Standing Committee B
Thursday 20 May 1999
(Morning)
[Mr. Frank Cook in the Chair]
(Except clauses 2, 28 and 99)
Schedule 3
New Schedule 13B to the Taxes Act 1988
Amendment proposed [18 May]: No. 127, in line 23, to leave out from the word ``partner'' to the end of line 25 and insert the words
`(b) otherwise the Children's Tax Credit shall be divided equally between the two claimants.'.--[Mr. Michael Jack.]
9 am
Question again proposed, that the amendment be made.
The Chairman: I remind the Committee that with this we are discussing amendment No. 72, in page 97, leave out lines 24 to 25 and insert
`(b) if they do not make an election, each partner will be entitled to a credit, calculated by halving the amount in section 257AA(2)'.
Amendment negatived.
Amendment made: No. 118, in page 97, line 28, leave out from ``if'' to end of line 29 and insert
`no part of either partner's income for the year falls within section 1(2)(b).'.--[Dawn Primarolo.]
Mr. Edward Davey (Kingston and Surbiton): I beg to move amendment No. 73, in page 99, line 43, leave out `other'.
I am quite excited by the amendment--[Interruption.]
The Chairman: Order. I am sure that the hon. Gentleman is keen to make progress, but he must not entice the Committee.
Mr. Davey: Perhaps I was over-egging the pudding, but I said that because the Government might want to accept the amendment, which would be an interesting innovation in the Committee. It is a technical amendment that would not change policy or the direction of the Bill. It was suggested to me by the Law Society, and would clarify the mechanism for assigning to a taxpayer a proportion of the credit.
Paragraph 6(9) of proposed new schedule 13B to the Taxes Act 1988 states:
``For the purposes of any assignment to a taxpayer under sub-paragraph (5)(b) above--
(a) the Commissioners shall hear and determine the case in the same manner as an appeal, and
(b) any of the other taxpayers shall be entitled to appear and be heard by the Commissioners or to make representations to them in writing.''
I agree with the Law Society that that seems to suggest that the taxpayer to whom the assignment is to be made would be excluded from the hearing. It may be contestable, but sub-paragraph (9)(a) implies only that the taxpayer could be heard, and that is not explicit. The amendment would make it clear that the taxpayer who hopes to have the credit assigned to him would be able to be heard before the Commissioners.
The amendment is simple, and I hope that the Government will accept it.
The Paymaster General (Dawn Primarolo): As the hon. Gentleman said, this technical amendment, which would make no substantive change to the Bill, would clarify the rights of the taxpayers concerned. I am pleased to advise the hon. Gentleman that his enthusiasm for and excitement about the amendment, and the fact that it will improve the Bill, mean that we are happy to accept it.
Amendment agreed to.
Schedule 3, as amended, agreed to.
Clause 29
Further provision about married couples allowance
Mr. Nick Gibb (Bognor Regis and Littlehampton): I beg to move amendment No. 128, in page 15, line 29, at end insert
`unless sections 257A(2) or 257A(3) apply to the husband (in which case the amount specified in sections 257A(2) or 257A(3) as the case may be).'.
The amendment would eradicate an injustice that already exists in the tax system and in the tax code. The huge changes to the married couples allowance presented the Government with an opportunity to eradicate that injustice.
The Conservative Government did an enormous amount to remove discrimination against women in the tax system--they introduced separate taxation and independent taxation. However, one or two small injustices remain, one of which relates to married women over the age of 65. When at least one spouse in a married couple is over 65, the couple can claim an enhanced married couples allowance, which is higher than the normal married couples allowance. The previous Conservative Government felt that it was important that reductions in the married couples allowance should not apply to retired couples whose financial plans were based on the existence of the married couples allowance. The Labour Government do not appear to share that concern--they will abolish the married couples allowance for couples who reach the age of 65 after next April. That is a great pity and a great injustice.
