Income Tax — House of Commons, 2019-07-03
Topic: Macroeconomics
Peter Christopher Dowd (Labour, Centre-left): The Minister said that he got support from businesses for tax relief. Well, that is not a surprise: when people are offered tax reliefs, they will accept them because it is cash in their pocket In a document published on 5 March last year, the Institute for Fiscal Studies said that our current tax system "does not consistently deduct the cost of investment meaning that some investments are discouraged, some are incentivised and some are unaffected by the tax system." It went on to say that there should be "a clear policy justification", which should be focused, and that we should ensure "that the benefits outweigh the costs." The document also said: "Too many reliefs have weak or poorly articulated policy aims", and that "digging into the details and evaluating how each relief stacks up against a clearly stated tax design" is important. It continued: "The bar for introducing any new relief should be high." On the very same night, the Chartered Institute of Taxation and the Institute for Fiscal Studies had a debate about business tax reliefs, which asked whether they were "corporate welfare or essential elements of the tax system" The question is, do we think they are an essential element of the tax system? In the debate on the Finance Bill, we raised these matters, but we were not able in any way to amend the law, which is regrettable. However, we did raise, in a sense, the whole question of tax reliefs, and it is a desperate shame to find ourselves here again debating the introduction of what amounts to another corporate tax relief, when so little has been done to sort out the scope of the scores of tax reliefs already in operation At the last count, the Government were responsible for managing 115 principal tax reliefs totalling £430 billion, as well as 80 minor tax reliefs totalling an estimated £690 million. However, alongside those, there are up to 235 reliefs in operation for which we have no cost data at all. I repeat: we are forgoing revenue on 235 tax reliefs, but Her Majesty’s Revenue and Customs does not count the cost. I find that quite remarkable. I cannot think of a single other policy area where the Treasury would be uninterested in Government expenditure Ministers tell us that the cost of these reliefs is negligible so there is no point making efforts to manage them more effectively. I do not believe that that holds water, especially when we consider that the Government regularly deprive citizens of small but essential sums of social security for the crime of being perhaps five minutes late to the jobcentre. Perhaps the Minister can explain why the Government can give away millions to large companies without counting the cost, while stripping the poorest in our society of the pounds and pence they need to survive. I ask that especially in the light of an interesting article by the Minister in The Sunday Times some weeks ago about our being one nation. It would be interesting to hear him comment on that. I agree with him that we have to bring the nation back together again, and that is an important part of this issue. I would also like to know what efforts the Government have made to improve the management of tax reliefs at HMRC. Will the Minister now commit to a moratorium on introducing further tax reliefs, unless the annual cost data on them can be collected and published by HMRC Turning to the measure before the House, it will not surprise anyone here that the pile of opaque and unaccountable tax reliefs is being added to, with yet another tax relief for businesses that does not necessarily fit the robust criteria set by the Institute for Fiscal Studies—criteria that this House should set in relation to the introduction of tax reliefs.