Previous Section Index Home Page


European Single Currency

33. Dr. Starkey: To ask the Chancellor of the Exchequer if he will make a statement on the steps currently being taken by his Department to prepare for the single European currency. [32525]

Mr. Gordon Brown: I have set up a Euro Preparations Unit (EPU) in the Treasury to play a coordinating role in helping both British business and the public sector prepare for the single currency. The Unit will look at the implications of the introduction of the euro on 1 January 1999 as well as how we would join and introduce the single currency in the United Kingdom if we decided to do so.

Mr. Mitchell: To ask the Chancellor of the Exchequer if he will press for Greek membership of the Euro. [33806]

Mrs. Liddell: Decisions on which countries meet the necessary conditions to go forward to Stage III of Economic and Monetary Union will be taken by Heads of Government in May.

Mr. Redwood: To ask the Chancellor of the Exchequer (1) if the British Government will support the triangulation method for currency conversion between member states; [34087]

Mrs. Liddell: After the launch of the euro on 1 January 1999, the national currencies of participating countries will continue to exist as national currency denominations (or units) of the euro during a transitional period of three years. Conversion from one of these national denominations to another national denomination will need to be effected via a conversion to the euro unit, or by another process producing the same result, to ensure that mathematical discrepancies do not arise. This process is described as triangulation and is set out in Council Regulation (EC) No 1103/97 on certain provisions relating to the introduction of the euro, adopted on 17 June 1997. Given that it applies to conversion between national currency units of participating countries and not the euro unit itself, its use will not arise for the calculation and presentation of accounts in euro.

Mr. Redwood: To ask the Chancellor of the Exchequer what role the Bank of England will have in assisting the European system of central banks to support the value of the currencies participating in monetary union after 2 May. [34090]

Mrs. Liddell: There can be no presumption that such support will be necessary, but in any event the Bank of England will have no formal obligations to assist the

12 Mar 1998 : Column: 310

ESCB to support the value of currencies participating in monetary union after 2 May. The Bank will continue to stand ready to assist other central banks in their operations from time to time.

Tobacco and Alcohol

34. Mrs. Lait: To ask the Chancellor of the Exchequer what progress he is making at ECOFIN in persuading European Union Finance Ministers to increase excise duty on tobacco and alcohol. [32526]

Dawn Primarolo: The issue of excise duty rates on tobacco and alcohol has not been raised in ECOFIN so far during the UK Presidency. We await the commission's report on their reviews of the minimum rates of duty on tobacco and alcohol.

40. Mr. Forth: To ask the Chancellor of the Exchequer what representations he has received from associations representing tobacco retailers and/or manufacturers concerning illegal resale of tobacco imported from Belgium. [32532]

Dawn Primarolo: The tobacco trade associations have made a number of written representations concerning the illegal re-sale of tobacco imported from Belgium. In addition I met with the Tobacco Manufacturers' Association on 4 March 1998.

Business Cycles

36. Mr. Flight: To ask the Chancellor of the Exchequer what assessment he has made of the extent to which the British and continental European business cycles are becoming more synchronised; and if he will make a statement. [32528]

Mrs. Liddell: The Chancellor set out the Government's views on the convergence of the British and continental European business cycles in his statement on EMU on 27 October 1997. In addition the Government published the Treasury's assessment "UK Membership of the Single Currency: an Assessment of the Five Economic Tests" which also discussed this subject.

Local Authority Expenditure

38. Sir Sydney Chapman: To ask the Chancellor of the Exchequer what proportion of total local authority expenditure is met by (a) central Government funds, (b) business rate payers and (c) council tax payers. [32530]

Mr. Darling: In 1995-96, across Great Britain as a whole, central government funds to local authorities had a value of 61 per cent. of total local authority expenditure, business rates payments 18 per cent., and council tax 15 per cent.

Interest Rates

39. Ms Keeble: To ask the Chancellor of the Exchequer what steps he is taking to promote long-term stability in interest rates. [32531]

Mr. Gordon Brown: The Government have put in place a credible monetary and fiscal policy framework that will deliver consistently low and stable inflation over

12 Mar 1998 : Column: 311

the long term. These measures should help promote interest rate stability in the long run, improving the environment for long-term investment.

