hazylavender/hi huggingface dataset:
Date: 2023-04-18
Victoria Atkins: Yes, of course, but we have to work with the US Administration this week, next week and the year after next. That is why, with the US having its own rules and with its encouragement that these global standards should be applied, we are in lockstep with other countries in implementing this rule. I would just make the point that this is unprecedented; this is new and we have to be realistic. A hundred years ago we did not have multinational groups operating in the way that they do today, or in the way they will in five or 10 years' time. We as an international community are trying to deal with some of the aggressive tax planning that we have seen multinational groups indulge in. We want to raise the floor, and those economies have signed up to this. They are part of the 135 countries that have committed themselves to this agreement. That is what was so important about the agreement, and these taxes will apply in those jurisdictions even if they have not implemented it.
Date: 2023-04-18
Richard Fuller: I am grateful to the Minister for giving way, and I apologise for not being here for the start of her speech. Can I just pick up on her remark that these countries have "committed" to this? A commitment in words to an international treaty is not the same as a commitment to enactment in domestic legislation. This is the point that my right hon. Friend the Member for North East Somerset (Mr Rees-Mogg) was making. In the United States it is clear that although there might be an international intent to enact this legislation, there is certainly no legislative intent that it should be passed into US law. I have other points to make but I will finish on that point and simply ask the Minister for her comment  on that.
Date: 2023-04-18
Victoria Atkins: First, this is an international agreement and nobody has forced the US, or anyone else, to sign up. As I say, 135 countries have signed up to it and a significant number are already implementing it or bringing forward legislation to do so. Indeed, the US Administration have maintained their commitment to align their rules with the pillar two standards. Until that happens, however, the OECD inclusive framework members, including the US, have agreed on how the US rules and the pillar two rules should interact to ensure that US multinationals are subject to the same standard as groups in other countries. The long and the short of it is that we should be proud of the fact that we in the United Kingdom have helped to shape--and will continue to shape--these rules, precisely because we are able to work in unison with other large economies. As a result, we have been able to retain the corporate tax levers that we care so much about, such as research and development tax credits and the full expensing policy that my right hon. Friend the Chancellor announced at Budget, and to ensure that issues specific to the UK financial sector are identified and addressed.
Date: 2023-04-18
Richard Fuller: On the Minister's point about being proud to implement this, I would say that the shadow Minister, representing the high-tax Labour party, might be happy to implement it, but I am not sure that I would have quite the same degree of enthusiasm as a Conservative. I want to probe a bit deeper on a fundamental question that the Minister gave an interesting answer to, which is about how the United States' interpretation of this is going to be held in the international context. Was she saying that the other countries in the international community that have signed up to it have effectively agreed that America does not need to go any further than its existing legislation in order to meet the requirements of this international standard? Or is she saying that there is still a requirement for the United States to enact it? If it is the latter, does she agree that the UK should not go forward and make its own changes until the United States makes those changes?
Date: 2023-04-18
Victoria Atkins: I remind my hon. Friend that this is a minimum floor of 15%, which is below the lowest rate of corporation tax payable in this country, 19%, and below the 25% corporation tax we are setting for both this financial year and the next financial year in this Bill. The countries most affected by this change are those that set lower rates of corporation tax. This international agreement is important because it means, when our constituents ask us why a particular tech giant has headquartered itself somewhere other than the UK while making enormous profits on its activities here--my hon. Friend the Member for North East Bedfordshire (Richard Fuller) will appreciate that I am not naming any businesses--we can say that we have joined an international agreement to ensure that such profit shifting does not occur. In the shifting sands of the 21st century and beyond we, as an international community, have to find ways of ensuring that companies cannot engage in profit shifting. I normally try not to reference Labour Front Benchers, but my hon. Friend the Member for North East Bedfordshire mentioned them. Through this Finance Bill--and I know he fundamentally believes in this--we are taking a fiscally responsible approach to taxation.  We understand that those with the broadest shoulders should bear the greatest burden of taxation, but we want to do it in a way that encourages growth and investment, and encourages businesses to set up and trade in our economy. Full expensing, R&D tax reliefs and the measures we introduced into the OECD agreement because of the concerns voiced by the insurance sector--these are examples of how we have been able to lead the international community in these negotiations and influence how the rules interact with our needs as a country.
Date: 2023-04-18
Vicky Ford: Put simply, it is important that multinational companies pay their taxes and it is good that the UK has agreed a new set of rules, but we need other countries to play the game according to the rules to which they have agreed. Will my hon. Friend keep a laser-like focus on ensuring that other countries play the game according to the rules? If they do not, will she make sure we have a plan B up our sleeve to defend our interests?
