Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Sewel: The Scottish parliament would pass a resolution increasing the tax rate by, let us say, 3p. The Inland Revenue would estimate what the yield from that would be and make that money available. During the course of the tax year it could become clear that there was a difference between the estimate and the yield. Either an adjustment would have to be made during the course of the tax year, or an end-year adjustment would be made to take account of the difference between the estimate and the actual yield. I hope that explains the point satisfactorily.

6 Oct 1998 : Column 290

I come back to the basic point in this debate as to whether Clause 69 should stand part of the Bill. The provisions which are captured in the clause were put explicitly and openly to the people of Scotland at the time of the referendum on 11th September last year. Over 60 per cent. of the people of Scotland endorsed those proposals and we are pledged to give legislative effect to them.

Clause 69 agreed to.

[Amendment No. 281BA not moved.]

Clause 70 [Supplemental provision with respect to resolutions]:

[Amendments Nos. 281C and 281D not moved.]

Clause 70 agreed to.

Clause 71 [Scottish taxpayers]:

The Deputy Chairman of Committees (Viscount St. Davids): I should point out before calling Amendment No. 281E that if that amendment is agreed to I cannot call Amendment No. 282.

Lord Mackay of Ardbrecknish moved Amendment No. 281E:

Page 33, line 8, leave out subsection (6).

The noble Lord said: We now come to the part of the Bill which attempts to define who is a Scottish taxpayer and who is not. We shall come later to what I believe is a more elegant solution to this problem, but I have learned that the Government do not like elegant solutions and so I do not suppose that I shall make much progress on that. I therefore wish to look at some of the detail of the solution that the Government have brought forward as to who is a Scottish taxpayer and who is not.

In Clause 71 we look at place of residence. In subsection (6) we have the interesting issue of,

    "a vessel or other means of transport",
with which comes the question of where one is just before and just after midnight. Take someone who commutes on Sunday night on the Glasgow to London sleeper, which currently leaves just before midnight. I should say that I seldom use the sleeper so this is not a case of my seeking anything for myself. I assume that the sleeper is still in Scotland just after midnight and therefore the commuter is judged to live in Scotland for that day. If, however, the sleeper were to leave a little earlier and cross the border by midnight, the commuter would be judged to live in England for that day. If someone leaves London on the sleeper, goes to sleep before midnight in England and wakes up in Scotland, it will be decided that he does not spend that day in Scotland because just around the witching hour he was still in England, sleeping his way north. I wonder whether the Minister can help me with the sleeper quandary.

There is a similar problem with regard to transport which concerns lorry drivers, but perhaps one of my noble friends will take up that matter. Many lorry drivers do a lot of commuting and moving around. Sometimes they are in Scotland overnight, sometimes in England and sometimes on the Continent. They may, in fact, be on the Continent to such an extent that the

6 Oct 1998 : Column 291

number of days on which they are in the UK calls their tax position into doubt and the matter may become very complicated for them. There are, for example, major transport firms in what was the constituency of my noble friend Lord Monro which operate cross-border and across Europe. Those firms will have drivers whose homes are clearly in Scotland but who will spend a lot of midnights outside Scotland, and I believe that that will be a problem.

I think the question of ships is the best of all in this particularly daft clause. A coaster may trundle around the coasts of Europe and spend some time in Scottish ports, some time in English ports and some time in European ports. I am happy to say that, thanks to the abolition of the dock labour scheme by the previous government, the ports in Scotland have seen a considerable revival of their trade, so it does happen that many sailors and merchant seamen spend many nights on their coaster in Scottish ports. They may live in England, they may indeed live in an overseas country, but they escape the tartan tax, at least so far. It seems to me odd that a merchant seaman who resides in England, and whose wife and family reside in England, but who spends a lot of nights in a Scottish port, may suddenly find himself having to argue with the tax authorities that he is not a Scottish taxpayer. I wonder what the position is if a ship leaves the Clyde on the tide and is still in Scottish waters at midnight. How would we resolve that?

The Inland Revenue has already sent out pages and pages of material to try to clarify the Scottish tax position. It has not succeeded as far as I am concerned, but I suppose it will all be to the benefit of accountants and such people who will be able to advise their clients as to the position.

I accept that there may not be many such people, but legislation is written to cover all eventualities and we must look at this matter very seriously. What will happen if someone spends a lot of time in coastal waters? It might be very relevant to the Scottish Fisheries Protection Agency, of which the Minister is the commanding officer, the commander in chief, the vice admiral, or whatever we want to call him. Many of the men of that agency will spend a lot of nights in Scottish coastal waters. Will they be able to say: "We are not Scottish taxpayers because we are not tied up at a Scottish port; we are out in the Minch somewhere watching the fishermen and making sure that they are all obeying the law".

