Selective Employment Tax

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 20 May 1969.

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Photo of Mr Terence Higgins Mr Terence Higgins , Worthing 12:00, 20 May 1969

Yes, I am aware of that. I hope we shall return to the point in greater detail in later debates when, no doubt, my hon. Friend will wish to speak.

It certainly is the case that exports are adversely affected in the way in which I was stating. Secondly, the whole incidence and timing of this tax is uncertain compared with other taxes. Thirdly, this tax, unlike most taxes which increase in yield as the gross national product goes up in money terms, or decrease in yield if the gross national product were to fall, does not move in this way. Therefore, instead of putting a built-in stabiliser into the economy, evening out fluctuations, this tax has no such stabilising effect and is far less favourable than many of the others which could have been imposed in its place.

Above all, this tax is arbitrary. It is arbitrary in its incidence. It divides one part of the country from another; it divides one part of a development area from another; it divides construction from manufacturing; it divides almost any particular aspect of our economic life in a purely arbitrary way, dependent on the construction of the actual index which is used to classify the various industries. Therefore, I hope that the Committee will vote against this Clause which seeks to increase this tax.

I do not think that it is necessary to go into the question of the revenue which it raises because we have no idea at all what is the Chancellor's Budget judgment. Following the fiasco on the whole question of the pensions increase and the way in which it has been financed, we have an enormous range within which the Chancellor's Budget judgment—if it ever existed—now exists. We are, therefore, right to attack a tax which, if anything, will have an adverse effect on the balance of payments.

One thing is absolutely clear. It is not that devaluation has failed so much as that it was half strangled at birth by the Government's actions and has been consistently kicked to death by their actions ever since. The danger now is that the Government pile deflation after deflation upon a devaluation which has failed. The Government themselves failed to make it work not only because they had procrastinated at the time of devaluation, but also because nearly everything they have done since has tended to operate against the effective way in which exports might have been stimulated by that devaluation.

The fact is that we are suffering from consistency and inconsistency amongst Ministers. The Chief Secretary is consistently in favour of this tax, and the Secretary of State for Social Services is inconsistent about almost everything. Indeed, some of his statements lately remind one of Mark Twain's description of the weather in Connecticut, namely, "If you do not like it, wait a minute." The statements of the Secretary of State vary almost from moment to moment. But about one thing he was right last Thursday. He said, with regard to the imposition of the pensions increase: To put it crudely, if we put the increase on the employer we put it on the cost of goods, and it would not help us now to overload him."—[OFFICIAL REPORT, 15th May, 1969; Vol. 783, c. 1742.] Yet this is a further imposition upon industry. It is particularly adverse on our exports and it is certainly adverse on our invisibles. It is discriminatory and it ought to be abolished at the earliest possible moment. An increase in this tax is quite absurd, and I hope that the Committee will unite to defeat the Clause.