Clause 32 - Corporation tax starting rate and fraction for financial year 2002

Part of Finance Bill – in a Public Bill Committee at 3:39 pm on 16th May 2002.

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Photo of Edward Davey Edward Davey Shadow Chief Secretary to the Treasury, Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Chief Secretary to the Treasury) 3:39 pm, 16th May 2002

I cannot have explained myself fully enough. There will be no extra economic activity as a result of sole traders deciding to incorporate. It has no effect on the country's overall economic growth; it is simply the result of a tax change. Therefore, it is a net loss. There is no extra growth or economic activity to set aside, unless the Government are about to tell us that they have changed the laws of economics, but I doubt that the Paymaster General will tell the Committee that.

Therefore, I disagree with the hon. Member for Wimbledon (Roger Casale). As far as I can see, the result is simply a net loss, which is what the Government estimate. My quibble is that the Government have made an underestimate, and that the Committee is being asked to agree to a tax measure that will cost the Exchequer far more than they think. It is incumbent on us to think carefully about that and probe the Government in case they have got it wrong. There is time to change, and to avoid money for our public services being lost.