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'In section 257C(3) of the Taxes Act 1988, at the end
"The order shall be made by 31st December following the preceding September referred to in subsection (1).".'.
Mr. Bercow: I have a sense that the patience of the House might soon be exhausted if hon. Members are inclined to dilate excessively on the remaining new clauses for our consideration. I am conscious of the patience threshold of Members, as you will testify, Mr. Speaker, and I shall therefore keep my remarks
Dawn Primarolo: May I say how much engagement suits the hon. Gentleman? His new-found brevity is no doubt a product of his haste to spend his timeas we would all like to do occasionallywith loved ones and family.
Mr. Bercow: As the Paymaster General can easily discern, I am thirsting for the company of my beloved, who said to me, although she is a keen supporter of mine, "Why, dear, do you always think it necessary to avoid using one word when a hundred would do?" She might not admit it, but that is what she said.
The subject matter in question is the statement of liability to income tax. The thrust of the new clause, which is tabled in the names of the shadow Chancellor, my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), other of my hon. Friends and I, is to make explicit what people pay, the effect of their contributions, and how resources are divided between the areas of Government responsibility. Specifically, people pay their taxes and, in return, they want decent health care, a quality transport system, adequate education, the best possible protection against crime, a guarantee of financial security and proper but minimum interference in the affairs of industry and commerce. If they live in rural areas, they are concerned about the rural environment. In addition, the Department for Culture, Media and Sport is mentioned in subsection (2)(h) of the new clause. It has responsibilities and money goes to it. Therefore, we need to know what we receive in return.
The thrust of the new clause is an attempt to move towards more open government, requiring transparency about where Government money is spent and an easy-to-follow format for the lay person. It is not, however, a move towards hypothecation of tax. The Government publish all the information in other formats, but the new clause would merely make it easier for individuals to understand Government spending.
As hon. Members can testify from their experience, a number of councils provide similar information on the council tax bills sent to each household. Conservative Members do not understand why the Government cannot operate on a similar principle in relation to the payment proceeds and purposes of income tax. It should not be costly to follow the spirit and content of the new clause, because the same calculations could apply to each taxpayer. A uniform system could operate, and it would not create a great administrative burden. It should be relatively straightforward to make computer-produced statements, about which we know the Government are very keen.
The new clause takes the form of a probing amendment. It does not make an explicit commitment on the part of the Opposition, but it would require the Revenue to produce a statement of an individual's income tax liability and the proportion of that liability that would be spent in each Department. It is a straightforward and eminently reasonable proposal.
I feel almost 100 per cent. confident that the Paymaster General, if she is in one of her more eminently reasonable moods, will eschew the opportunity of a long reply and make it clear that no Labour Member has any intention of objecting to the new clause. With the hoped foralthough not guaranteedsupport of the Liberal Democrats, I trust that we can be unanimous on the subject and dance round the mulberry bush together in support of new clause 6.
Mr. Edward Davey: The reputation of the hon. Member for Buckingham (Mr. Bercow) for speaking without hesitation, repetition or deviation once drove me to suggest that he was a suitable candidate for "Just a Minute". That point may not apply today, because he has been brief and witty.
I assure him that the Liberal Democrats support the new clause. We have advocated such a proposal, under what we describe as our citizens' tax contract, since 1993. Therefore, it would be odd if we did not support the new clause. However, I have one or two concerns about its detail. Perhaps I did not hear the hon. Gentleman clearly, but he did not appear to explain why the Ministry of Defence was not covered by subsection (2).
Mr. Bercow: I am easily provoked, as you will be aware, Mr. Speaker. I was being selective and illustrative about the new clause rather than pedantic and exhaustive. As a person of generous spirit, I always thought that the hon. Gentleman preferred the former combination to the latter. I hope that he will not now disabuse me.
The new clause is similar to a new clause that I tabled to the Finance Bill 2000. I will not rehearse the speech that I gave then, but hon. Members who are interested can read it at columns 26869 of Hansard for 18 July 2000. It is also on our website.
