Friday, December 22, 2006

EXCLUSIVE: Gordon Brown In Tax Cock Up

The Air Passenger Duty increases that were announced in the Pre-Budget Report are due to come into effect from 1 February and airlines are now collecting the increased rate of duty. The airlines are also asking passengers who have bought tickets before the pre-budget report but for travel after 1 February to pay the extra duty now. The problem is that, at the moment neither the airlines nor the government have the legal right to collect the increased duty.

The problem has arisen because the duty increase was announced in the Pre Budget Report and not the Budget but is intended to come into effect before the 2007 Budget. It is not unusual for changes in rates and allowances to be announced at the time of the Pre Budget Report. What is different this year is that the changes are intended to come into effect before the next Budget, and therein lies a problem. There is a general principle established in the Bill of Rights of 1689 that the government cannot raise taxes without enacting legislation. This would give the government a problem every year when they raise the rate of duty on alcohol, cigarettes and petrol with effect from the Budget Day, because they would not be able collect the higher rate of duty until the Finance Act had been passed many months later. To get around this problem there is an Act of Parliament called the Provisional Collection of Taxes Act which allows the government to collect taxes provisionally on the assumption that the announced changes will be enacted, provided that the House of Commons passes a specific resolution in favour of the changes. The resolution is made immediately after the Budget Speech, and that is the resolution that is voted at the end of the subsequent debate. For example after the 2006 Budget, the resolutions looked like THIS.

The trouble for Mr Brown is that there was no such resolution after this month’s Pre Budget Report. Now that Parliament has risen, there is no opportunity to pass such a resolution until January. To be fair to the Chancellor, there isn’t normally any need for a resolution, because changes announced at the time of the Pre Budget Report do not usually need to come into effect until after the Budget.

Without the passing of the resolution, there is no legal obligation on the airlines to collect the higher rate of duty, and it is hard to see how the airlines could force their customers to pay the higher rate before the airlines themselves are required to collect it. One might imagine that the Chancellor would have understood the parliamentary procedures, particularly because he has been the proposer of all the Budget resolutions since May 1997, but apparently not, because on 13 December he told the Treasury Select Committee that he thought he already had the powers to collect the increased duty:

Col 315 - 482

Q344 Chairman: I will write to you then, Chancellor, because I think there is a case here for them. Do you expect airlines then to pay that before it is authorised by the House of Commons and, if so, do you have the legal sanction to do that?

Mr Brown: I believe we do.”

Oh dear, the Dour One seems to have got it wrong, doesn't he? Very unlike him to pay no attention to detail. I wonder if the likes of Ryan Air will now see this as payback time...

UPDATE: I particualrly like this comment from one of my readers... "If people really cared, they would send in tax payments for all their past flights."

41 comments:

javelin said...

So much for Big Head Brown being so clever. His headline tax grab wasn't even thought through - typical of the man. - I pray this man never becomes Prime Minister.

nick said...

This is typical of Brown and Nu-lab. Tax 'em and fine 'em if they don't pay the tax. Never mind having legitimacy (see Iraq war) we'll fix that later.

cassander said...

Hmmm.... does the same apply also to the 1.25p rise in petrol duty, which was imposed with immediate effect?

Anonymous said...

great post ian. wonder what the Airlines will decide to do?

Not sure they are that bothered right now, given the lack of flights!

Anonymous said...

Thank God this incompetent, tax-grabbing, English-hating creep's chances of taking over from Bliar are receding daily as the reality of his so-called "miracle economy" is exposed as a debt-fuelled spending boom now heading for an almighty bust.

griswold said...

Our micro managing moron of a Chancellor is showing great skill in putting nails in his own coffin. That towering intellect corrupted by hubris and arrogance. He couldn't run a charity shop. Keep it up Brown and I look forward to your political wake.

wrinkled weasel said...

I am beside myself with rage that this bag of dandruff is taking money from me on false pretenses.

It is merely a way to swell the coffers with the word "green" inserted. There has been no undertaking whatsoever that the monies gained from taxing flyers will go to "green" measures, whatever they are and consequently this is yet another stealth tax, one of many that have crept in under Gordon Brown's chancellorship.

Anonymous said...

Iain re your new career as a commentator on polls, perhaps you would like to look at the MORI for Dec. Con lead 1%

mark williams said...

