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Lord Sewel: I can try to help on that point. As I said, distributions broadly mean dividends paid by companies, but they also cover other things, such as distributions by unit trusts and other such vehicles. I hope that that is helpful to the noble Baroness. I return to the point made by the noble Lord, Lord Campbell of Croy. I confirm that dividends are not caught by the 3p variation. We set out quite specifically and from the start to introduce a very limited tax-raising power for the Scottish parliament, which is up to 3p variation on the basic rate.

One of the difficulties we are faced with as regards dividends is that they are not taxed at the basic rate, but only at the lower rate or the higher rate. That is one of the factors that we have to take into account. I hope the noble Lord understands that point.

Lord Lyell: Before my noble friend winds up, I can save a lot of time by thanking the noble Lord, Lord Sewel, for what he said about Amendments Nos. 280 and 281. I am rather flattered that he treats me in a manner akin to Corporal Jones in "Dad's Army" as the "threat" in thinking that my amendments might be concerned with doing down the Scottish taxpayers. All the briefing I have had shows that the two amendments

6 Oct 1998 : Column 279

in my name, that of my noble friend Lady Strange, and one in the name of the noble Lord, Lord Selkirk of Douglas, would clarify the entire position for United Kingdom taxpayers. The noble Lord has given a very full explanation, for which I am grateful. I shall digest what he said and I look forward to hearing what my noble friend on the Front Bench has to say.

Lord Selkirk of Douglas: I am also very grateful to the Minister. Can he state in a couple of sentences how the Government intend to use Clause 75(2) in relation to charities in future?

Lord Sewel: I shall take refuge in the time-honoured phrase; namely, that I shall take the opportunity to write to the noble Lord on that point.

Lord Mackay of Ardbrecknish: We have had an interesting debate. I am pleased to hear that Amendment No. 279C is in because, following consultations, the Scottish financial community is very keen on it. We shall come to amendments further on in the Bill about which the Scottish financial community is also keen. I look forward to the Minister being persuaded by its arguments to accept the amendments in the Marshalled List.

I am disturbed that the Minister confirms my example about the three sets of retired people. It will be seen to be unfair and unjust. I understand the arguments. I am puzzled as regards the position of a basic rate taxpayer who has some pension income and some dividend income. The pension income alone does not take someone into the basic rate and the dividend income alone does not do that either; but together they take a person into the basic rate. Will the portion of the basic rate on which a person has to pay the extra 3p come from the pension income or from the dividend income? I am sure that the Inland Revenue will have written pages to resolve that problem. Perhaps the Minister has read the pages and can help me, or will he write to me?

Lord Sewel: I made the earlier point that dividends are taxed in a completely different way from income. They are not taxed at the basic rate, but at either the lower or higher rate. Therefore the situation that the noble Lord envisages cannot come about.

Lord Mackay of Ardbrecknish: I shall read my self-assessment form again and the notes that go with it. I was not aware, when I read the calculations that go with it, that somehow or other they were separate. I will leave that and have a look at it. These matters are complex. The noble Lord, Lord Eatwell, made a brief intervention and left the Chamber before he heard the replies--but if one runs a great Cambridge college then I suppose one cannot spend too much time here. He complained about the complexity as regards charities. What has been made clear in the past 25 minutes, and in the previous debate, is that the whole issue is hugely complex. It is not just a question of the charities.

I believe that my noble friend Lord Sanderson made a good point. Instead of trying to suggest that it is an extra 3p on the basic rate of income tax, which could take the basic rate of Scottish tax to 26p; it could be simply said

6 Oct 1998 : Column 280

that the basic rate would be 23p wherever one lives in the UK, and the Scottish taxpayers who pay at the basic rate will pay an additional 3p levy. One can call it what one likes. But it is not an addition to the basic rate. I wonder to what extent that would solve a great many of the problems. Perhaps the Minister will consider what my noble friend Lord Sanderson said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 280 and 281 not moved.]

Lord Mackay of Ardbrecknish moved Amendment No. 281A

Page 31, line 19, at end insert--
("( ) For the avoidance of doubt, and notwithstanding any other provision of this Act, the Parliament shall not vary any tax except the basic rate of income tax.").

The noble Lord said: I wish to test the opinion of the Committee on this amendment.

4.38 p.m.

On Question, Whether the said amendment (No. 281A) shall be agreed to?

Their Lordships divided: Contents, 92; Not-Contents, 115.

