Clause 1
Finance Bill
10:45 am
Jeremy Browne (Shadow Chief Secretary To the Treasury, Treasury; Taunton, Liberal Democrat)
I can indeed. Let me give the Committee a few examples, Sir Nicholas, even though you may feel that that is not directly relevant to the matter before us. It struck me as bizarre that when I earned enough money to be a higher-rate taxpayer, I received a greater amount of marginal tax release on my pension contribution than I did when I paid the basic rate. Everybody in this Committee is a higher-rate taxpayer, so I suppose that we should all mutually declare an interest in retaining the status quo. None the less, if a member of the Committee puts an extra £1 into a pension pot, they will get more tax relief than one of our constituents who earns, for example, £20,000 a year. To the Liberal Democrat party, that is a strange state of affairs. To remove higher rate tax relief on pension contributions would, according to our estimates, which are based on Treasury figures, bring in something in the region of £7.5 billion per year.
Some members of the Committee may think that the current state of affairs is preferable—I imagine that everybody on the Government side thinks that, as it is Government policy. It means that, for the sake of argument, if someone who earns £120,000 per year puts an extra £1 in their pension pot, they will be rewarded out of taxpayers’ funds to a greater degree than somebody who earns £20,000. That is not my party’s position, and I shall I come on to the issue of environmental taxes.