Cassander - I think you are right, but the fuel duty is collected from the refineries, who pass the cost on to the petrol wholesalers/ distributors who pass the cost onto the retailers who pass it onto you by adjusting the pump price. Going back to the garage and asking for your tax back isn't going to work because he is simply passing on to you the increase that was passed onto him. You would have to go cap in hand to BP/Shell/Exxon/Conoco or to the Trasury to get your 50p back from the last time you bought petrol.

Machiavelli's Understudy said...

So if the airlines are already collecting it, even before it's due to come into force... where's that money going?

Am I missing something here?

G Brown said...

I don't need parliament. I'm the next Prime Minister and just you remember it..

Anonymous said...

HMRC are saying that the Treasury IS able to enforce the increase in APD ahead of the 1 February date and is doing so now.

For consumers they are at the mercy of whether the airline with which a ticket has been bought decides whether to pass on the increase.

Taxcutter said...

Great work Iain

hatfield girl said...

Tax cock up doesn't begin to cover it:
constitutional shambles;

inflation and unemployment (classic stagflation) rising hugely this year ;

a public finance deterioration since 2000 which is almost heart-stopping;

huge responsibility for London's disastrous attempts to refurbish the tube with his corrupt determination to do it by public-private finance;

massive transfers of the London and south-east tax take to Scotland and the north; i.e. Labour heartlands.

And then he trieds to take our concentrated attention off this overall, monumental product of economic and fiscal ignorance by spending even more of our money on buildings in which to 'educate' people. Not better teaching staff, support staff, curricula, and equipment, oh no, buildings which stand empty threequarters of the time anyway.

Brown's personal and affective characteristics have been the object of a great deal of discussion on the blogs; while the personal is not political it is beginning to be hard not to believe that what he is is what he does.

scroblene said...

One bloody grab for Man.

One bloody great grab for British Mankind - and Womankind.

This is what we expect from the man who dreams of being PM one day.

They really are the pits this lot, I feel their attitude should attract much more hate - I feel it right now.

peter hitchens said...

As its Christmas could I please be the first person to snigger like a naughty schoolboy at the combination of the words..
Gordon
Brown
Cock
Up ?

peter hitchens said...

I would like to add
The mans a fucking imbecile who couldnt be trusted to run the pie stand at Kirkaldy rovers let alone an enconomy.

Anoneumouse said...

Ah, yes, Bowles v. Bank of England, [1913] 1 Ch. 57, 84-85

By the statute 1 W. & M., usually known as the Bill of Rights, it was finally settled that there could be no taxation in this country except under authority of an Act of Parliament. The Bill of Rights still remains unrepealed, and no practice or custom, however prolonged, or however acquiesced in on the part of the subject, can be relied on by the Crown as justifying any infringement of its provisions. It follows that, with regard to the powers of the Crown to levy taxation, no resolution, either of the Committee for Ways and Means or of the House itself, has any legal effect whatever. Such resolutions are necessitated by a parliamentary procedure adopted with a view to the protection of the subject against the hasty imposition of taxes, and it would be strange to find them relied on as justifying the Crown in levying a tax before such tax is actually imposed by Act of Parliament.

Darren Cronian said...

Thanks for the info Iain. I'm getting tons of emails from consumers asking if they should pay this duty tax.

Surely the consumer has some rights when they signed the booking agreement - they can't then come back for more money.

Have a look at the link submitted to see some of the comments coming from consumers and travel companies.

2br02b said...

(1) I suspect the only way to bring this to a head is a judicial review.

(2) It is not in fact in the interests of Ryanair, Easyjet & Co. to make an issue over this as in real life, every increase in these and similar taxes and charges increases airline net income. This is because when people pay by internet for their flights they pay their taxes and duties then too, however because people are more likely to just abandon flights and re-book and pay again rather than try to change flight times of already paid for flights if they have to change their journey when re-booking fees are high and flights are cheap, the low-cost airlines just pocket the lot without having to pass on the tax & fees.

In fact, this is their main profit centre: no-shows are where they make their money, and the more tax rates rise, the more money they make. It's the direct reason why the likes of Ryanair are able to offer free flights and yet make a profit.

