Tax row clouds Budget’s path

The Finance Bill sailed through its second reading in the Commons last week, but the government had to withstand a series of attacks on its Budget, including renewed charges that the complex tax measures it introduces will benefit accountants at the expense of business.

Tory and Liberal Democrat MPs mounted the offensive during a key Commons debate which also heard criticism of the shortage of anti-avoidance measures in the Budget.

The Bill was approved in principle, however, by 304 votes to 164. It moves into committee next week for line-by-line consideration.

Shadow chief secretary and accountant David Heathcoat-Amory protested about ‘pages and pages of extra regulations and a massive extra complexity in the tax system’ which would increase the administrative overheads of business.

Liberal Democrat finance spokesman Malcolm Bruce said: ‘This is a wonderful Budget for tax accountants. It is not a good Budget for small businesses and individuals trying to cope with self-assessment and calculating their tax liability.’

Former Tory Treasury minister Michael Jack said measures the Inland Revenue and Customs & Excise claimed would secure the tax base would raise just #300 to #350m a year, despite Labour’s pledge in opposition to ‘close the tax loopholes’.

Beckenham Tory MP Jacqui Lait said: ‘When we add up the complexities the government has introduced to the tax system, it is clear there is going to be a return of the tax avoidance industry.’

Dudley South Labour MP Ian Pearson called on the Treasury to find a way to ‘passport’ the tax benefits of leasing from lessors to small and medium-sized businesses so that it could be restored as a way of financing information technology equipment.

Chief Treasury secretary Alan Milburn and financial secretary Barbara Roche, who opened and closed the debate, both dismissed the concerns.

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