Tax Credits Bill
Baroness Hollis of Heigham (Parliamentary Under-Secretary, Department for Work and Pensions; Labour)
My Lords, the money is to come from general tax revenues. As I have said, payments are to be deducted from tax receipts before they are paid to the Consolidated Fund, as set out in Clause 2. That is why Clause 2 makes it clear that the amounts are to be deducted by the Board from the gross revenues. I have to say that we have discussed this at length.
I appreciate that there may well be an unbridgeable gap between noble Lords on the Benches opposite and myself as regards whether these are tax credits or benefits and therefore whether the accountancy devices or the modes of funding are appropriate, in the views of the noble Lords, for this endeavour. At its core, we are seeking to make work pay. People are to be paid working tax credit through the wage packet. As a result, I hope that people will be brought from being out of work into being in work. Furthermore, for the first time tax credits will provide an integrated child tax credit which can be received by someone out of work, but which can then be ported into work.
The accountancy devices regarding which elements should be appropriately recorded under taxable revenues and which should be recorded as payments being made to individuals are entirely in accordance with the ONS and OECD proposals, a matter that we have already discussed at great length. I could discuss on a philosophical level whether tax credits form a part of the tax system or whether only 10 per cent of the credits should be counted as tax forgone. However, I think quite simply that there is no meeting of minds on this.
Ultimately, however, for the purposes of what we are seeking to achieve here, and given that we are following well-established procedures originally set up for WFTC and DPTC, does it matter? We are seeking to ensure that more money goes to families with children in ways that will encourage people into the labour market. The procedures of accountancy are entirely compatible with international standards; they are transparent and available for public scrutiny. There can be no ambiguity about what we are doing. Perhaps I may say to the noble Lord that I really do not understand why he does not let the matter rest.