Division No. 1


Addison, V.
Ailsa, M.
Annaly, L.
Balfour, E.
Belhaven and Stenton, L.
Beloff, L.
Belstead, L.
Berners, B.
Boardman, L.
Brabazon of Tara, L.
Brougham and Vaux, L.
Burnham, L. [Teller.]
Cadman, L.
Campbell of Croy, L.
Carnegy of Lour, B.
Charteris of Amisfield, L.
Chesham, L.
Clark of Kempston, L.
Cork and Orrery, E.
Courtown, E.
Cox, B.
Dean of Beswick, L.
Denham, L.
Denton of Wakefield, B.
Dixon-Smith, L.
Donegall, M.
Drogheda, E.
Ellenborough, L.
Elliott of Morpeth, L.
Elton, L.
Fraser of Carmyllie, L.
Gray of Contin, L.
Haddington, E.
Halsbury, E.
Harlech, L.
Harmar-Nicholls, L.
Harrowby, E.
Hayhoe, L.
Hogg, B.
Holderness, L.
Inchyra, L.
Jopling, L.
Kenyon, L.
Kingsland, L.
Kinnoull, E.
Kintore, E.
Lang of Monkton, L.
Lauderdale, E.
Lindsey and Abingdon, E.
Long, V.
Lucas of Chilworth, L.
Lyell, L.
McConnell, L.
Mackay of Ardbrecknish, L.
Mackay of Drumadoon, L.
Mancroft, L.
Mersey, V.
Milverton, L.
Monro of Langholm, L.
Montrose, D.
Mowbray and Stourton, L.
Munster, E.
Naseby, L.
Nelson, E.
Nickson, L.
Noel-Buxton, L.
Norfolk, D.
Norton of Louth, L.
O'Cathain, B.
Oxfuird, V.
Pender, L.
Platt of Writtle, B.
Rathcavan, L.
Renton, L.
Roberts of Conwy, L.
Rowallan, L. [Teller.]
Saltoun of Abernethy, Ly.
Sanderson of Bowden, L.
Sandford, L.
Selkirk of Douglas, L.
Sempill, L.
Sharples, B.
Shaw of Northstead, L.
Stodart of Leaston, L.
Strange, B.
Strathcarron, L.
Sudeley, L.
Swansea, L.
Swinfen, L.
Thomas of Gwydir, L.
Wade of Chorlton, L.
Westbury, L.


Addington, L.
Allenby of Megiddo, V.
Amos, B.
Annan, L.
Archer of Sandwell, L.
Ashley of Stoke, L.
Bach, L.
Barnett, L.
Berkeley, L.
Blease, L.
Bledisloe, V.
Borrie, L.
Bruce of Donington, L.
Burlison, L.
Calverley, L.
Carlisle, E.
Carmichael of Kelvingrove, L.
Carter, L.
Castle of Blackburn, B.
Cledwyn of Penrhos, L.
Clinton-Davis, L.
Crawley, B.
David, B.
Davies of Oldham, L.
Dean of Beswick, L.
Desai, L.
Dholakia, L.
Dixon, L.
Donoughue, L.
Dormand of Easington, L.
Dubs, L.
Dunleath, L.
Eatwell, L.
Evans of Parkside, L.
Falconer of Thoroton, L.
Farrington of Ribbleton, B. [Teller.]
Gallacher, L.
Gladwin of Clee, L.
Goudie, B.
Graham of Edmonton, L.
Gregson, L.
Grenfell, L.
Grey, E.
Hardie, L.
Haskel, L.
Hayman, B.
Hilton of Eggardon, B.
Hogg of Cumbernauld, L.
Hollis of Heigham, B.
Hoyle, L.
Hughes, L.
Hunt of Kings Heath, L.
Hylton, L.
Islwyn, L.
Jacobs, L.
Jay of Paddington, B. [Lord Privy Seal.]
Judd, L.
Linklater of Butterstone, B.
Listowel, E.
Lockwood, B.
Lofthouse of Pontefract, L.
Lovell-Davis, L.
Ludford, B.
McCarthy, L.
McIntosh of Haringey, L. [Teller.]
Mackenzie of Framwellgate, L.
Mackie of Benshie, L.
McNair, L.
Maddock, B.
Mallalieu, B.
Mar and Kellie, E.
Mason of Barnsley, L.
Milner of Leeds, L.
Mishcon, L.
Molloy, L.
Monkswell, L.
Montague of Oxford, L.
Morris of Castle Morris, L.
Morris of Manchester, L.
Nicol, B.
Orme, L.
Pitkeathley, B.
Prys-Davies, L.
Ramsay of Cartvale, B.
Redesdale, L.
Rendell of Babergh, B.
Rodgers of Quarry Bank, L.
Rogers of Riverside, L.
Russell-Johnston, L.
Sainsbury of Turville, L.
Sefton of Garston, L.
Sewel, L.
Shepherd, L.
Shore of Stepney, L.
Simon, V.
Simon of Highbury, L.
Smith of Gilmorehill, B.
Steel of Aikwood, L.
Strabolgi, L.
Taverne, L.
Taylor of Blackburn, L.
Taylor of Gryfe, L.
Thomas of Macclesfield, L.
Thornton, B.
Thurso, V.
Tomlinson, L.
Tope, L.
Tordoff, L.
Turner of Camden, B.
Walker of Doncaster, L.
Watson of Invergowrie, L.
Whitty, L.
Williams of Elvel, L.
Williams of Mostyn, L.
Wilson of Tillyorn, L.

Resolved in the negative, and amendment disagreed to accordingly.

6 Oct 1998 : Column 281

4.47 p.m.

[Amendment No. 281B had been withdrawn from the Marshalled List.]

On Question, Whether Clause 69 shall stand part of the Bill?

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