By the way, the Department of Transport's OWN forecast for UK flight say that WITHOUT the recent rise in the airport tax, there would be 665 million passengers going through UK airports in 2030, but WITH the tax rise there would be 655 million. This difference is too small to (a) be any more than a minor fluctuation in a forecast like this and hence (b) totally irrelevant to CO2 reduction.

Therefore the tax is exposed as a 100% pure, simple, straight-forward excuse to raise extra revenue, full stop.

----

By the way, there is also no evidence whatever that the TORY-introduced petrol tax escallator designed to reduce petrol consumption actually reduced it at all--until, when it looked like actually working it immediately cause the petrol 'revolt' and had to be stopped.

----

The reality is that any so-called 'green' tax that is actually in danger of 'working' is politically impossible to sell.

Anonymous said...

Not easing up for Xmas then, Iain. Guido has.

Rachel said...

Happy Christmas Iain. I'm sorry, I have just tagged you.

verity said...

God I hate Gordon Brown. I hate everything about him. His hair is repulsive, his mouth is sickening, he looks as though he smells of sour sweat. And he is a moron who thinks he is a genius. I absolutely hate this man almost as much as I hate Tony Blair.

Anonymous said...

The more I see of Gordon Brown the more I despise him.

Everyone I talk to feels the same way whether they be Tories, LibDems, or Labour voters. Noone trusts him and noone likes him and most become quite venomous when I mention his name.

Doesn't augur well for his career ambitions does it?

Vienna Woods said...

I'm sincerely glad that Conservatives are at last waking up to the fact that under New Labour, the country's finances have been deteriorating for every single month that they have been in power. At one time the Office of Statistics used to measure the UK's performance by publishing our Balance of Payments figures as a measure of our performance with the rest of the world. This suddenly, and without protest, stopped as soon as Brown and Co got their legs under the table. While everyone was praising New Labour for pushing the Bank of England into the spotlight and therefore to take the "blame" as well if anything went wrong, Brown has been doing what former Labour governments have always done; i.e. borrow without an idea how it will be paid back. Consequently, if one cares to study the complete history of our Balance of Payments, the last time we were in plus figures was during the last Conservative government. During New Labour's tenure the deficit has increased with each successive month since it came to power. I have never been of the opinion that Brown was so prudent (he's an idiot!) and the Conservatives need a good kicking for not bringing this to light much, much earlier.

Ian Thorpe said...

Its past time airlines were taxed on fuel, a measure which suited the Americans but nobody else.

But I have to ask, when did a trivial detail like obeying the law ever trouble this government?

Voyager said...

Please let some QC take this to the High Court

Anonymous said...

vienna woods you are spot on!

How this myth of Brown's "prudence" over the economy has persisted for so long amazes me.

The fact is we have a record and growing trade deficit, record public and private debt, rising unemployment, repossessions, bankruptcies and IVA's and we are now staring the horror of stagflation in the face. What's left of the economy is largely a debt fuelled spending boom which will grind to a halt when the house price bubble bursts next year.

Cameron and Osborne will win the next election but will have to sort out the economic shambles left behind by Brown's profligacy, irresponsibility, and mismanagement.

Something similiar happened in the late seventies as I recall.

scroblene said...

Anon 7.36

It happened when John Major was unexpectedly back at no 10.

Don't lose any sleep - this lot are going to shaft you good and proper when they have their own pensions straightened out.

The disgrace of all these ugly 'neigh-blab' politicians will mean that even now they are hated by the majority of normal people, they will probably survive until their obits appear in the papers.

After that, who cares? I could easily write a few obits now, but need to wait until the BP goes down a bit!

What a bugger to keep having to consider all these awful people when we should be thinking nice Christmas thoughts.

Anoneumouse said...

Hansard 6 Dec 2006 : Column 310

"While I will go ahead with an inflation rise in fuel duty from midnight tonight of 1.25p per litre, I will not restore the fuel duty escalator and I have rejected a real terms increase in fuel duty"

is this increase in tax a similar contravention too.

Perhaps the 'Green Gobblin King' and the Government needs to be reminded that (Edw. II Revocatio Novarum Ordinationum) is still good law.

"Ordinances or provisions concerning the King and the realm made by subjects shall be void and none such shall be made except by the King, Lords and Commons in Parliament".
.

hatfield girl said...

