HC Deb 12 March 1998 vol 308 cc747-8
15. Rev. Martin Smyth

What steps he has taken to achieve equalisation of taxes in the European Union. [32507]

Dawn Primarolo

This Government have taken no steps towards equalising direct tax rates in the EU. The Government believe that fair tax competition is positive and helps to maintain Europe's external competitiveness. The UK has already persuaded other member states of this and the benefits of fair tax competition are explicitly recognised in the code of conduct agreed by ECOFIN on 1 December 1997.

There is already a significant degree of harmonisation or approximation of indirect taxes. The last Government were responsible for much of this: they agreed minimum rates for VAT and excise duties.

Rev. Martin Smyth

Early-day motion 949 deals with the increase in tobacco taxes. Does the Minister accept that that is having an adverse effect on our people and on their jobs without helping people's health? Also, about £1 billion a year is being lost to the Treasury through smuggling.

Dawn Primarolo

As the hon. Gentleman will be aware, the report produced by the European Union on excise duties, particularly with regard to tobacco, is now considerably overdue. The Government are pressing hard to obtain publication of the report. As the hon. Gentleman will know, the Government take very seriously the problems of smoking and smuggling.

Mr. Townend

I am grateful to have the opportunity to ask the hon. Lady a question, as she does not have the courtesy to sign her replies to me.

The House knows of my lifelong experience in the drinks industry. I was interested when the hon. Lady talked about a level playing field. Does she accept that smuggling into this country is growing dramatically and that the big danger is not only that the Government are losing revenue, but that organised crime is progressively taking over the smuggling? We have had recent incidents at Dover in which firearms have been used. Does she agree that the only way to solve the problem is to have more harmonisation, and will the Government start to move towards that in this year's Budget?

Dawn Primarolo

I find it incredible that Conservative Members who supported a Government who for 18 years did nothing about smuggling now try to saddle this Government with solving the problem immediately. As the hon. Gentleman well knows, we take smuggling and excise fraud seriously. It was this Government who set up with the industry the review on tobacco and alcohol smuggling and fraud. The report before us will inform the Chancellor's judgments in his Budget next week.