A wife can, jointly, elect to claim all of the married couples allowance, but if she does not, she is permitted to claim only 50 per cent. not of the full married couples allowance applicable to people over retirement age, but of the married couples allowance applicable to couples under 65 which is £1,970. The husband can claim the remainder, which is more than 50 per cent., although the couple might want to split the allowance 50:50.
The restriction applies only to women, and it is clearly therefore discriminatory. The amendment would deal with the injustice, so I hope that all Committee members will support it; there cannot possibly be a good justification for opposing it.
Dawn Primarolo: I am surprised that the hon. Gentleman moved the amendment. He referred to a ``small injustice'', I shall ask the Committee to reject the amendment because there is an impediment, which is called independent taxation, which we debated at considerable length on Tuesday. I am also surprised that the Conservative party is trying, at this late stage, to change the rules for the married couples allowance, which they introduced. The amendment should be rejected.
It has always been the case that a husband who is eligible for the age-related additional married couples allowance, which we are preserving for today's pensioners, has been able to transfer only the basic level of the married couples allowance to the wife, excluding the age-related element. The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) seeks to enable the age-related element to be transferred as well.
That is how the rules introduced by the previous Conservative Government for transfer of the married couples allowance work. The reason why the full amount of age-related married couples allowance cannot be transferred to the wife is that the age-related element can be tapered away--does that term sound familiar?--depending on the level of the husband's income, as is the case, for the higher tax rate payer, with the children's tax credit. If the full married couples allowance were transferred to the wife, it might be necessary to reclaim some of the relief from her if her husband's income proved higher than expected. That would be a breach of confidentiality and add another layer of complexity to a system that is already far from simple.
Clause 29 does not change the way in which the married couples allowance rules work. However, it substitutes the new definition of the minimum level of the married couples allowance--the point beyond which the allowance is not tapered away--introduced by clause 28, into the transfer rules. Instead of defining the basic married couples allowance by cross-reference to the allowance for couples under 65, which is to be abolished, clause 28 introduces a new monetary floor for the minimum level of the married couple allowance. The change will make no difference to any pensioner's tax liability.
It is a little late in the day for the Opposition to decide that they do not like their own rules. Changing them in the way that the amendment suggests could cause difficulties for pensioner couples because of the way in which the age-related married couples allowance can be withdrawn on the basis of the husband's income. It is always possible for any surplus married couples allowance that the husband has to be transferred to the wife after the year end. Clause 29 leaves the present married couples allowance rules on transfer unchanged. There are no good reasons for changing them, so I ask the Committee to reject the amendment.
Mr. Gibb: It is a pity that the Paymaster General is taking such a partisan and party-political approach to this probing amendment, which seeks to raise the worries that exist outside the House about the discrimination that applies only to women. She is right to point out all the difficulties, but the Government should have come to terms with those, as they are making such radical changes to the married couples allowance legislation. This was an opportunity for the Government, who pride themselves on promoting equal opportunities between men and women, to deal with the one remaining injustice against women in the tax system.
The Paymaster General said that the rules were introduced by the previous Government--but they represent a residual discrimination left after huge changes had been made to the tax system by that Conservative Government.
Dawn Primarolo: The amended rules were put in place in 1993-94, as a consequence of independent taxation.
Mr. Gibb: The hon. Lady makes my point for me. The tax code in place when the Conservative Government left office was far less discriminatory than the code that we inherited from the previous Labour Government. When changing legislation as complicated as this, there will always be residual provisions that have to be left in, or have to be put in, as a consequence of changing the whole system. The Government have missed an opportunity to eradicate the final element of discrimination.
Mr. Stephen Dorrell (Charnwood): It is rather flattering that the Paymaster General finds it a sufficient argument in support of a principle of taxation to say that the previous Government supported it.
Mr. Gibb: My right hon. Friend makes a valid point. The Government have advanced that argument throughout consideration of this Bill and others. It is a pity that they did not use their resources to end this injustice by changing the structure of the married couples allowance, which will continue to be claimed by ``today's pensioners''--to use the Paymaster General's phrase-for many years to come.
However, the point has been made, and I beg to ask leave to withdraw the amendment.
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