Budget Resolutions - Income Tax (Charge)

Part of the debate – in the House of Commons at 2:23 pm on 1st November 2018.

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Photo of Margaret Hodge Margaret Hodge Labour, Barking 2:23 pm, 1st November 2018

This Budget reflects traditional Tory values that will deepen poverty and inequality and do nothing for struggling families. I will provide three examples: the Government chose to put more money into mending potholes than they granted to our cash-starved schools; they chose to prioritise the motorist over a sustainable future for our planet; and they chose to give away more in tax to those who need it least and ignored those who need most support. Labour should have no truck with that approach. We should pledge to reverse the tax and benefit changes.

Regrettably, most politicians shy away from an honest conversation about the need to raise enough money through tax to fund good-quality public services. We cannot keep promising excellent schools, effective policing and compassionate care if we refuse to raise the necessary money through taxation. We cannot keep pretending that punishing the wealthy is the solution to underfunding. We need to demonstrate value for money. We need a fair system in which big corporations do not get away with paying minimal tax on their profits. We also need a truthful conversation with voters about how much we need to raise in tax to fund public services.

I regret that the Government have not used the Budget to build on Parliament’s determination to have greater transparency in British tax havens, so that we know who owns what and where. Following the money is an essential tool to help ensure that everybody pays their fair share. MPs welcomed the Government’s concession on British overseas territories. However, we must now deal with the anomaly of Britain’s Crown dependencies. Mr Mitchell and I visited Guernsey and the Isle of Man and held positive discussions with elected politicians, and we will soon visit Jersey. Our purpose is persuade the Crown dependencies to co-operate with the UK and agree to publish public registers. Should they not co-operate, however, Parliament must use its powers to insist that they do so. Parliament expressed its views on this issue clearly. We must now ensure consistency and transparency in all UK jurisdictions.

Finally, I had hoped to welcome the digital services tax, but the Government’s proposal is little more than a public relations stunt. The Red Book projects that it will be 2022-23 before we raise just £400 million from this tax. A recent Tax Watch report calculated that in 2017, Google, which paid only £49 million in corporation tax, should have contributed £356 million, and that Facebook, which paid only £16 million, should have paid £127.5 million. Just two companies, Google and Facebook, should have paid £480 million in 2017, far exceeding the £400 million the Government estimate they will get some five years down the line from all large digital corporations. Hardware companies such as Apple and Microsoft will not be covered by the tax. Video and audio platforms, such as Netflix and Spotify, will not be caught either. Airbnb and Uber will argue that their marketplaces are not online. Even Google and Facebook will be able to exclude some of their profits.

The tax gives us far too little, far too late. It is an exercise in media management designed to persuade taxpayers that we are all treated equally. It leaves undisturbed the continuing scandal of billions lost to the public purse by the deliberate actions of giant global digital companies. This behaviour is an enduring outrage, and we on the Labour Benches will continue to argue for fair taxation.