Finance Bill

The hon. Lady makes a valid point, and I suspect that she will find in her constituency, which has a high proportion of tourist-related businesses, that those businesses that do not invest in fixed assets will suffer, because they will not benefit from the offsetting tax changes that the Chancellor has made. There is a double whammy for businesses in her constituency, as there is for so many businesses across the country. It is not surprising that a large number of businesses across the country criticised the Budget for the impact that it would have on them, but what did the Treasury say in its defence? The Economic Secretary to the Treasury, speaking at the British Chambers of Commerce’s annual conference, said that the Chancellor had raised the small companies tax rate to clamp down on"““individuals incorporating to avoid paying their due share of tax. Without addressing this, this trend would have continued at a cost to the rest of the taxpaying population of billions of pounds—money which could not be afforded.””" At least he did not say that the Confederation of British Industry told the Government to say that. The Financial Secretary to the Treasury has said that "““the lower rates of tax have resulted in a significant number of people incorporating to take advantage of them, not to invest in business, but simply to extract the company profits in a way that reduces their personal tax and national insurance liabilities.””—[Official Report, 23 April 2007; Vol. 459, c. 758.]" That has been a recurrent theme in the Treasury’s defence of the change in taxation. Treasury Ministers who parade that defence seem to forget that it was they who introduced the zero per cent. rate of corporation tax in the Finance Act 2002. They sought to use the measure to encourage enterprise, and of course it led to increased incorporation. In a way, they are unpicking their own reforms, and rather quickly. Every small company is at risk of losing out as a consequence of the Government repairing the damage that they did.