Orders of the Day — Finance Bill
Mr John MacGregor (South Norfolk)
I heard what the hon. Gentleman said. We are halfway towards our goal, and we shall soon have reached a basic rate which is equivalent to the reduced rate band which was introduced by the Labour party when it was in government.
The cumulative effect of the income tax reductions since we took office is substantial. Once again we have designed our income tax proposals to concentrate the benefit on the overwhelming majority of ordinary taxpayers. As we did last year, we have structured the changes so that those with the highest incomes do not benefit disproportionately. I know that the whole House has given a warm welcome to the measures of extra relief for those aged 80 years and over, and for blind people.
The cut in the basic rate improves incentives for nearly everyone whose marginal rate is the basic rate. That is nearly 21 million taxpayers of working age, or 94 per cent. of the total. It is good also for industry, because it offers higher take-home pay without adding a penny to industry's costs. For a married man on average earnings, the rate and allowance changes combined mean nearly £4 a week extra in his pay packet, which is equivalent to a 2·7 per cent. pay increase. As the Government have made clear repeatedly, a key factor in the future performance of the economy and thus the prospect for jobs will be the ability of British industry to keep control of its costs. The Government's success in reducing inflation has substantially reduced the justification for pay increases that are not earned by better performance. This year's income tax reductions provide further help to employers in their efforts to control labour costs.
I note that the right hon. Member for Sparkbrook said on radio the other day that
the reduction in the standard rate of income tax is unsustainable".
Let me assure the House and the country that it is and will be perfectly sustainable under our sound economic management. It would be only if the Opposition parties ever had the chance to implement their policies that the tax cuts would immediately go out of the window.
I must admit——