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Offshore Receipts in Respect of Intangible Property

Part of Finance (No. 3) Bill – in the House of Commons at 5:30 pm on 20th November 2018.

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Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Treasury), Shadow SNP Spokesperson (Housing, Communities and Local Government) 5:30 pm, 20th November 2018

Dundee is affordable. There is a balance—[Interruption.] The hon. Gentleman is not listening, but there is a balance here. We need local infrastructure, transport and so on to support such things, but there is an argument for doing all that. It used to be UK Government policy to decentralise large office blocks, but they have cut that back over the years, and offices are now disappearing. He can give me no lectures about that. There are countless examples of the UK Government cutting offices. So many jobcentres in the city of Glasgow have been cut that my constituents now have to take two buses just to get to one, and I do not see any Scottish Conservatives standing up for that.

To get back on to topic, it is time for a root-and-branch review of the UK’s massively over-complicated tax system and to close for good the tax loopholes that the Tories are happy to keep open. As well as making it more difficult to avoid or evade tax, a simplification of the tax system could help those who are inclined to pay but find negotiating the system confusing. By HMRC’s own estimates, more than £6 billion a year is lost through simple errors when completing tax forms. The fact that people are ready and willing to pay tax and have such trouble doing so suggests that the current system is not fit for purpose.

That complexity can even have an impact on people’s immigration status. After making entirely legitimate corrections to tax returns, something which I am sure the Minister would encourage, the highly skilled migrants currently fighting their case with the Home Office—they are outside today for their sixth protest—found that they had been accused of dishonesty and that their applications for leave to remain had been refused. It is a scandal that makes absolutely no sense. As a result of Government policy, there is effectively no incentive for highly skilled migrants to make corrections to their tax returns lest they find themselves falling foul of the Home Office. What kind of system is that? Things are not joined up across the Government.

The Chancellor’s announcement of a digital sales tax will be welcomed by many people, not least the many people in my constituency who have contacted me about it. I am encouraged by the Chancellor’s willingness to take action, but, as always, the devil is in the detail. The Chancellor expects to raise £400 million from this tax, but for companies such as Facebook, which had global revenues last year of £1.27 billion, their share will be no particular hardship. We may be better served focusing efforts to ensure that online giants are declaring a share of profits in the UK that reflects reality. Loopholes still exist that make it relatively straightforward to depress profits in one country to avoid paying tax, and that is still perfectly legal. There are some encouraging noises from the Government, but they fall woefully short of the meaningful, comprehensive action that SNP Members have been calling for.

The powers to tackle avoidance and evasion in Scotland lie here at Westminster. Where the Scottish Government do have limited powers, they have acted to tackle avoidance, introducing a general anti-avoidance rule that goes much further than the UK equivalent UK. They have also taken steps to ensure that companies that have benefited from evasion and avoidance do not benefit from public procurement schemes, which is crucial. If the UK Government are unwilling to close tax loopholes, they should devolve the powers to Scotland and allow us to get on with the job. An independent Scotland would, I am sure, seek to simplify and improve the tax system to the benefit of all those living and doing business in Scotland.

Looking to the future, the UK Government need to ensure that Brexit does not serve as a distraction from international efforts to tackle tax avoidance and evasion. I note that Estonia is clearly leading the charge on anti-money laundering action, with Prime Minister Jüri Ratas joining with the Bank of Estonia’s Ardo Hansson to call for the establishment of a European body to combat money laundering. Estonia has a population of 1.3 million and it is leading the charge here. Where are the UK Government on this? They are too busy arguing with themselves about how many letters they can count to get on with the job of tackling tax evasion and avoidance.

At a time of so much uncertainty in the UK economy, we cannot let the economic challenges that lie ahead prevent us from creating a fairer society when it is possible to do so. Our great fear is that the UK Government will begin a race to the bottom, so desperate will they be to attract funds here. The EU has long been a source of anti-money laundering regulation, and we must ensure that, whatever happens in the next few months, we do not take retrograde steps on the progress that has been made.

The SNP supports action and accountability on this. We need to make sure that all possible measures to review our tax system are taken so we know that the UK Government’s system is effective and doing what it is meant to do and that we close these loopholes, which allow people to get away with not paying the tax that is rightfully due.