Date: 2023-04-18
Victoria Atkins: I repeat that the date for implementation is 31 December. The EU has issued a directive and, as I outlined, the major economies within the EU are already bringing together the legislation to enact this. Japan has already legislated, and others are following. I would argue that our plan B is in the very rules of this international agreement. The rules work because they ensure that every low-taxed multinational company pays the top-up tax that is due, whether or not it is headquartered in a country that has introduced pillar two. Those economies that rely on low tax rates understand that, because of how business is now conducted in some regards, we are raising the floor of international taxation so that those with the broadest shoulders continue to pay.
Date: 2023-04-18
Kit Malthouse: The Minister is being generous with her time, although we are in Committee, so detailed scrutiny and questions are appropriate. I have a couple of questions. The Minister says that one of her missions is simplicity, and I know she understands that this measure will necessarily add several thousand pages to "Tolley's Tax Guide", which is now in two volumes--it was only one volume when I trained as an accountant. That is unfortunate, and we can debate the desirability or otherwise of this measure, but what protections are there against the creation of just another game? Although this Bill seeks to set a minimum floor on the headline corporation tax rate, it is perfectly possible for countries to compete on effective corporation tax rates. Are we likely to see Governments around the world play a game of competitive subsidies and competitive allowances? We will have full expensing, but some of our competitors will not--full expensing will reduce the effective rate for quite a lot of capital-intensive businesses, although not necessarily for services businesses--but there will now be a menu of allowances, derogations and tax breaks that can effectively be used to play a slight game of subterfuge as we all compete for these large, and now very mobile, businesses to locate in our territories.
Date: 2023-04-18
Kit Malthouse: Perhaps I was not entirely clear. For example, it is perfectly possible for us to say that our headline corporation tax rate is 25%, but we previously had--we are now getting rid of it--a super deduction that allowed me to offset more than 100% of any cost or investment against my tax and, therefore, reduce my effective rate of corporation tax to much less than 25%. It is possible, away from the headline rate at which we are imposing this minimum rate around the world, for Governments to play the game of subsidy. "We will give you PS150 million to come to our country, and you then pay 25% corporation tax. It is like for like. I am paying you, but I am getting my money back." It is also possible to create a raft of allowances against that income, which will reduce the effective rate. The headline rate then becomes less important than the effective rate. We may well be kicking off that game with this measure. I am not entirely sure what protections there are against that, and against the complexity that comes with it, in this Bill.
Date: 2023-04-18
Victoria Atkins: On the complexity point, having set my three objectives, of course I acknowledge that there will be times of tension between fairness and simplicity. Indeed, I said that in the Budget debate and on Second Reading. We believe it is fair to have a spectrum of corporation tax thresholds between 19% and 25% as businesses grow and accrue profits, but I fully admit that does not make it simple. The balance the Government have to strike is where there might be tension between fairness and simplicity. Of course, we always want to ensure that fairness prevails. I take my right hon. Friend's point about complexity, but I gently remind him that these enormous multinational groups have armies of lawyers and accountants looking after their affairs. One might say that many of them have been able to shift their profits in this way because they are able to conduct that analysis. I should say that they are doing it completely lawfully, and there is no allegation of misfeasance, but we wish to bring forward this international agreement. In the 21st century, we should not be frivolous or dismissive about encouraging businesses to invest in plant, machinery and people. I know my right hon. Friend is not being frivolous or dismissive, but this is not a game. If we can encourage multinational groups to come and do more business here, to invest in our workforce and in other businesses, that would be a great thing for the UK economy. This international agreement is about trying to introduce a level playing field in 135 countries to ensure multinationals are taxed fairly in each jurisdiction. Finally, if we do not implement this measure, the top-up tax that these groups would have paid to the UK will be collected by other countries. This important agreement was reached by the Prime Minister when he  was Chancellor, during our G7 presidency, and we want to enact it in this Finance Bill to enable it to take effect.
