Finance Act

Thursday 20th March 2008 at 12:33

A Bill to grant certain duties, to alter other duties, to amend the law relating to the national debt and the public revenue, and to make further provision in connection with finance.

Chief secretary to the Treasury, Yvette Cooper introduced the Finance Bill to the House of Commons for its second reading on April 21 2008.

In her opening remarks Cooper stated that the Bill “supports the economy at a time of significant global pressures”. She added that the British economy is “well placed to weather global storms”.

Cooper, continued by highlighting the beneficiaries from this year’s Budget, she stated that corporation tax was the “lowest in the G7” and that the Bill would make “changes to the small companies rate to create a more level playing field”.

Cooper added that:

“Even those who are paying more in this year's Budget have still benefited significantly overall since 1997.”

Many backbenchers challenged the government over the increase in the lowest rate of income tax, with Treasury select committee chairman John McFall (Lab, West Dunbartonshire) offering to work with the chancellor to find measures that could be implemented “sooner rather than later” to compensate those who had lost out.

Replying for the Conservatives, shadow Treasury minister Philip Hammond, accused the government of being “weak and disunited” and “fighting each other rather than fighting for Britain.”

Hammond accused the prime minister of being in “denial” over the affect of the change in income tax. Hammond added:

“It is his income tax reform that is fuelling the collapse of his authority and undermining his successor's first Finance Bill.”

“Everyone likes a tax cut,” Hammond said.

“But how many members on any side of this House came into politics to increase taxes on the poor? Yet that is precisely what we are being asked to do.”

For the Liberal Democrats Jeremy Browne, (Lib Dem, Taunton) called the Budget a failure of “all the tests of leadership.” He added:

“It had no great purpose. It has no great vision, it flunks all of the big challenges, it is now impossible to work out what the Labour Party exists to achieve.”

Michael Howard (Con, Folkestone and Hythe) also spoke against the tax change, he said:

“How on earth did it come about that this Prime Minister could introduce a change that hurts so many who are amongst the least well-off in our society.”

Russell Brown (Lab, Dumfries and Galloway) called on a change to the policy, the ministerial aide said:

“We have an issue, we have a problem and we as a Labour Government need to put this right.”

Stuart Hosie (SNP, Dundee East) attacked the increase in duty on whisky, he claimed it would harm the industry in Scotland called for a “proper review” into the issue.

Wrapping up for the Conservatives Mark Hoban claimed there was “widespread opposition” to the scrapping of the ten pence rate.

For the government, financial secretary to the Treasury, Jane Kennedy, told MPs the government had done much to help poorer families through working tax credits.

She said: “The changes to income tax in this Bill have to be seen as part of a package that puts additional resources into those tax credits.”

The Bill was given a second reading by 298 votes to 223, government majority 75. The Bill is due to be debated in its detailed committee stage next week.

House of Commons

First reading: March 18 2008 [HC Bill 89]

Second reading: April 21 2008

Finance Bill Committee: