Monday, November 24, 2008

Has Brown Forgotten Parliamentary Due Process (Again)?

You may remember the issue of enforceability of immediate tax increases where no Budget resolution has been passed, which was an issue after the PBR in 2006. At the time it involved Air Passenger Duty and Vehicle Excise Duty.

To cut a long story short, the government may not impose a tax, or collect an increased tax, that has not been passed by Parliament. Historians and constitutionalists among you will know that we have the Bill of Rights to thank for that. When rates of tax or duty are increased in the Budget it is normal that a specific resolution is passed in Parliament immediately after the Budget Statement and questions, so that the increased taxes may be collected under rights granted by the Provisional Collection of Taxes Act. No such resolution was passed as far as I can tell from the parliamentary record (Hansard is not available yet):

Most increases in the PBR do not cause a problem because they are deferred and will either be covered by a resolution at the time of the Budget or by the passage of the Finance Act, but any immediate increase requires a PCTA resolution. This year I think there may well be a problem with...

1. Fuel duty to be increased with effect from 1 December 2008
2. Tobacco duty rates increased with effect from 6pm 24 November 2008.
3. Alcohol duty rates increased with effect from 1 December 2008.

Or am I wrong?

18 comments:

Paul Pinfield said...

Peter Lilley, John Redwood and a number of other Tories attempted to raise this issue in the chamber this evening with the Deputy Speaker (Mr Hazelhurst). They got nowhere...

I knew that one day there would be a reason for watching the Parliament channel.

Chris Paul said...

You're wrong. Absolutely wrong.

Iain Dale said...

Panicked are we Chris? Do feel free to justify why I am wrong. Waiting...

Alex said...

Paul Pinfield, the issue raised by Redwood et al. was whether there could be a debate, which is a political matter. As a constitutional matter, if there is no resolution of parliament to collect the tax, it is not enforceable under the Bill of Rights.

Iain is spot on (and Chris Paul is as usual way off). In 2006 the government was helped by the fact that the two taxes were fuel duty (collected quarterly from oil refineries) and APD which is also collected periodically. The oil refining companies played ball with the government because they are good corporate citizens (and because the government could get back at them in other ways), but the airlines had a big problem with passengers who had already bought their tickets before the APD duty rate went up, but flew after the rate went up and before the increase was enforceable. Strictly, they couldn't collect the difference in APD until the Finance Act was passed.

In the end, Finance Act 2007 had some really ugly legislation which read as follows (bear in mind the Budget resolution was passed on 21 March 2007and the Bill was enacted in July 2007):

"12 (4) The amendments made by this section have effect in relation to any carriage of a passenger on an aircraft which begins on or after 1st February 2007.
(5) But if the amount of duty due from any operator in the accounting period ending before 21st March 2007 increased as a result of those amendments, the operator is to pay the amount of that increase as if it became due in the first accounting period ending after that day."

The airlines had no right to collect the tax before March, but after July they had to pay the extra duty for flights even though the airlines had no legal basis for charging the duty between 1 February and 21 March.

This time it looks as though there is a more immediate problem because HMRC have no right to collect tobacco duty (which went up last night) at the higher rate.

Withering Vine said...

"That levying money for or to the use of the Crown by pretence of prerogative, without grant of Parliament, for longer time, or in other manner than the same is or shall be granted, is illegal"

Whilst the Crown cannot collect it without a vote of supply, it could subsequently collect tax by reference to past events. We have no entrenched constitution.

As a matter of convention it should be announced in advance, but it looks as if it has been.

farnboro said...

I think you'll find that the relevant statutory instruments were laid before Parliament yesterday, under delegated powers. They are listed in the Votes and Proceedings (if you know where that is).

farnboro said...

The Value Added Tax Act 1994 (yes, 1994) authorises the variation of VAT rates from 17.5 per cent by a mere SI subject to negative resolution.

John Pickworth said...

Would it help if we throw some tea into the harbour?

Sorry, just trying to help ;-)

Withering Vine said...

I said: "Whilst the Crown cannot collect it without a vote of supply"

It's too late at night - that is the wrong end of the pipe. It's a ways and means resolution (required before levying the tax in the relevant finance bill enabling the bailiffs to move in).

farnboro said...

Scroll down the page to see the SIs amending the taxation rates which were made by the Treasury and laid before Parliament yesterday.

http://opsi.gov.uk/si/sis24-11

http://opsi.gov.uk/si/si2008/pdf/uksi_20083026_en.pdf

http://opsi.gov.uk/si/si2008/pdf/uksi_20083020_en.pdf

http://opsi.gov.uk/si/si2008/pdf/uksi_20083019_en.pdf

http://opsi.gov.uk/si/si2008/pdf/uksi_20083018_en.pdf

Blue Eyes said...

The Labour Party wouldn't know what due process was if it slapped them round the face. They have no interest in British history or of constitutional niceties. The Labour Party only exists in order to further its own existence.

Patrick said...

Do Labour MPs have any honour?

I ask this is as it is now manifestly clear that Brown and Labour have once again ruined our national finances.

What purpose do they serve in keeeping Brown afloat a moment longer?

Anoneumouse said...

There should be a debate and a vote on these tax changes

Edw. II 1322 Revocatio Novarum Ordinationum

“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”.

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.

Alex said...

"farnboro said...
I think you'll find that the relevant statutory instruments were laid before Parliament yesterday, under delegated powers. They are listed in the Votes and Proceedings (if you know where that is)."

Yes, but statutory instruments that operate by the negative procedure do not come into force for 40 days, which will be after the date that these rates of duty would apply from.

"farnboro said...
The Value Added Tax Act 1994 (yes, 1994) authorises the variation of VAT rates from 17.5 per cent by a mere SI subject to negative resolution."

Not relevant in this context because the rate of VAT has been reduced.

Not a sheep said...

This Labour government are not governed by the normal rules of parliament, they were elected as "the political wing of the British people" and govern as such. Never has the UK seemed to be ruled by an "elected" dictatorship as it has since 1997.

Jeffrey said...

A negative procedure SI can come into force immediately - it is the passing of a resolution seeking annulment that is subject to 40 days. The SIs relating to fuel and tobacco/alcohol are affirmative procedure and will have to be approved by the House - but that doesn't prevent them coming into force before approval. No Parliamentary rules or conventions have been broken

Anoneumouse said...

Jeffery The Bill of Rights is quite clear

A Statutory Instrument is not an act of parliament, it is a Henry VIII clause. If the government were on the ball and really wanted to cover its arse yesterday then, they should have used the provisions within the Provisional Collection of Taxes Act 1968 which consolidated the Provisional Collection of Taxes Act 1913 which was enacted after the court ruling in favour of Mr Gibson Bowles.

You are never alone when you smoke in the Strand

Jeffrey said...

anoneumouse - you are right that SIs are not Acts, but they are made under the express authority of their respective parent Acts. It is entirely proper and constitutional. You are confused as to what a Henry VIII is, I think.