Date: 2023-04-18
Priti Patel: I rise to speak to the topic at hand, but I want to begin by thanking the Minister for the way in which she has tackled this Committee sitting and her familiarisation with the points made on Second Reading. I am on the record as having concerns about not just the implementation but the purpose of all this. No one would disagree that multinational companies need to pay their fair share of tax, but I question the way we are going about achieving that. I put it on the record that I was semi-humoured by the comments of the Opposition spokesperson just now. Even when the Labour party is taking a break from its efforts to heap extra burdens on businesses, which is obviously what it stands for, it is raising concerns about implementation timetables. Labour has missed the opportunity to speak up for British businesses, so it falls to those on the Conservative side of the House to do that. We believe in competition, business growth and business investment. My right hon. Friend the Member for Chelmsford (Vicky Ford) is not in her place right now, but sectors such as insurance employ my constituents, probably the constituents of the hon. Member for Ealing North (James Murray) and hundreds of thousands of constituents up and down the country. Those are the types of jobs we should try to safeguard in the United Kingdom. The hon. Gentleman was partisan, so I will make a point now as well: the response of the Labour party is always to build up even more red tape, regulations and reporting. I think we all know how we adopt regulations in this country. My own personal view, which I attested to on Second Reading, is that I would like to have a delay to implementation until we see a critical mass of other countries, including very significant competitors, moving some way towards implementing the tax, as has been said by colleagues this afternoon. As my hon. Friend the Minister already knows from interventions today and from Second Reading, I feel that this new tax risks placing significant compliance costs on British businesses, which are already paying well above the minimum 15% tax rate. We must recognise that there are current pressures and that these inevitable costs will be fed on to consumers. I have touched on the insurance sector, but at the end of the day it is consumers who will end up picking up the costs through higher premiums and other impacts on them. On top of consumer prices, which bear the brunt of that and are also inflationary, there is no way, given the delays that we are seeing elsewhere, that implementing this tax will not have an impact on our competitiveness. By pressing ahead, we risk capital flight and jeopardising future investment income. I have a range of questions to put the Minister shortly. I understand the reassurances that she has shared with the House today about other jurisdictions, but we have to be honest with people and say that we are not seeing a mass move towards co-ordinated implementation. That is not happening. We understand that that is down to electoral cycles and all sorts of pressures within other jurisdictions, and I also acknowledge that she pointed to Germany, Spain, Sweden and the Netherlands as having published draft legislation. However, only three EU member states are reaching the stage that we were at last July, and that does not mean they are meeting the parallel process on the timetable for implementation. She also pointed to Japan and Canada; Japan is interesting, because its legislation delays implementation until several months after the UK's, while Canada is yet to pass its legislation for a whole range of reasons. We should level with everyone, particularly because we as Conservatives believe in British businesses and the risks they take and know that they look to the Government of the day to give them certainty and support--I will come on to the support side in a moment. We must be clear with businesses about the environment in which we will be bringing in this measure, what it will be like and what it will mean for them. That is even before we come to the problem of the United States, which, as my hon. Friend the Member for North East Bedfordshire (Richard Fuller) touched on, is not implementing pillar two at all, and Singapore and Hong Kong, which are also important jurisdictions for financial institutions and which will be delaying implementation until 2025. I entirely understand the Minister's point about the revenue-raising nature of this measure, but, given the delays in key and significant jurisdictions, those revenue  projections are fluid--and I am being polite in using the word "fluid"; we could say they are uncertain, as they already were, but I think we could even go further and say they are probably in jeopardy. We need greater scrutiny of some of the revenue figures. The Minister has seen the research by the Chartered Institute of Taxation, which has already said it is in doubt whether pillar two will raise the PS2 billion annually that the Government are predicting. Perhaps it would be useful for the Committee to get a greater understanding of the projections, the calculations and the insights used in considering this matter, because that institute and others have raised concerns around the figures. Those institutions also raise concerns about the implementation timelines, which have been the subject of discussion. I would rather see no implementation or see implementation delayed until others look at it. However, since we are using the tool of primary legislation to bring this measure forward, at a time when the matter is still under live international discussion, which could change in months--that is the nature of the world and the markets--we need to understand what it means for British businesses and the complexities that it will bring to them. On the point of complexity, the Institute for Fiscal Studies recently released its own report expressing significant concerns about that, and many of us made the point on Second Reading about what that means for businesses. No doubt they have an army of tax lawyers, but will this be a perverse incentive? Will it have unintended consequences? On Second Reading I also touched on significant questions about international dispute resolution, which have still not been answered and which raise considerable concerns. We still have wider concerns about implementation, other jurisdictions, the ways of working and how we will resolve some of those unanswered questions. I urge Ministers to come back on Report with solutions to the points that I have made and others will no doubt make. We really do need to see what this means not just for businesses but for the whole principle of accountability, fairness and transparency internationally. We have spoken about the European Union and the United States, but the impact on British jobs and businesses is our predominant concern. I raised the whole issue of tax sovereignty. The wider implications of the policy measure for our tax sovereignty have not been unpacked. I have previously touched on the threats to competitiveness, but I genuinely feel right now that, for a country and a Government who believe in free market fundamentals, in having a dynamic economy that embraces free enterprise, and in low and simple taxation, these measures could be regressive--we could actually be going backwards. My right hon. Friend the Member for North West Hampshire (Kit Malthouse) mentioned the infamous tax guide for accountants. When accountants have to follow tomes of guidance, that goes against the grain of tax simplification. I am concerned that part of the Bill really fails to address those issues. I have one plea for the Minister. She understands that this Finance Bill has such a significant section dedicated to international taxation--the OECD rate of taxation--so I urge her to reflect on the comments that I and many others have made, which very much come from industry. I and many colleagues wrote to the Chancellor before the Budget back in March with a range of concerns. We  have not yet even had a response to that letter. I think it is important that we see proper, considered responses to all the concerns that we have raised--that is absolutely appropriate. Before jumping headlong into implementation without proper timescales, without thinking through the consequences of what the provisions mean and with other jurisdictions acting independently and changing their own legislative parameters, will the Minister come back to this House with significant answers to my questions?