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Income Tax Bill

My Lords, I am grateful to the noble Lords who have spoken in this debate. However, I chide the noble Lord, Lord Newton, on two areas in his short contribution. First, he is too modest by half. The reason why he is chairing the committee is, as we all know, his astute mind and his excellent chairmanship. We are pleased that he has taken up this position and we wish him well in it. Despite the misgivings of the noble Baroness, Lady Noakes, about the future of this work, I wish him well in it and I hope that he stays the course. His other misjudgment was to use the word ““docile””. Just because only the noble Baroness, Lady Noakes, and the noble Lord, Lord Newby, are here for the Opposition does not mean docility—far from it. A critical and constructive approach to legislation is what we always receive from those two noble Lords. The noble Lord, Lord Newton, will recognise this evening that, if there was a note of docility when he was speaking, that is because he engages the House in those terms. But, as I cheerfully expected, that would not last much beyond the duration of his immediate contribution—nor did it. I hear what the noble Lord, Lord Newton, says about all the appeals added up and the length of the Bill. There are 49 separate provisions contained within this piece of legislation. It is a significant piece of work to codify in those terms, which is why we are pleased with the progress that is being made. I recognise what the noble Lord, Lord Newby, indicates—that there are still parts of the legislation that are difficult to master. Modern life is quite complicated and aspects of the tax system will always test those of us who do not have particular qualifications in certain areas. The noble Baroness, Lady Noakes, enjoys the great advantage of being highly qualified, although that does not stop her from suggesting that we should rewrite a great deal of our legislation and adopt new strategies for the future. I am not sure that the Chancellor has given me the opportunity this evening to prejudge his Budget and to codify that within a limited and simple framework to solve all her problems, but I will faithfully relate back to him the desiderata that she has identified. Of course I agree with her that we should strive for tax simplification, which is why this project receives all-party support and produces legislation that enjoys the support of us all. However, some concepts of tax legislation are quite difficult. Even the Opposition, when they were in government, wanted to deal with certain aspects of tax avoidance and to identify tax loopholes, which often leads to complexity. There is no doubt that this is a natural corollary to some of that work. The greatest sin would be to leave the loophole, which would mean that someone was not meeting their full obligations to the nation as the law intended. I accept the noble Baroness’s broad stricture that we should aim to make matters simpler. I do not think that any one Finance Bill will significantly increase the burden. The achievement of rewriting, which codifies past Finance Bills, should be recognised. I have no doubt that my right honourable friend’s Budget in the other place will be testing in certain areas. It is likely to be a good deal more testing to values and judgment than to complexity or simplification, but I hear what the noble Baroness says about that. It is fair to ask whether simplification is an objective. Certainly, we want our taxation laws to be as clearly understood as possible in order to avoid the inadvertent actions that sometimes occur with regard to tax. It defeats the whole object of our attempt at self-assessment if we cannot keep taxation laws clear enough for the average citizen to cope confidently with a submission of their taxes without necessarily having recourse to professional advice, which we all know comes at a price and which, for the vast majority of our citizens, would never be meaningful in terms of value for money in their own situation. I have no doubt that future Finance Bills are bound to add to the burden of the noble Lord’s committee, but Kenneth Clarke deserves the plaudits of us all for putting on the agenda since 1996 a clear realisation of the virtues of clarity and simplification in tax laws, of which the Chancellor of course takes account. I am not able to give the kind of assurances that the noble Baroness wants on this week’s Statement, but I agree that we should share her broad objectives. I also countenance the obvious fact that it is easier to have a broad objective than it is to achieve in detail certain aspects of necessary tax changes in an increasingly complex society. The noble Baroness would be the first to understand that there are developments in the world of finance and wider aspects of society that throw up fresh problems almost year on year. It is not surprising, therefore, that the Finance Bill is complex. Nevertheless, I respect the point made by the noble Baroness and the noble Lord, Lord Newby, on simplification. The noble Lord, Lord Newton, attests by his very presence the important objective of the exercise. On that basis, I hope that it will be recognised that this work and Bill are a very important step forward. I commend the Bill to the House. On Question, Bill read a second time; Committee negatived. Then, Standing Order 47 having been dispensed with, Bill read a third time, and passed.