The new clauses have the same purpose: to avoid unnecessary bureaucracy, expense and anxiety among vulnerable people. Let me explain. Relatively recently the Government changed the way in which they send out pay-as-you-earn notices of coding. I raised that in 2000 because of the Government's practice of announcing personal allowances for the following year for most employees in the pre-Budget report, but their failure to announce the allowances for pensioners. That caused confusion among pensioners who received a notice of coding in the spring and another one after the Budget. They wondered what was going on because the coding had changed following the Budget, and between April and May they effectively gave a tax-free loan to the Government because their tax position had been based on non-indexed allowances.
We argued that the Government should amend the Taxes Act 1988. They did not accept that, but changed the practice by administrative decision, which was welcome. They were clearly moved by the strength of the argument, especially the case put forward by the Low Incomes Tax Reform Group, and this is my first opportunity to salute them for that. However, in making the change and announcing the age-related allowances in the pre-Budget report, the Government did not announce the allowances for the following year for blind people. Although pensioners escaped the double tax code notification and related problems, blind people did not. So the Government need to go a little further.
The problem also suggests that, rather than making the change by administrative decision, it might be better to put it beyond doubt by including it in law. That would allow us to avoid the problems that arise for blind or elderly people if someone in a Department is forgetful and they receive two coding notices. That situation is confusing and people end up giving an interest-free loan to the Government. It is a small but important point because some of our vulnerable citizens experience unnecessary anxiety. I hope that if the Government do not accept the new clause, they will make that administrative decision now and table an amendment to that effect to next year's Finance Bill.
Dawn Primarolo: New clauses 6 and 18 are aimed at giving greater information and clarity to the taxpayer. I regret that I cannot accept either new clause, but I will outline some of the problems that arise and the issues that need to be settled.
New clause 6 attempts to provide every taxpayer with a statement to show how their income tax liability is allocated in spending terms. Telling taxpayers how their taxes are spent is something that the Government take seriously. We are doing that in a number of ways, but always want to improve on such practices. I want to explain why new clause 6 does not provide the best method. I listened very carefully to the points made by the hon. Member for Buckingham (Mr. Bercow), and I shall continue to reflect on them, but I shall briefly put to him the major difficulties with the new clause.
First, the new clause runs counter to the principle underlying the Consolidated Fund because it asks us to track £1 of tax from a taxpayer into the Consolidated Fund and then back out to a particular Department. I accept the principle being put forward by the hon. Gentleman about giving indications of how taxpayers' money is spent, and we do our best to do that, but this route would be bureaucratic and difficult.
In addition, the apportionment calculation in the new clause simply will not work. I appreciate the point that is being made, but by multiplying an individual's income tax liability by the percentage of the total UK tax take that the income represents, the apportionment proposed in subsection (2)(d) can never add up to 100 per cent. of the individual's income tax liability. Other hon. Members pointed out that the list of Departments is not exhaustive and perhaps that is where the 100 per cent. is made up. However, that runs counter to the point that the hon. Member for Buckingham was trying to make about people understanding where their money goes.
There is a second problem with the new clause. Many of those who are not in self-assessment, such as employees taxed under PAYE, currently have no reason to provide the Inland Revenue with details of investment income taxed at source, unless they are liable to be taxed at the higher rate or are due a repayment. To provide such taxpayers with a statement of their total liability to income tax, the Inland Revenue would be required to obtain details of the total tax paid by each individual, and that would effectively bring millions of taxpayers into self-assessment, not for the purposes of collecting tax, but merely to provide them with a statement of their share of income tax liability, notionally apportioned. I do not think that the hon. Gentleman wanted to achieve that.
To be fair to the hon. Gentleman, what he is asking in his new clause is that the total tax paid by an individual over a tax year should be calculated, but that information, which would have to be accurate, is not held in one source. The new clause would require a statement to be issued annually to every one of the 26 million income tax payers, showing their total tax liability for the year, including PAYE. That would be a huge task, and it is a costly way of trying to achieve the hon. Gentleman's aim.
In speaking to the new clause, the hon. Gentleman was good enough to say that it was a probing amendment, and that he wanted to push the Government and, presumably, to hear me say that we will continue to look for ways to improve our method of accounting to the taxpayer for the spending of tax moneys. Although the hon. Gentleman will want to return to the matter, I hope that he accepts that the intention is shared across the House but this particular method is not the best way of fulfilling it. I should be grateful if he would allow me to consider the matter for a little longer.