§ 6. Mr. Tim Smith
asked the Chancellor of the Exchequer what he expects to be the overall financial benefit to industry of the tax proposals in his Budget.
§ Mr. Smith
Is my hon. Friend aware that the abolition of the national insurance surcharge and the new corporation tax structure have been widely welcomed as bold and imaginitive, and that one particularly attractive aspect of this is the fact that companies will be able to plan ahead for three years with certainty because the Chancellor has announced the corporation tax rates for that far ahead?
§ Mr. Moore
My hon. Friend is, of course, right. It is the certainty that companies now have about the long-term pattern of changes that will be introduced in the Finance Bill that will give them a unique opportunity. The reductions in corporation tax rates to 35 per cent. will produce a lasting cut in companies' tax burdens as well as the lasting reduction for them of taxation through the abolition of the NIS.
§ Mr. Bermingham
Will the Minister explain to the double-glazing industry how the imposition of VAT can assist it to increase its production, bearing in mind that this will lead to increased cost to purchasers and, therefore, to an expected decrease in sales? Perhaps he will explain to them and to those who work in the industry how the Budget will help them.
§ Mr. Moore
First, 75 per cent. of all new construction is not subject to VAT, and the double glazing industry is critically involved in new construction. Secondly, about 95 per cent. of companies will pay corporation tax at the rate of 30 per cent. from now on, which will be a unique advantage. Thirdly, there is the removal of the national insurance surcharge. That will remove a direct burden on the double-glazing industry, which is employment-intensive.
Is the Minister aware that the president-elect of the CBI described the Budget and the tax changes as "painful for some", that is for companies in the manufacturing industry, whose tax bill, in some instances, will increase by 25 per cent. in two years' time? Is he further aware that the tax changes will do nothing for jobs or investment in manufacturing industry and that the Budget confirms people's belief that the Government are deeply prejudiced against manufacturing industry?
§ Mr. Moore
I am sure that the hon. Lady will wish me to complete the quotation from Sir James Cleminson, which contains many good points. In describing the Budget he said:It is radical but it will be painful for some. It is a challenging Budget for business and we look forward to playing our part in this, a medium-term strategy for business, to help in the recovery.I am delighted to be able to complete the quotation for the House.