon, 300,000 people will benefit from the cut in the 50p rate, by an average of £10,000, whereas only 4,000 people will pay the higher stamp duty on properties worth more than £25 million. The Chancellor’s estimate that the loss in revenue from cutting the 50p rate is £100 million is risible. It is absurd to suggest that £2.9 billion more tax will be collected because of behavioural changes—that would be an unprecedented impact on people’s behaviour.

Before I leave the issue of tax avoidance, I wish to discuss the great contribution to the Budget made by the Liberal Democrats. They seem pleased with securing a crackdown on tax avoidance in return for succumbing to the Tory desire for a cut in the 50p rate. In fact, the Institute for Fiscal Studies says this morning that there is less action on tackling tax avoidance in this Budget than there has been in previous years.

[Tessa Munt (Wells) (LD)]

rose—

[Helen Goodman]

I am sorry, but I will not give way, as I have used up my intervention time.

If the Liberal Democrats look at the measures in the Red Book to combat tax avoidance, they will see that six of them will be legislated for in the 2013 Finance Bill instead of the 2012 Finance Bill. If they look at table 2.1 in the Red Book, they will see that the forestalling of the additional rate reduction and the cap on unlimited tax reliefs—that is the new phraseology for the tycoon tax—adds up to £2.4 billion this year. In other words, this coalition Government have given their wealthy friends one last chance to avoid tax, and that avoidance will be worth £2.4 billion. That is equivalent to all the cuts imposed in the June 2010 Budget on lone parents, on working parents and on the disabled.