I am generally a low-tax Conservative. I prefer lower, simpler taxes, but I thoroughly welcome this new tax. It is clearly welcomed across the House. The public are frustrated at seeing these big technology companies and other multinational corporations not paying their fair share of tax.
I have a few observations and then one question for my right hon. Friend the Financial Secretary. It is absolutely welcome that he is co-ordinating globally on this. I have led tax talks with the OECD on things like common reporting standards, and they take a very long time, so it is welcome that he has come forward with a national measure aligned with what we expect from the international measures, and we are not waiting for the international measures to come into place.
I notice that the shadow Chief Secretary says that the measure has not gone far enough, but it is still one of the first in the world and it also breaks the mould in being a turnover tax, which the UK Government have always resisted. As globalisation continues apace, the arguments for turnover taxes as opposed to profit taxes get a lot stronger and we now have one in the UK on digital services. I suspect that in years to come there will be arguments made for expanding turnover taxes to other sectors.
The case was made that the tax is modest in terms of revenue, but all taxes start out modestly. When we look at the history of value added tax, stamp duty or income tax, they started out modestly and tended to increase as we saw what their impact was. The digital services tax is an entirely new tax on a sector where we do not really know the dynamics. The data has not been collected by the companies, so it is absolutely right that we see what the impact is before deciding in what way to extend it.
When I was chief executive of the British Bankers’ Association, I was involved in many discussions with the Treasury on new bank-specific taxes. With a new tax, it is always the case that we do not know what revenue we will get. There is always a high amount of uncertainty because people have not collected the data for that tax. It is inevitable that for the digital services tax there will be a degree of uncertainty, as has been pointed out.
My question for my right hon. Friend the Minister is about enforcement and implementation. The digital services companies will have to collect a lot of data that they might not have been already collecting. HMRC will be dependent on them for providing the data because it will not have direct access to all their internal accounts and that level of detail. I want to know what work is being done with HMRC to make sure that it can get the right data and have confidence that the companies are paying the amount of tax that they should be paying and not playing games, as they are sometimes wont to do.