Date: 2023-04-18
Richard Fuller: As has been mentioned, the Minister is being extremely generous in providing answers to some of these important questions. This may be a little niche, but may I take her back to the experience of the United States? A large number of US multinational companies, such as Apple and others that will be covered by this measure, held their cash balances offshore and did not take them back to the US because of the levels of corporation tax. Those levels were reduced under President Trump from 33% to 21% or 25%, I believe, but then in addition a special law was introduced providing for a 15.5% repatriation tax. That one-off tax enabled or incentivised companies such as Apple to bring their resources back to the US and pay tax there. Under the specifications both within the UK and under our international agreements, will what she is asking us to support today enable the UK to make one-off changes that might be in the specific interests of our corporations to help them bring back capital here? She may not know that--
Date: 2023-04-18
Victoria Atkins: I hope I have understood my hon. Friend correctly. I am always loth to draw direct comparisons, particularly at the Dispatch Box, between the way in which the US conducts its tax affairs and the way we do so, as the systems are different. He has alighted upon the changes that the previous President made. The current President has also indicated that he wishes to make changes, albeit perhaps in a different direction. I hope my hon. Friend will appreciate my being cautious before giving an answer. I do not know whether he is referring to the corporate alternative minimum tax and the global intangible low-taxed income provisions. If I may, I will write to him on this, because it is incredibly technical and I want to ensure that I answer him accurately. Having taken that final intervention, I am very conscious that although this is a large piece of legislation, colleagues are rightly scrutinising it. I shall sit down now so that they have a chance to have their say on it. I ask that clauses 5 to 15, and 121 to 277, and schedules 14 to 18 stand part of the Bill.
Date: 2023-04-18
Kit Malthouse: I wish to challenge the hon. Gentleman's assertion about the notion of a window. We know that where taxation is concerned the creation of a window can often create an incentive to move quickly. For example, when there was a stamp duty window, we saw a significant number of transactions brought forward and take place. The Government are saying that they want to see very significant investment taking place. We know that British industry has accumulated a large amount of cash on its balance sheets. Why would the Government not create a particular incentive by saying, "Look, there is a deadline. If you get in now, we will give you this very generous tax break and then who knows what may happen in the future"? We must not forget that although the investment may absorb all of the profit for small businesses, it will, in effect, create a tax loss that is able to be carried forward beyond the window. So I do not understand his criticism of our having a window if, as the Government say, they want action now rather than in three years' time.
Date: 2023-04-18
Richard Fuller: The hon. Gentleman is very kind to give way. Personally, I do not have much concern about transparency in the United Kingdom--we do a fantastic job in that regard. I also have no problem with this country implementing regulations. We tend to have a reputation for gold-plating all our regulations. My concern is that other countries will not do what they say they will do. By enacting this legislation, my concern is that other countries will not do so. The hon. Gentleman has been extolling the virtues of supporting British enterprise, but Labour's approach runs the risk of putting British companies at a disadvantage, because the United States and other countries may not move forward as we introduce these restrictions. He has talked about transparency, but can he specifically say today that, if the United States does not enact this legislation, the Labour party, whether in Government or not, would support efforts for us to renew or review pressing ahead with our own legislation?
Date: 2023-04-18
James Murray: I thank the hon. Gentleman for his comments. At one point, I thought he was starting to speak in favour of our new clause; I got my hopes up momentarily because he referred to the importance of making sure that more countries implement the pillar two rules, and we agree that that is important to make them as effective as possible. Indeed, new clause 1 says that the statements to the House, every three months of the following year, must include details of efforts by the UK Government to encourage more countries to implement the pillar two rules. On that basis, I hope that he will join us in the Lobby to vote for the new clause later this evening.
Date: 2023-04-18
James Murray: I am going to make some progress. Finally, our new clause 2 would require the Government to set out their approach to pillar one of the OECD agreement and the digital services tax. We know that, unlike pillar two, the implementation of which is proceeding both here in the UK and in many countries overseas, the prospects of pillar one being implemented in the near future look less positive. That is likely to have an impact on the Government's approach to the digital services tax, so I urge the Government to support our new clause, which requires the Chancellor to make a statement to the House on the matter. While new clause 2 has not been selected today, I none the less encourage the Minister to set out the Government's approach to pillar one and the digital services tax in her closing remarks. Through today's debate on the Bill's clauses and our amendments, we have seen the state that the Government are in. We have seen how they are failing to provide our economy with the stability and certainty that is needed for growth--growth that we need in every part of the country to make everyone, rather than just a few, better off. We have seen how the Government's Back Benchers risk putting their party before our country at every turn, and how they are unable to provide the long-term plan that people and businesses need. We have seen clearly how this Government are refusing to take fair decisions on taxes--putting up council tax for families across the country, rather than strengthening the windfall tax on oil and gas giants. When we come to vote at the end of this debate, I urge all hon. Members to support Labour's new clauses and expose the unfair choices that this Prime Minister and this Conservative Government are making, which are leaving our economy on a path of managed decline.