The position will have to be clarified. If it is not clarified in the legislation or in the guidance, it will eventually have to be clarified by expensive court action, which we all want to avoid. I believe that this daft little subsection deserves some attention from the Committee to try to make sure that the Government know what they are doing. If it becomes clear to the Committee, as I am sure it will, that this is a pretty confused issue, I hope that Members and the Government will be persuaded that the simpler solutions

6 Oct 1998 : Column 292

with regard to defining who is and who is not a Scottish taxpayer, to which we shall come later, should be accepted by the Government. I beg to move.

The Earl of Balfour: Grouped with Amendment No. 281E in the names of my noble friends Lord Mackay of Drumadoon and Lord Mackay of Ardbrecknish is my Amendment No. 282, which I realise will fall if their amendment is accepted. Mine is a purely probing amendment, but I should like to give the Committee a few examples of where I think a problem exists in respect to

    "a vessel or other means of transport"--
that is, ships, aircraft or road vehicles, which all have to be registered at some place.

When I was in Finland in June 1977 I was asked if it was still possible to obtain flax sail canvas and sail twine to equip a square-rigged sailing vessel. Upon my return, I contacted Webster & Sons, now called Millerain of Arbroath, who informed me that they could still make flax sail canvas to full Admiralty standards and sent me samples and prices f.o.b. a British port. Flax canvas is much nicer to handle in wet stormy weather than is cotton, which is horrible, or man-made polyester, which deteriorates in bright sunlight.

I also contacted Barbour Campbell Threads Limited of Lisburn, Northern Ireland, who make the best flax and polyester twine and thread I have ever seen and whose products are ideal for sewing anything from leather to the finest silk.

The order from Finland was placed with those two firms, who arranged delivery to Aberdeen where the bolts of canvas and boxes of twine went aboard a Finnish cargo ship. That ship regularly called at Aberdeen. That is my first example: I would not wish the Finnish crew to be subject to the tartan tax.

My second example is of the then well known shipping company Richard W. Jones of Newport, South Wales, which for many years had ships with cargoes of coal making regular voyages from a Forth port to the Mediterranean returning with full cargoes, including deck cargoes, of esparto grass (used in making the best quality paper) from North Africa. These ships sailed with mostly a Welsh crew and were always registered at Newport but seldom, if ever, sailed to their home port. In October 1950 I was fortunate enough to sail for the first time as second mate for one voyage on the "Uskport" when the regular second mate was home on leave.

My last example refers to the best shipping company with which I ever sailed: the Ben Line of Leith. All of its ships were registered at Leith but they were too large to get into Leith and their main port was London. Their regular voyages were to the Far East--Malaya, Hong Kong and Japan--which meant a round voyage of about five months. Although my parents' home was in Scotland, as was the case with most of the officers and crew, I was never at home in Scotland for more than two months in any one year. When I was at sea a person had to be out of the country for a full financial year and unmarried in order to claim any tax rebate. He could then reclaim the lot.

6 Oct 1998 : Column 293

Under subsection (3) of this clause it appears that a single person is able to avoid tartan tax if he or she spends most of the time out of Scotland. I fear that a married person with a home in Scotland will miss out, as has been the case with income tax in past years. I should not like to see a situation in which a married person who is a householder in Scotland must pay Scottish tax but a single person is able to avoid it because that person has no home of his own in Scotland.

In conclusion, I draw the attention of the Committee to the concluding words "or other means of transport" of Clause 71. Some years ago when I attended the Peterhead Harbour inquiry chaired by the noble Lord, Lord Hughes, I was interested to learn that regularly two refrigerated lorries per week left Peterhead whose first stop was Rome. I believe that in this case the Government should take into consideration that our transport costs, including fuel costs, are very much higher at the moment than in most of Europe. I should not like Scotland to lose this important trade, which contributes to the balance of payments, due to any kind of Scottish tax.

I ask the Government to consider the question of a person's domicile. I hope that married people will not be penalised because they have homes in Scotland and that single people can get away with it.

5.30 p.m.

Lord Mackie of Benshie: The fact is that the Inland Revenue already deals with a number of cases involving taxpayers who work both in and out of the country. They deal with people who work on rigs or drive lorries, and in respect of the whole of their tax, not just thruppence. I believe that we are making a little too much of it.

Next Section Back to Table of Contents Lords Hansard Home Page