§ 3. Dr. Julian Lewis (New Forest, East)If he will make a statement on the tax burden on businesses. [3323]
§ The Chief Secretary to the Treasury (Mr. Andrew Smith)Information on receipts from different taxes and changes are included in the relevant issues of the "Financial Statement and Budget Report".
§ Dr. LewisI thank the Chief Secretary for that singularly uninformative reply. Does he accept that the 418 Confederation of British Industry has estimated that the tax burden on business has increased by £5 billion a year, and could that be the explanation for the fact that Britain has slipped in the ranking of most competitive countries in the World Economic Forum's league from fourth to ninth position?
§ Mr. SmithThe truth is that the Government have cut taxes on business, including a cut of 3 percentage points in the large and small companies rate of corporation tax and the introduction of the 10p starting rate, which—as my right hon. Friend the Chancellor has said—will be expanded in the Budget next year to give more help to small businesses. The result is that corporation tax as a share of the gross domestic product has fallen under this Government from the 3.6 per cent. we inherited to 3.4 per cent. last year.
As for the CBI, Digby Jones, its director general, said in response to my right hon. Friend's enterprise statement on 18 June:
We are really encouraged by the commitment to make Capital Gains Tax more favourable to enterprise than in the United States. Together with the commitment to improve tax treatment for share options, this is a clear indication the Government understands the importance of business competitiveness in the global marketplace.
§ David Taylor (North-West Leicestershire)While I accept my right hon. Friend's point about the level of corporate taxes, does he accept that small and medium enterprises face a serious problem in relation to the level of business rates? I received today a letter from a small firm in my constituency that has moved to new premises and provided 150 new jobs. Its space requirements have not quite doubled but its rate bill has quintupled. Can my right hon. Friend work with other Ministers to examine the effect of that tax, which is long overdue for reform?
§ Mr. SmithI shall of course examine carefully the points that my hon. Friend makes. There is always more we can do for small firms and we are looking at what that might be, but we have cut their average corporate tax bill by nearly a quarter. We have raised the threshold for mandatory audit, we have introduced the Small Business Service and we are simplifying the VAT regime. We also allow businesses to calculate their tax liability on the same basis that they need to provide figures for their company reports. As a consequence, there are now 170,000 more small businesses than when the Government came into office. We shall look at what we can do to give them more help, but the progress that has been made already should be recognised.
§ Mr. Nicholas Winterton (Macclesfield)I am sure that the Chief Secretary will appreciate my total commitment over many years to manufacturing industry, but I want to bring to his attention the plight of a textile company in the north-west. It is involved in a very competitive sector of manufacturing, and has spent more than £1 million on reducing the emissions into the environment that result from its manufacturing processes. Under the climate change levy, the firm will have to pay £85,000 a year. Does not the right hon. Gentleman believe that that is extremely unfair? Before he tells me about rebates, I must add that, unfortunately, the company is not eligible for a 419 rebate. It will therefore have to accept an additional tax burden of £85,000 a year. How would he explain that to the company?
§ Mr. SmithI acknowledge the hon. Gentleman's commitment over many years to manufacturing industry, and the consistency and passion with which he has spoken on the subject under successive Administrations. The answer to his question regarding the firm in the north-west that he described is that we can build success for the future only through investment, by developing skills and by creating a generally low-tax environment for business that recognises the tough global competitive circumstances faced by such firms. No Government can guarantee the success of individual firms or sectors; we can only do our level best to create the best conditions for them to succeed against tough global competition. Opposition Members accept the Kyoto targets, but it is no good them willing the ends with regard to climate change if they are not prepared to grasp the means.