The detailed scrutiny of each of the 161 clauses and 27 schedules of the Finance Bill has begun. Two overriding issues emerge from this Bill.
The first is that, despite repeated promises from Gordon Brown and Tony Blair, before and during the election campaign that Labour would not raise taxes, this is the second tax-raising Budget in the 12 months of this Labour government .
In addition to the #5bn a year tax on pension funds in July?s Budget, clause 27 of this Finance Bill increases the income tax bills of married couples, by reducing the value of the relief to 10 per cent.
This raises #1bn a year for the Treasury with money paid by ordinary working people, and is the equivalent of half a pence rise in the rate of income tax. The second annual increase in petrol excise duty will also raise over #1bn a year and again will be paid by ordinary people in higher petrol-pump prices.
In September 1996, Tony Blair said in Birmingham: ?We?ve no plans to increase tax at all.? On 8 April 1997, Gordon Brown said on GMTV: ?There is no black hole for the Labour party because we have got no public spending commitments that require extra taxes.?
The second issue is that of the huge scope and quantity of the delegated legislative power that the Finance Bill hands over to the Treasury.
As well as new Treasury powers in relation to VAT and the place of supply, the introduction of quarterly corporation tax payments, ISAs, personal pension scheme approval, the new code for fiscal stability and the preparations for EMU, the Bill introduces some very all-embracing powers.
For instance, in clause 30, a new section 59E (5) of the 1970 Taxes Management Act is introduced which gives the government the power to ?make such modification of any provisions of the Taxes Acts as the Treasury thinks necessary or expedient?.
Not only is it unprecedented to introduce a new corporation tax payment system by statutory instrument, it is also of great concern that such wide-ranging legislative powers can be handed over to the Executive. Power seems very much to have gone to the heads of this new government, which needs to be reminded that we live in a parliamentary democracy.
Nick Gibb is Conservative MP for Bognor Regis
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