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Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 2:56 pm on 20th April 2004.

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Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary to the Treasury 2:56 pm, 20th April 2004

I beg to move,

That this House
declines to give a Second Reading to the Finance Bill because the provisions contained in its 574 pages increase the burden and complexity of taxation, particularly on small owner managed businesses;
do nothing to increase the savings rate or improve United Kingdom productivity;
and will lead to a further decline in the competitiveness and relative attractiveness of the United Kingdom as a location for investment.

First, I refer hon. Members to my declaration in the Register of Members' Interests. Secondly, I congratulate the Chief Secretary on a better performance than that in the recent Budget debate, but his promotion of his own Finance Bill lacked both conviction and enthusiasm.

This is, perhaps, the dullest Finance Bill for a long time, but I imagine that the Chancellor is proud of himself for adding another 574 pages of tax complexity for businesses and citizens to cope with—admittedly, 158 pages deal with the new tax regime for pensions. The reforms were supposed to simplify arrangements and, as the Chief Secretary said, to create a single new system, but if he read through the 158 pages he would find that the Bill sets out six new systems to replace the eight old systems.

If the Government were in listening mode, they would find that pension professionals are offended and outraged that this massive piece of complex legislation has been introduced without prior consultation, which permits no more than three months of digestion, analysis and criticism as the Finance Bill moves through its parliamentary stages. The time scale is unnecessary because the new measures will not become effective for two years—Green Papers are different from specific consultation on detailed legislation.

Virtually all economic commentators agree that the background to the Finance Bill is the Chancellor's need to raise taxation sooner or later in the face of a current structural deficit of some £35 billion with, by the Government's own measure, full capacity in the economy next year. In addition, there is an estimated £13 billion black hole arising largely from what the Institute for Fiscal Studies assesses as over-optimistic projections for corporate tax revenues.

Citizens and businesses do not face major tax increases only if Labour win the next general election—the tax take is going up by nearly 8 per cent. this year, to £31 billion, after a 6 per cent. increase last year and before a further 8 per cent. increase next year.