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(Except clauses 7, 8, 9, 11, 14, 16, 20 and 92) - Clause 56

Part of Finance Bill – in a Public Bill Committee at 11:00 am on 16th June 2009.

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Photo of Greg Hands Greg Hands Shadow Minister (Treasury) 11:00 am, 16th June 2009

My hon. Friend makes an interesting point. He is right: it is not exactly the same. The easiest thing for me to do is to refer him to the lengthy debate that was held on this very point during the consideration of last year’s Finance Bill by the Committee of the whole House.

It would also be helpful to get clarification from the Minister about cases where an MEP gives up his or her position voluntarily to take on office in a national Government. The Government do not appear to be particularly expert at these provisions. Indeed, my hon. Friend the Member for Rayleigh (Mr. Francois) drew attention to the case of an MEP who was appointed Europe Minister recently, rather embarrassingly in the course of the Prime Minister’s press conference, the day after the European elections. He pointed out that she would be unable to take on the role unless she first stood down as an MEP. That seemed to be news both to the MEP and the Government, despite the fact that anyone familiar with the European Parliament will know that MEPs come in and out of national Government quite often in other countries, requiring them to step down.

Returning to clause 56, what will be the tax status of the severance arrangement for that particular MEP who is now, or maybe is not or perhaps soon is the Europe Minister or is perhaps just the acting Europe Minister? I am still not sure of her status. I think the public have a right to know, not least because she is listed on the No. 10 website as being a recipient of a full ministerial salary, unlike many of her Lords colleagues, or soon-to-be colleagues, who have also been appointed to the Government and/or attend Cabinet.

I have asked the Minister a number of questions during this short debate on MEPs’ pay arrangements. I shall summarise them again. [Interruption.] I have eight questions. First, is the assumption correct that the tax for the benefit of the Communities is the one derived from the 1986 Council regulation? Secondly, which part of the EU does the tax raising and where does the tax go? Thirdly, have there been cases since 1968 where someone has been paid by the EU Commission or the EIB and has been taxed twice because of the lack of this clause? Is the clause absolutely necessary?

Fourthly, the Minister will need to explain the obscure coefficients I mentioned earlier when referring to the EIB website to try to see whether we really are comparing like with like on these matters. Fifthly, which tax regime will apply post-2009 to MEPs’ pensions and transition payments? Sixthly, are MEPs as a class of persons now, or were they ever previously, exempted from national income taxes raised in Belgium, France or any other country where they declared themselves to be resident? Seventhly, what about a UK-resident but non-domiciled MEP, like the UKIP MEP I mentioned earlier? I cannot say with any degree of certainty that that is her status—I have made a number of inferences—but I would be grateful for an explanation of how that sort of person is, or might be, treated under clause 56. Finally, what will be the tax treatment of any severance package of an MEP who steps down voluntarily under the new statute, and how will that compare with the existing arrangements?

We do not, of course, oppose the clause. It would not be right for MEPs to be taxed on their full salaries and other entitlements in their entireties by two separate tax authorities. However, we have many questions and seek a number of clarifications on the whole matter.