What was the point of making the Bank of England independent if Brown didn't intend to join the Euro?

Monetary policy might as well be decided in Frankfurt as in Threadneedle Street for all the democratic answerability afforded . At least in Frankfurt it's under the spotlight of tens of countries' scrutiny.

Who's deciding interest rate levels and generating associated policy in the UK? Mervyn King and his Committee. Who do they answer to?

It's a good thing they've got consciences. What happens when the Monetary Policy Committee is peopled by less desirable members? When the Governor is not a principled and highly competent professional?

NuLabour hasn't a clean record on stuffing boards with its own appointees that follow its private agenda.

And who now, in the face of the Brown-produced stagflation, can argue that there is no relation between inflation and unemployment?

Are there any economists at all in the Treasury these days? Aren't they ashamed of the fool that they have allowed to bring the British economy to this parlous state?

Blair is responsible for leaving this buffoon in charge of our taxes and our everyday lives for ten years, buying Brown off so he could indulge in grandiosity and gesturing on a global, murderous scale.

Lord Monteagle said...

So which front bench MPs are holding the Government accountable for this illegal tax..........?
Which journalists are taking the govenment to task...............?

Anonymous said...

Hatfield girl: "At least in Frankfurt it's under the spotlight of tens of countries' scrutiny."

If being under the scrutiny of tens of countries is good, then being under the scrutiny of hundreds of countries might be thought better?

Thus better in Threadneedle street than Frankfurt.

David Lindsay said...

In the meantime, Michael Meacher's spoiling activities have almost certainly ensured that Gordon Brown will be elected Labour Leader, as thus PM, unopposed, i.e., that there will be no actual election.

There is simply nothing like enough Labour MPs to put both Meacher and John McDonnell (favoured candidate of the Chiarman of Sedgefield Constituency Labour Party - I know, because he told me) on the ballot paper; if there were, then the Government would be facing nightly defeat on the floor of the House of Commons.

So Meacher can look forward to being restored as Environment Secretary under Brown. But what, exactly, is Alan Simpson's price for keeping Jeremy Corbyn out of the Deputy Leadership Election, which there really is going to be? I think we should be told...

Ken from Gloucester said...

Thank you!! I am off on a long haul holidy at the end of January returning mid February.


If I get a demand for this money from the Holiday Company I will tell them where to go!! and tell them to wait for the appropiate legislation.


Up yours Gordon (miserabilist) Brown.He reminds me more and more of Oliver Cromwell!! I will keep you up to date on my stand against this illegal act and I hope others will follow in my footsteps.

Dr No said...

Ian,

One of your best articles this year. It provides insight not provided by the old media. Surely this is an area where Ministers are advised on "due process" by the Civil Service. Difficult to believe this advice was not provided which suggests either arrogance or, incompetence at the Treasury

Anonymous said...

Gormless Brown.
So full of shit even his eyes are brown.
This is why the English need indipendance!

Anonymous said...

Hello there, this is Gordon Brown, Your Most esteemed Chancellor.

I'd like for you to have a chance of voting for me at the link here: http://petitions.pm.gov.uk/sack-brown/ as i know most people are upset of a possible power coup by me in the Labour party, not having voting for me, so here's your chance to have your say!

I'd like to become Prime Minister asap before im rumbled about my mis-management of the economy. I also Like shafting people who work hard with millions of stealth taxes & rewarding idle benefiteers, so this will make me very popular.

Also, see this news article about my guide on how to scrounge off the state & screwing the system here: http://www.dailymail.co.uk/pag....._a_source=

So, cast your vote for me in the above link & spread the word around!

Anonymous said...

Stop higher fuel and road tax rates vote no at
http://petitions.pm.gov.uk/roadtaxrates

Also visit Fuelandtaxprotest.mfb12.com

An sick of this dictator taking the nintendo out of us all , wake up stand up !!!!!!

Anonymous said...

GET RID of BROWN! Vote!
http://petitions.number10.gov.uk/please-go/

Anonymous said...

gordon brown does nothing for the people all he thinks about is himself and the rich . he puts lives at risk ie army and swine flue. stopping support for people who are sick . this man should be taken down he is not a good man . gordon brown and labour are not for the people any more just for themselfs and they are thieves. lets get ridd