Clause 187 - Repeal of drawback on British compounds and spirits of wine

Part of Finance Bill – in a Public Bill Committee at 6:30 pm on 19 June 2012.

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Photo of Jacob Rees-Mogg Jacob Rees-Mogg Conservative, North East Somerset 6:30, 19 June 2012

I am sorry to trouble members of the Committee with this matter because I know that they are keen to prepare themselves for the debate on financial services market abuse later this evening. However,  this clause deals with a concerning change in the regulations, and I wish to bring people’s attention to the explanatory notes which state that

“it is doubtful whether section 22 is fully compliant with EU directive 2008/118, which concerns the general arrangements for excise duty.”

I am surprised that the hon. Member for Bassetlaw did not point that out.

I am concerned, first, that we are introducing a piece of legislation primarily because of the European Union, which is something of which we should always be suspicious, particularly in taxation, which is reserved to this country. Although this measure concerns tax not being paid or being rebated at a particular stage in the process, it is still fundamentally a taxation issue.

Secondly, the clause might discriminate against smaller businesses. If a producer of alcohol stores their alcohol on site, they do not have to pay duty until it moves from their premises. For a small operator who warehouses alcohol, should the repeal be implemented, duty will become payable at the point at which the alcohol is moved to the warehouse. That will have unfortunate cash-flow implications for small businesses at a time when they are particularly hard pressed. I am deeply concerned that we are slightly rushing through what appears to be a tidying-up exercise, by getting rid of a minor section of a 1979 Act, pretty much the last Act passed by the Callaghan Government before it collapsed. It is a minor section of an old Act that could have an effect on businesses in this country. When it is very difficult to get bank credit, as we discussed earlier, requiring the payment of duty before the goods are finally shipped on to the end retailer could be very damaging for businesses. I hope the Government will think again or explain why the clause does not have the effects that concern me.