§ Mr. ChidgeyTo ask the Chancellor of the Exchequer what assessment his Department has made of the impact of recent changes to the foreign earnings deduction arrangements on(a) operating costs of British charities and (b) in the gross and net tax revenues accruing to Government. [52539]
§ Dawn PrimaroloIn reaching the decision to end the general Foreign Earnings Deduction, full consideration was given to all likely practical consequences. Based on information provided on behalf of UK charities, any costs arising as a result of this legislative change will be very low. Most aid agency employees working abroad will not be UK resident for tax purposes and so will be unaffected by the change. The net full year Exchequer yield from the withdrawal of the general Foreign Earnings Deduction is forecast to be at least £250 million a year and the gross figure will be higher than this.
§ Mr. ChidgeyTo ask the Chancellor of the Exchequer what assessment his Department has made of the impact of recent changes to the foreign earnings deduction arrangements, on the overseas earnings and competitive position outside the United Kingdom of(a) the consultancy sector, (b) consulting engineers, (c) contractors and (d) industries in the United Kingdom which supply goods and services for British consultants and contractors operating overseas. [52538]
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§ Mr. Geoffrey RobinsonIn reaching the decision to end the general Foreign Earnings deduction, full consideration was given to all likely practical consequences. It is important to note that FED was available to all employees and provided a loophole exploited not only by UK employers. It is, therefore, impossible to measure precisely the effect on overseas earnings of the withdrawal of this relief. More importantly, in terms of international competitiveness, it is misleading to look at one feature of the tax system in isolation. We believe in support for all businesses through economic stability and broad based relief. We have already reduced the main rate of corporation tax by two percentage points. A further one per cent. reduction is proposed for 1999. Advance corporation tax is also being abolished. It is measures such as these which makes the UK attractive to business and which will result in the creation of jobs and closing discredited loopholes such as FED helps to fund these measures.