National Insurance Contributions Bill
During a debate on the National Insurance Contributions Bill, Brooks Newmark intervenes on a number of occasions raising his concerns about the Government being able to impose retrospective legislation.
Mr. Brooks Newmark (Braintree) (Con): Although I do not wish to be pedantic about the use of language, I am still not clear why we should rely on reason, especially the reason prevailing at the Treasury, if the Department is given the right to create regulations that impose retrospective taxation. Why should we leave the reason to the Treasury because that would take us to the logical result of retrospective taxation?
Mr. Forth: My hon. Friend is challenging the whole principle underlying the Bill, which I would love to do. We will, of course, have the opportunity to do that on Third Reading. We are examining in a focused way the mechanism by which retrospection would be implemented by the Treasury-after consultation with the commissioners, as I would prefer it. The Bill would allow the Treasury to make its judgment on retrospection simply on the basis of expediency. As we have discovered, no moral judgments would be allowed because the decision would be based on what was practical. That might suit the Government, but I hope that it does not suit the Opposition.
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Mr. Newmark : I may be able to help my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth). The Treasury may consider the perspective of my hon. Friend the Member for Christchurch (Mr. Chope) unreasonable. However, it may view it as reasonable, necessary and even expedient to claw back more money through the tax system. I suggest that my hon. Friend look at measure from the Treasury's perspective, which may well deem such behaviour reasonable. That, however, makes me uncomfortable with the use of the word "reasonable".
Mr. Chope: My hon. Friend appears to be criticising amendment No. 15, which would leave the test of reasonableness with the Treasury. Amendment No. 14, however, would leave the test of reasonableness to the objective observer or the courts so, even if he does not support amendment No. 15, I hope that he will support amendment No. 14 for the articulate reasons that he gave.
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Mr. Newmark : On retrospection, which has been raised by my right hon. Friend the Member for East Yorkshire (Mr. Knight), it may well be expedient for the Treasury to decide that it wants to claw in more tax revenues. As my hon. Friend the Member for Christchurch (Mr. Chope) has said, however, an independent body making an independent judgment may well say that such a decision is not reasonable, although it is expedient for the Treasury.
Rob Marris: I am grateful to the hon. Gentleman, who makes my point for me. In the light of his remarks, I urge my right hon. Friend the Minister to be very cautious about accepting the amendment. The judgment of what is reasonable in a tax regime-whether we are talking about retrospectivity, the level of a given tax or its very existence-is ultimately a political judgment, as many such things are. It is much more difficult to make that political judgment if one tries to step away from it by suggesting that in some fantasy world taxation, per se, is reasonable. Some people regard it as reasonable and some do not. Some people do not want to pay tax at all.
2.45 pm
Mr. Newmark: Will the hon. Gentleman answer my question about the retrospectivity of taxation? It may well be expedient for the Treasury to claw in more money, but it may also be unreasonable for it to take that action. That is the point that we are making.
Rob Marris: I accept that some Members would see it as unreasonable. That is why I urged my right hon. Friend to be cautious when considering the amendments. I prefer the word "expedient" to the word "reasonable" for the very reason that the hon. Gentleman highlights. These are political decisions; they are not, and cannot be, moral decisions.
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Mr. Newmark: My hon. Friend mentioned Adam Smith. There is a great passage in "The Wealth of Nations" that has a bearing on our debate. Adam Smith wrote in 1776 that
"the tax which each individual is bound to pay ought to be certain and not arbitrary. The time of payment, the manner of payment, quantity to be paid ought to be clear and plain to the contributor and to every other person."
Is not the problem with the Bill the fact that it is vague and arbitrary? That is our concern.
Mr. Chope: My hon. Friend is right. I did him a disservice in attributing the use of that quote to my hon. Friend the Member for Ludlow. It is good that we have relatively new Members of the House who are so familiar with that great work, "The Wealth of Nations". That augurs well for liberty and freedom as issues that will be debated much more fully in the House. I am glad my hon. Friend the Member for Braintree (Mr. Newmark) is present today to develop the argument that he started articulating in Committee.
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Mr. Newmark: In respect of the date of retrospection, it is not that 2 December 2004 is a particularly offensive date. It may well have been a lovely day; I do not know, because I was not fortunate enough to be a Member of this House at the time. It might well be reasonable to backdate to that date national insurance contributions that have been avoided by means of "dishonest schemes"-to use the Paymaster General's words-although we continue to disagree on that point.
The implication of the Bill is that we shall set a dangerous new precedent for the way in which the House conducts its business. Would it become a requirement that all financial services professionals should, instead of reading the Financial Times over their cornflakes, thumb through a copy of Hansard, looking for ministerial statements that might affect them two years down the road? Should they believe that whenever the Government express an intention to legislate, they will follow it through? We have had broken promises from this Government before. Should tax advisers warn their clients of the potentially earth-shattering-or at least profit-affecting-implications of the Paymaster General's words every time she addresses us with her customary eloquence? No, that would be absurd. We have endured the loss of clarity in our tax system. We must not endure a further erosion of certainty, otherwise we will become prohibitively uncompetitive as a nation.
Legislation should be proportionate. It is said that this legislation will affect only the dishonest. It will not. It will have a knock-on effect throughout the financial services industry. Will the Minister at least exclude one knock-on effect by confirming that the use of ministerial statements to signal retrospective taxation will not proliferate into a general principle?
