Tax System

Oral Answers to Questions — Treasury – in the House of Commons at 12:00 am on 20th July 2000.

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Photo of Lynne Jones Lynne Jones Labour, Birmingham, Selly Oak 12:00 am, 20th July 2000

What proposals he has for simplifying the tax system. [130133]

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

We continue to support the tax law rewrite project, which aims to modernise direct tax law and make it clearer and easier to use. The first rewrite Bill will be ready for enactment by the end of this year.

Photo of Lynne Jones Lynne Jones Labour, Birmingham, Selly Oak

I thank my hon. Friend for that answer, but rewrite is not the same as simplification. The House has just completed consideration of the Finance Bill. I must confess that I have not studied its 742 pages to the extent that I am sure other Members have, but I get the impression that successive Governments have introduced Finance Bills that have made the tax system more complex. Most have paid lip service to the need for a less complex system, but none have set up a mechanism with clout for addressing the issue. I invite the Government to set up such a mechanism, preferably involving Members, who should be given adequate resources for this important job.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

If my hon. Friend had studied the Finance Bill, she would have seen that at least one measure removed more than 40 pages of highly complex tax law. I am sure that she will also appreciate that when a Government approach tax law, they have to balance fairness with simplicity and understanding for the taxpayer. In today's complex world, another issue that Governments have to address is the activities of the tax planning industry, which spends all its time trying to circumvent tax law and avoid paying the levels of tax that Parliament had intended should be paid, so anti-avoidance legislation becomes increasingly complex.

The tax law rewrite project considers how to simplify the drafting of legislation, and the Government are reviewing how we can ensure that our legislation is simpler and easier to understand, while addressing the issue of fairness in the tax system.

Photo of Michael Fallon Michael Fallon Conservative, Sevenoaks

Is the hon. Lady aware that only new Labour could describe 15 separate rates of capital gains tax and 21 separate rates of company car tax as simplification? Why does she think that every business organisation now complains about the tax complexity and red tape imposed by the Government?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I know that we are nearing the end of the Session.

The hon. Member for Sevenoaks (Mr. Fallon) is saying that he is opposed to the lop rate of capital gains tax and to the way in which the Government have reformed the tax system to encourage long-term investment. Is he seriously suggesting that the previous system of capital gains tax, with all its indexation, was somehow simpler?