Clause 30 - Charge and main rate for financial year 2003
Finance Bill
2:30 pm
Ms Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
I was intending to come on to that when showing how the formula would work in the legislation and how it would, therefore, change every year. It would cut straight across the principle of companies having certainty in their ability to plan what their tax rates will be.
The rounding-up formula would be different every year. The boost that the rounding up would give would be much greater than the amendment appears to intend at initial sight and would be beyond what the Government consider necessary. The amendment would also make the relationship between the various profit limits unstable from year to year. That comes to the point that the hon. Member for Buckingham (Mr. Bercow) made. That is important for the computation of corporation tax reliefs on the relative amounts between each limit. If the amendment were accepted, there would be a required change in the fraction used to calculate the marginal relief.
This year, those fractions would have to be 209 over 4,000 and 341 over 12,000. Although I accept the principle that the hon. Member for Arundel and South Downs wishes to explore, I do not believe that his intention is to require legislation every year, automatically to change how all those limits are calculated and, therefore, to require companies to begin to engage in mathematical gymnastics over the planning of their liabilities. The amendment would
also mean that the calculations would be increasingly complicated year after year, as we sought to achieve the right balance.
I take the amendment in the spirit in which I hope it was intended. I think that the hon. Member for Arundel and South Downs wants to have on record, again, the Government's commitment to continue actively to scrutinise corporate taxation levels, whether for large or small and medium-sized companies. I think he also wants to ensure that the rules that interlock with the corporate tax rate continue to produce a highly competitive tax rate for British companies in terms of international competition—a point that we may discuss in later debates—and provide the certainty that our companies need in understanding their tax concerns.
On that basis, I hope that the hon. Member for Arundel and South Downs, while wishing to put on record that he favours that type of mechanism, will accept that although it looks good in principle, I am not attracted to it in practice. I am prepared to say that we will, of course, always continue to look critically at issues that are put forward, not least because the hon. Gentleman is very thoughtful and has, in previous Finance Bills, occasionally discovered things that we should have discovered, and which we went on to do. I hope that the Committee will not support the amendment if it is pressed to a vote.