Clive Live in Parliament: Clause 1 - Main rate of corporation tax for financial year 2011 - 12th July 2010

Clive Efford MP asked four questions (one at the start and three at the end) and also made a speech in Parliament on Corporation tax and those who take advantage of loop holes and try to avoid paying.

1. Clause 1 — Main rate of corporation tax for financial year 2011 (12th July 2010)

Clive's question transcript:

I am interested in the right hon. Gentleman's train of thought, but will he clarify something? Is he saying that there is no such thing as avoidance of corporation tax, or is he saying that anything that comes about is just the result of a misunderstanding?

2. Clause 1 — Main rate of corporation tax for financial year 2011 (12th July 2010)

Clive's speech transcript:

I pay tribute to Karl McCartney, who made his maiden speech. Many of us remember his predecessor with great fondness, and we certainly notice the difference in appearance to which he referred. She was a popular Member here, as I suspect that she was in her constituency. I am sure that the hon. Gentleman will do an able job in his time as Member of Parliament for Lincoln.

The thrust of the argument of my hon. Friend John McDonnell is that the House should be able to scrutinise the Government's actions on enforcement of corporation tax to avert some of the severe and harsh cuts elsewhere in public expenditure. The Red Book refers to the need to reduce all sorts of evasion. Indeed, paragraph 1.96 mentions the Government's measures on corporation tax, which a later group of amendments tackles, and states the need to alter the rate of corporation tax to reduce the avoidance of payment. A practice has been created of people avoiding other forms of tax and paying capital gains tax at a lower rate to minimise the amount that they pay in tax. I therefore agree with the thrust of the point that Mr Redwood made that there are times when we need to tweak the tax system to close down loopholes. In that sense, the tax system has historically been like turning a thermostat up and down. We introduce one set of regulations, that area overheats, the thermostat is turned down, another section of the tax system responds and people move in that direction to avoid paying tax.

With amendment 11, my hon. Friend is trying to ensure that the House can hold the Government to account for what they do to fulfil what they say in the Red Book, and thereby ensure that the Government maximise the amount of corporation tax that is paid.

3. Clause 1 — Main rate of corporation tax for financial year 2011 (12th July 2010)

Clive's question transcript:

The point, on which I believe we are all in agreement, is that everyone should pay the tax that they are due to pay. Amendment 11 proposes not that corporation tax should be raised or reduced, but that it should be paid, that the Government ought to take action to ensure that companies that are liable to pay it do so, and that the House should have the role of providing a check and balance to ensure that the Government are carrying out that function.

4. Clause 1 — Main rate of corporation tax for financial year 2011 (12th July 2010)

Clive's speech transcript:

I could not agree more. If I were to start listing some of the harsher items in the Budget, such as the £1.9 billion that the Government are trying to take out of housing benefit or the overall £11 billion from the welfare budget, I would risk incurring your wrath, Mr Amess. I would also risk that if I were to point out some of the actions of the previous Government in relation to the medical tests that disability living allowance claimants were forced to go through. The coalition Government, supported by the Liberal Democrats, tell us that things will become even harsher for DLA claimants, so our discussion of minimising avoidance of corporation tax is absolutely relevant.

5. Clause 1 — Main rate of corporation tax for financial year 2011 (12th July 2010)

Clive's speech transcript:

The hon. Gentleman makes a point that I could repeat. Cutbacks in Her Majesty's Revenue and Customs staff make more distant the target of maximising the amount of tax taken. He may have joined me on the odd occasion when I voted against the previous Government, so we have been on the same side of such arguments from time to time. Some of us are sinners turned saints, and even as a loyal Labour Back Bencher, I might agree with elements of the criticisms of the previous Government.

We have been given instruction in tautology on the question of avoidance and evasion, but we are quite clear that we are talking about people whose actions are not within the rules. We need to ensure that action is taken so that they pay their fair share, because clearly, the increase in taxation-the VAT increase and other measures-and the cuts will hit the poorest in our communities first. That is why it is absolutely essential that we have discussions such as the one instigated by my hon. Friend the Member for Hayes and Harlington.

6. Clause 1 — Main rate of corporation tax for financial year 2011 (12th July 2010)

Clive's speech transcript:

My hon. Friend's intervention needs no comment from me, other than to say that it is an excellent example of the sort of practices that we need to bear down on. We pay a plethora of accountants and financial advisers to advise on how to invest our money wisely, and that is a legitimate area of activity. It is right that people may order their finances within the rules to maximise their income, but if that becomes exploitation or unfair in terms of what people are contributing, we have to act. That is where the amendments that we have tabled on capital gains tax, which we will discuss later, come in.

Stewart Hosie mentioned the cut in tax staff, and if we are going to see substantial cuts in staff, it will make it even more difficult for HMRC staff to perform their task on whatever tax they are pursuing, be it corporation tax or any other.

The right hon. Member for Wokingham seemed to dismiss the issue of tax evasion, suggesting that we could pursue evaders until the cows came home, but they would never pay the tax so we would not be able to close the deficit by pursuing them. He then went on to talk about the difference between evasion and avoidance, rather than focusing on what we can do-as the people who scrutinise legislation-to ensure that the Government are delivering on their words in the Budget.

7. Clause 1 — Main rate of corporation tax for financial year 2011 (12th July 2010)

Clive's speech transcript:

My point is that that was the sum total of the right hon. Gentleman's contribution on that subject. He then elaborated on other issues. The point is that the thrust of the amendment is evasion-people working the system in a way that breaches the rules and means that they do not make the contributions that they should make. Those are the people we should bear down on. In my intervention in his speech, he accepted that there was such avoidance, and that those people should be dealt with. It is how we scrutinise that that we are discussing now. It is the function of this House to hold the Government to account, and the amendment asks for a report to Parliament on what exactly the Government are doing.

I congratulate my hon. Friend the Member for Hayes and Harlington on his amendment, and I look forward to hearing what the Government have to say in response.

8. Clause 1 — Main rate of corporation tax for financial year 2011 (12th July 2010)

Clive's question transcript:

I am grateful to my hon. Friend, because his probing is uncovering who is winning the arguments on the Government Benches. The Liberal Democrats went into the election calling for a 10% levy on banks, but the outcome is that what has been raised in the levy has more than been compensated by the corporation tax cuts. We are seeing who is winning the arguments on the Government Benches on making the banks pay their fair share.

9. Clause 1 — Main rate of corporation tax for financial year 2011 (12th July 2010)

Clive's question transcript:

I apologise to the hon. Gentleman in advance for going back to what was said during the general election, but it is important in this context. The Liberal Democrats said that they were in favour of a banking levy, as he has just said, but they went further and said that it would be in addition to corporation tax. What we are debating is corporation tax that compensates the banks for the levy, cancelling it out. How can he possibly defend that position?

10. Clause 1 — Main rate of corporation tax for financial year 2011 (12th July 2010)

Clive's question transcript:

To correct Matthew Hancock, it is just not true to say that the banks are going to pay more. Deutsche Bank has said:

"Taking 2% off the 2012 tax rate for the five banks listed in the UK would increase profit by £1.16bn, that is it should almost offset all of the banks tax. Overall a good outcome for the banks."

Similarly, HSBC said:

"We'd expect most domestically-orientated banks, for example Lloyds, to be better off after four years than they were pre-budget".