HC Deb 15 January 1998 vol 304 cc481-3
12. Mr. Spring

What is his policy on tax avoidance. [21063]

Mr. Gordon Brown

In the July Budget, we took action on the following matters relating to the issue: taxation of dividends on trading assets as trading profits; acceleration of capital allowances by finance leasing; sale and lease-back; transfers of unused past allowances; company purchase schemes; pay-as-you-earn avoidance; on VAT, in relation to the second-hand goods margin scheme, cash accounting schemes, capital goods schemes and insurance premium tax. Those actions will raise £1.5 billion over five years. We are now considering strengthening tax rules on multinationals and all other matters with a view to action in future Budgets.

Mr. Spring

Is the right hon. Gentleman aware that, in response to his announced policy to abolish PEPs and TESSAs, some important financial journalists suggested to their readers that they might move their investments offshore to avoid tax? As such arrangements are clearly condoned at the highest level of Government, would the Chancellor like to comment on those suggestions and on whether even middle-income savers should take heed of that professional advice?

Mr. Brown

People would be well advised to be wary of any advice on those issues from the Opposition. The available tax relief on individual savings accounts, PEPs and TESSAs is about £1.3 billion, which is substantial and rising, and we are committed to funds being made available in future Government budgeting. The hon. Gentleman should think carefully about the previous Government's record on tax avoidance. We are taking action on tax avoidance; for 18 years, they failed to do so.

Mr. Rammell

Does my right hon. Friend agree that the previous two questions demonstrate a concerted campaign by the Conservative party on the issue of standards in public life, that that campaign carries no conviction and that the Government will take no lectures from the party that brought us cash for questions in brown paper envelopes?

Mr. Brown

I shall certainly take no lectures on tackling tax avoidance from Conservative Members. We have already closed loopholes to the tune of £1.5 billion and we are committed to closing loopholes in tax rules for multinationals. We are also taking action on other matters and will report in future Budgets. The problem with Conservative Members is that they have a new found interest in tax avoidance although they never took action to deal with it when they were in government.

Mr. Lilley

I come back on this because the Chancellor has consistently tried to pretend that the issues raised by the Paymaster General's trust are minor and insignificant. I submit that hypocrisy, conflicts of interest and economy with the truth are not minor matters. When he was in opposition, the Chancellor pursued such matters in respect of people who did not hold ministerial office. Will he stop hiding behind a statement issued on 8 December by the Treasury which both threatened to sue newspapers and claimed—I quote the words of the Paymaster General's solicitors: our client does not influence the decisions of the Orion trust in any way."? Subsequently, the Paymaster General has contradicted that and said that he did influence the trust to buy £10 million of shares in his company—his shares—and to buy and subsequently sell at a profit shares in the Coventry City Football Trust. How does the Chancellor reconcile those two statements?

Mr. Brown

The hypocrisy is people saying that they want to take action on such matters when they refused to do so when they were in government. [HON. MEMBERS: "Answer the question."] I remind the right hon. Gentleman that when he was Financial Secretary to the Treasury and was asked to take action on offshore trusts, he said that it would impose a substantial and unreasonable burden on business."—[Official Report, 11 January 1990; Vol. 164, c. 706.] That was his action. [HoN. MEMBERS: "Answer the question."] On the particular case of my hon. Friend the Paymaster General, which the right hon. Gentleman persists in raising, first, my hon. Friend has met all the rules that have been demanded of him in the code of ministerial conduct. Secondly, he has followed the advice of the permanent secretary to the Treasury. Thirdly, he has paid taxes in the United Kingdom to the tune of £1.5 million in the past five years. Finally, I am the person in the Treasury who makes the decisions on taxation.

Dr. George Turner

Does my right hon. Friend share my concern that the Opposition are in danger of bringing the House into disrepute? We rightly have on our agenda a series of questions that are important to the future prosperity of the nation, yet it is clear that the real intent of the Opposition is to contribute not one whit to the discussion on tax evasion—

Madam Speaker

Order. The hon. Gentleman must put his question directly and it must concern Government policy and not the activities of the Opposition, for which the Chancellor is not responsible.

Dr. Turner

Does my right hon. Friend agree that he and the House should be addressing the important issues that the Opposition failed to address for 18 years?

Mr. Brown

I agree entirely with my hon. Friend. When the right hon. Member for Hitchin and Harpenden (Mr. Lilley) was Financial Secretary and was asked to take action on the taxation of trusts in Bermuda, he said that he would not. That is the reputation of the Opposition for taking action. The difference between them and us is that we are prepared to take the action that is necessary to close down tax avoidance.

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