Parliament: Revenue - Tories attack plan to tax consultants on contract

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The Independent Online
WILLIAM HAGUE accused the Prime Minister yesterday of driving information technology companies abroad by imposing a pounds 500m "stealth tax".

Mr Hague, the Tory leader, claimed that proposals designed to stop IT professionals saying they are self-employed for tax purposes when on long contracts with particular companies would disadvantage small entrepreneurs. However, Tony Blair insisted during Prime Minister's Questions that the Government was giving "the best boost to small businesses that this country has seen for many years".

In rowdy exchanges, Mr Hague charged Mr Blair with being "as stealthy with the truth as you are with your taxes". The changes, dubbed the "IR35 tax" by Tories, would heap an extra pounds 475m in National Insurance contributions on specialists and consultants, he said.

In reply, Mr Blair refused to withdraw the plans, which are part of the Welfare Reform and Pensions Bill, challenging Mr Hague to spell out how he would finance his party's spending plans.

Mr Blair said: "This particular measure is to make sure everyone in the country pays tax on the same basis and we don't have people avoiding tax which other people then have to pay. It won't drive companies out of Britain.

"Countries like ours are thriving on the fact that we have managed to get, for the first time in years, public spending under proper control, inflation under proper control, which is why the economy ... is thriving. It's about time, since you say you want to run an effective economic policy, that you answered the questions we had to answer in opposition. That pounds 7bn worth of tax cuts - where does the money come from?"

Mr Blair also confirmed that proposals on the Government's stance over fox hunting would be announced in the next few days. While he refused to be drawn into details, it is expected that the Home Office will back a Private Member's Bill while setting up an inquiry into the impact a ban on fox hunting would have on jobs in rural areas.

Asked by Bridget Prentice, the Labour MP for Lewisham East, whether suggestions of a "retreat" were true, the Prime Minister said: "I can assure you the Home Secretary will make the announcement in the next few days. But I tell you that you shouldn't believe all you read in the newspapers." He added later that he was prepared to meet members of the Middle Way Group, which has called for an alternative to a ban.