Date: 2023-04-18
Richard Fuller: I am somewhat sorry to interrupt my right hon. Friend, but I am interested in his views on international competitiveness. One of the issues that the Minister mentioned in relation to the application of global minimum tax is that it will affect companies that have a large amount of their asset base in intangible assets. Those are primarily in the more advanced countries--western democratic countries--which will find it much harder to justify some of the deductions they can make from the amount of tax they will be subject to under that global minimum tax. What is his consideration of the global political impact of that on the competitiveness of our advanced economies versus China, and of the other implication about the valuation of pensions, many of which are invested in companies that will be disproportionately affected by this legislation?
Date: 2023-04-18
Sarah Olney: I welcome the Scottish National party's support for our new clause. I ask the Government to accept the Liberal Democrat amendment proposing an impact assessment on the changes to R&D tax credits. It is essential that this policy is kept under review and its impact on the UK's tech industry and long-term economic growth is monitored if we are to ensure that the UK becomes the powerhouse of technical innovation it so badly needs to be if we are to drive the productivity we need to increase growth across all economic sectors.
Date: 2023-04-18
Emma Hardy: I never for one moment suggested we should scrap the tax relief entirely, but we definitely need to do something about fraud. When we have businesses ripping off the taxpayer for PS1.1 billion--money that is desperately needed for our public sector, hospitals and infrastructure--we need to take the issue seriously and not brush it under the carpet. R&D claim firms continue to hard sell opportunities to claim refunds, often to companies that should not qualify. We have issues with the tax gap, which is around PS32 billion. That tax gap continues to increase and the tax fraud gap stands at PS14.4 billion. That is a heck of a lot of money. If they were serious about wanting to reduce taxes, I would have thought Government Members would want to tackle tax fraud. I have raised the issue with the Minister in a previous debate and I know she is aware of it, so will she outline the steps being taken by HMRC and HM Treasury on the important work of reducing tax fraud and simplifying our tax system? While we are talking about tax simplification, and as a teaser for the debate tomorrow, it seems strange that the Government wish to abolish the Office of Tax Simplification. That seems a rather strange thing to do when they seem so keen on having tax simplification, but maybe we can continue that discussion tomorrow.
Date: 2023-04-18
Victoria Atkins: I thank all Members for a most interesting debate. It is not often that the public--if people have been watching this debate--are able to see us scrutinise measures in this way. Committee debates often take place in rooms off the Committee Corridor, and although they are sometimes available for public consumption, it is very helpful when they happen on the Floor of the House. I am genuinely grateful to all who have contributed. I am afraid I cannot resist picking up, very gently, the points made by Opposition Members about the role that my hon. Friends have been playing during this Committee stage in scrutinising legislation. This is exactly what Members of Parliament are supposed to do. Their job--your job, dare I say it to Members--is to scrutinise our legislation, and I welcome that. It may well be that Opposition Members have highlighted a fundamental difference between the Labour and Scottish National parties and the Conservative party: we have the intellectual self-confidence to hold these debates, and to debate policy. [Laughter.] Opposition Members may laugh, but we know how difficult internal debate has been in the Labour party. It has meant inquiries by the Equality and Human Rights Commission, it has meant a Labour MP being protected by the police in order to attend her own party's conference, and I understand that a member  of that party is currently being ostracised because her views on what a woman is differ from those of the Leader of the Opposition. So we on this side of the House do welcome debate, and we are able to conduct it properly and professionally within the rules of this Chamber.
Date: 2023-04-18
Zarah Sultana: I rise to present a petition on behalf of the residents of Coventry South regarding post office services in the Quinton Park area of Cheylesmore. The petition notes the vital services local post offices provide and highlights the importance of them being easily accessible for those with mobility issues. It further notes that since the Daventry Road post office in Cheylesmore closed, there has been a loss of service in this area. The petitioners therefore urge the House of Commons to support better provision of post offices in the community and specifically for a post office to open that serves the community of Quinton Park, Cheylesmore. Following is the full text of the petition: [The petition of residents of the constituency of Coventry South Declares that local Post Offices provide a vital service for the community, further declares that it is particularly important that they are nearby and easily accessible for older people and people with mobility difficulties, notes that the closure of Daventry Road Post Office in Cheylesmore, Coventry, resulted in the loss of this service in the area. The petitioners therefore urge the House of Commons to support better provision of Post Offices in the community, and specifically for the Post Office on Daventry Road to serve the community of Quinton Park, Cheylesmore, Coventry. And the petitioners remain, etc.] [P002828]