Company Taxes (Euro)

Mr. Mitchell: To ask the Chancellor of the Exchequer who will bear the exchange costs relating to company taxes paid in euros. [33119]

Mrs. Liddell: A working group, which will report in April, is looking at steps that the Government might take to help businesses that choose to use the euro from 1 January 1999 and the associated implications for departments.

Included in this work is an analysis of the implications of meeting the Government's commitment to allow certain taxes to be paid in euro.

Taxation (Professional Businesses)

Sir Nicholas Lyell: To ask the Chancellor of the Exchequer what representations he has received as to the legality of the Government's proposals to withdraw the cash basis practice for the taxation of professional businesses, with particular reference to the provisions of the Equal Treatment Directive (76/207). [33030]

Dawn Primarolo: A large number of representations and comments were received, including some referring to the provisions of the Equal Treatment Directive. We are now in the process of reviewing the comments received. The outcome of that review will not be announced before my right hon. Friend's Budget.

Sir Nicholas Lyell: To ask the Chancellor of the Exchequer what representations he has received on the double taxation effect of the proposed catch up charge contained in the proposals to withdraw the cash basis of taxation for professional businesses. [33032]

Dawn Primarolo: We have received a large number of comments and representations on the proposal to withdraw the cash basis practices. A few of these suggested that there was a double taxation effect of the proposed catch up charge, but we do not accept that there is. The catch up charge brings into account, only once, the receipts which would have been included had the business always been taxed on the accruals basis, and which would otherwise escape tax altogether on moving to that basis, because they were earned in an earlier period.

Sir Nicholas Lyell: To ask the Chancellor of the Exchequer, pursuant to his answer to the hon. Member for Preseli Pembrokeshire (Ms Lawrence) of 22 December 1997, Official Report, column 471, on business profits, in what way the imposition of the catch up charge proposed in the Government's proposals to withdraw the cash basis of taxation for professional businesses (a) corrects an anomaly and (b) creates a level playing field for all businesses. [33200]

Dawn Primarolo: The normal way in which those carrying on a business compute profits for tax is on the 'earnings' or 'accruals' concept under which items are brought into account not as money is received or paid, but

12 Mar 1998 : Column: 312

as receipts are 'earned' or expenses 'incurred'. However, the Inland Revenue had long-standing published practices under which self-employed people carrying on a business which counts as a 'profession or vocation' may choose a special basis for computing their tax profits, often called a 'cash' basis. Professionals on a cash basis can, subject to certain conditions, compute their tax profits by bringing into account money only as it is received or paid out. Many professional businesses do not adopt a cash basis, but the tax profits of those that do are generally lower than they would be if they were computed on an earnings or accruals basis.

The idea of withdrawal of the cash basis was to level the playing field for all businesses. The catching up charge is necessary to ensure that the transition from cash to accruals basis does not leave out tax receipts, less any expenses, which have not yet been included in their tax returns, but which would have been included if the accruals basis had always applied.

Sir Nicholas Lyell: To ask the Chancellor of the Exchequer if he will list the tax liability of a barrister (a) under the current practice and (b) under the potential future practice under the Government's proposals to withdraw the cash basis of taxation from professional businesses whose earnings correspond with each of the two examples given at Appendix B of the Bar Council's response dated 12 February. [33029]

Dawn Primarolo: The proposal to withdraw the cash basis practices available to professionals was the subject of a consultation process which was started by the issue of an Inland Revenue Press Release on 22 December 1997. Comments were invited by 14 February 1998. Now we are in the process of reviewing the many comments received. The outcome of that review will not be announced before my right hon. Friend's Budget. A barrister's liability under the potential future practice will of course depend on the final shape of the proposal yet to be announced. A comparison at this stage is not therefore possible.

Sir Nicholas Lyell: To ask the Chancellor of the Exchequer what representations he has received as to the effect on the taxation of partnerships of the Government's proposals to withdraw the cash basis practice for the taxation of professional businesses. [33031]

Dawn Primarolo: We have received a large number of comments and representations on the proposal to withdraw the cash basis practices. Many of these raised issues about the effect of the proposal on partnerships. Now we are in the process of reviewing the comments received. The outcome of that review will not be announced before my hon. Friend's Budget.


Next Section Index Home Page