§ 3. Mr. Ernie RossTo ask the Chancellor of the Exchequer what steps he is taking to cut down on tax evasion.
§ The Financial Secretary to the Treasury (Mr. Peter Lilley)The Government are strongly opposed to tax evasion, which is why we have doubled the number of staff engaged in anti-evasion work. We have increased the penalties, which had not been increased since 1960, 378 implemented the bulk of the Keith committee's recommendations, simplified the tax system and reduced punitive tax rates, which invited avoidance and evasion.
§ Mr. RossIs it not true that according to the latest National Audit Office report, almost £4 billion or 15.5 per cent. of assessed tax revenues were uncollected in 1988? If the tax collection system was as efficient now as it was 10 years ago, we should have an extra £1.5 billion of revenue.
§ Mr. LilleyI appreciate the hon. Gentleman's point. If he reads the Treasury's reply to the committee, he will see that the sum of money is notional and that it has been normal for large amounts to be under assessment while assessments are waiting to be fixed. The actual amount that remains uncollected is only about one fifth.
§ Mr. GillDoes my hon. Friend believe that shifting the burden of taxation from a direct to an indirect basis is altogether helpful, to avoid this problem?
§ Mr. LilleyThat is certainly one of the factors that enter into the equation. However, I should also lay emphasis on reducing top tax rates. The previous Labour Government, when they had rates of 83 and 98 per cent., collected tax from only 30,000 taxpayers. Now, at the rate of income in real terms at which they would have been paying 83 per cent., 190,000 taxpayers declare their income.
§ Mr. Nicholas BrownThe Minister's general commitment is not matched by the detail that he has given the House. According to the performance indicators in the public expenditure documents that we discussed in the House on Tuesday, the Inland Revenue's cost per employee on income tax cases has fallen. If the resources have been saved—I doubt whether they have—will the Government merge the special office and the inquiry branch—a reform which they have been putting off since 1985—in order to clamp down on corporate fraud?
§ Mr. LilleyIf the hon. Gentleman looks closely at the figures, he will find that there has been a sixfold increase in the amount successfully recovered by the tax evasion unit. That is good news.
§ Mr. GowDoes my hon. Friend have it in mind to introduce any measures to prevent the Labour party from giving evasive answers about the proposed roof tax?
§ Mr. LilleyMy hon. Friend makes an extremely good point. One of the worst types of tax evasion is for the Labour party to evade giving the British people details of the taxes that it proposes to impose on them. We should like to see an end to the evasion of many questions on the roof tax. Is the Inland Revenue to be invited to hand over details of individuals' taxation to local authorities? Will individuals see their tax burden rise with every increase in the capital value of their house?