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I beg to move amendment No. 3, in page 64, line 16, at end insert—
'and ceases to have effect in relation to accounting periods of controlled foreign companies beginning on or after the earlier of:
(a) the third anniversary of the day on which this Act is passed; and
(b) the expiry of any twelve month period during which no statutory instrument is approved under section 748A(5) of the Taxes Act 1988 (territorial exclusions from exemption under section 748).'.
The Paymaster General made an extraordinarily helpful suggestion. As she knows, it is just that I do not want to subject the House to my tones for too long. I am thirsting to hear her mellifluous tones, and I know that hon. Members will prefer hers to mine.
Clause 89 provides for a reserve power to make regulations specifying overseas jurisdictions in which all controlled foreign companies would automatically fall within the charge to tax made by the controlled foreign company rules. The aim of the measure is to protect the United Kingdom against harmful tax practices where they continue to be prevalent. It reflects the Government's determination to promote fair tax competition and to take effective action where jurisdictions do not remove the harmful features of their tax regimes. It would not be used where appropriate action is being taken by jurisdictions to remove harmful tax practices.
The amendment accepts clause 89, but seeks to insert a sunset clause to limit the life span of the reserve power to the earlier of either three years from the date on which the Finance Bill receives Royal Assent or the expiry of 12 months during which no statutory instrument specifying a jurisdiction has been made. I know that the hon. Member for Buckingham is, as he said, very attached to the affirmative resolution procedure. The reserve power ensures that the Government would have to bring before the House regulations making it clear why a jurisdiction had been designated, and no jurisdiction could be designated unless and until the House voted through regulations to that effect.
The clause was introduced for a specific and highly focused purpose, and we hope never to use it. But we should signal that we are serious about our desire to protect the United Kingdom's interests in the long term and to be in a position to provide that protection should harmful tax practices be introduced in the future or continued in some way. If the amendment were to be accepted, and the clause lapsed, we would have to consider reintroducing such provisions in Parliament, taking up valuable parliamentary time to have exactly the same debate.
In 1985, the Conservative Government took the same reserve power, which could have been used against the United States in respect of unitary taxation. It did not contain a sunset clause. The hon. Gentleman takes the view that he bears no responsibility for what happened in the name of his party before he entered the House. I hate to have to point out to him gently that there is such a thing as responsibility in politics, which is not only about discharging one's obligations but about understanding that one has to account for decisions taken in our collective names. We entirely supported the reserve power taken in 1985. The Conservatives never sought to remove the provision and, although it has not been used, it remains on the statute book as section 812 of the Income and Corporation Taxes Act 1988.
Clause 89 provides for the Government to defend the UK's best interests in exceptional circumstances. I could not agree to recommend to the House that we limit the time period over which the power could be used without seriously undermining the Government's ability to defend our tax base. I therefore ask the hon. Gentleman to reconsider the matter. If he presses the amendment to a vote, I shall have to ask my hon. Friends to oppose it on the basis that unfortunately, in this instance, his party is not acting in the best interests of UK taxpayers.
The Paymaster General did her best to reassure us, but, as she knows, I am not easily reassured. As things stand, the Treasury has far-reaching powers in these matters, and we are not convinced that those powers are desirable or will be needed. We are concerned about the Government's intentions towards several Crown dependencies.
The thrust of our proposed sunset clause is sound. If it turns out that the Government do not need these provisions, they should not rue the passage of the sunset clause because all it says is that these provisions will expire after
"the third anniversary of the day on which this Act is passed" or
"the expiry of any twelve month period during which no statutory instrument is approved" under these provisions.
If the Government have had no reason to use these provisions, it is not clear why they should object to the sunset clause. However, if the Government use these provisions, they ought to be prepared to go through the minor and trifling inconvenience of returning to Parliament to renew them on the statute book, given that it is a matter of legitimate contention whether they will need these provisions.
I was a little disappointed, particularly as the Paymaster General is rather a keen parliamentary advocate, to hear her talk about valuable parliamentary time being taken up. This is an extremely important matter. If the Government used these provisions, they would have far-reaching implications for the people and companies affected. In those circumstances, it is not unreasonable to assume that the Government would be willing to tell Parliament that, because these important provisions have expired, they need legislatively to renew them.
Moreover, there is some form on this subject, as the Paymaster General will know. She chided me because the Conservative party did not propose a sunset clause when we were last in government. The answer is that we subsequently recognised that it would be wise to introduce all sorts of things that we did not do then. The theme of sunset clauses was taken up enthusiastically by a number of my hon. Friends and myself during the previous Parliament.
The hon. Gentleman tempts me down a path that is not altogether virtuous and that I doubt will prove to be in my interest, but on the basis that I cannot be accused of saying something new—I merely repeat what I have said before—I shall tell him that I prefer to put it the other way round: we have done things that I should have preferred we had not done and to which I never signed up. We passed a silly treaty at Maastricht. I was opposed to it then, and I am opposed to it now. I hope that we would not pass it again.
I shall be tempted no further down an unvirtuous path, the prospect of which the hon. Gentleman has dangled before me. However, I would tell him that a decent debate on sunset clauses has taken place. Sadly, he did not contribute to that debate because he was not a Member of Parliament at the time. I highlighted the significance and potential of sunset clauses with reference to the experience of our friends in the United States of America when, on
I was mortified that the Government did not accept my Bill. I thought that they would provide time for it. I rue the fact that it never became law, but I note that some significance and value were attached to my proposal on sunset clauses because the then Secretary of State for Trade and Industry, Mr. Byers, subsequently included a sunset clause in the Electronic Communications Act 2000.
The then Secretary of State was very proud of the inclusion of that sunset clause. He drew attention to it during our exchanges on Second Reading and said he thought that I ought to be satisfied, having highlighted the arguments for such clauses in my ten-minute Bill, that he had introduced such a clause. The trouble is that the Government have since lost enthusiasm. Their appetite has diminished. I am not aware that there have been further such clauses. If a sunset clause was good for that Act, there is at least an argument for the Government to consider such a clause in relation to the Bill.
However, there are other matters to discuss. My hon. Friend Mr. Flight is now in the Chamber. He has a wealth of expertise on this subject; he may be tempted to share just a portion of it and therefore I shall now, blessedly, conclude my remarks.
I withdraw. No, I wish to press the amendment to a Division. I am sorry, Mr. Deputy Speaker. For the avoidance of doubt, I was tempted to withdraw the amendment because I thought that you were accusing me of a parliamentary infelicity. My hon. Friends and I wish to press this matter to a vote. That is why I have been banging on about it for the past 10 minutes.