Income Tax

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 5th July 1973.

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Photo of Mr William Price Mr William Price , Rugby 12:00 am, 5th July 1973

asked the Chancellor of the Exchequer how much money was collected from income tax during the last 12-month period for which figures are available and what was the total for 1969–70.

Photo of Mr John Nott Mr John Nott , St Ives

In the financial year 1969–70 income tax receipts represented 12·3 per cent. of the gross national product and amounted to £4,907 million. In the financial year ended 5th April 1973 the percentage had fallen to 11·9 per cent. of gross national product and amounted to £6,477 million. For the 12 months ended 31st May 1973 the figure was £6,577 million.

Photo of Mr William Price Mr William Price , Rugby

How does the Minister square that statement with the claim that people are paying less income tax under the Tories? How does he also square it with what the Chancellor was saying only a moment ago? Is it not clear that the Government are taking more tax off the working people of this country than any Government in our history, and will the Chancellor stand up sometime and tell us what he is doing with it?

Photo of Mr John Nott Mr John Nott , St Ives

What the hon. Member says is not correct. I give him one example. In 1969–70 taxes on personal income represented 22·7 per cent. of wages and salaries. By 1972–73 we had reduced tax on personal income to 20·9 per cent. of wages and salaries. The proportion of indirect taxation related to the gross national product has also fallen.

Photo of Mr Peter Trew Mr Peter Trew , Dartford

Surely what matters is not the amount of tax collected but the rate of taxation? Is it not a remarkable coincidence that under Labour Governments tax rates rise and under Conservative Government they fall?

Photo of Mr John Nott Mr John Nott , St Ives

I entirely agree. If the rates of tax in force at the last General Election were still in force today the British people would be paying £4,000 million more than they are.

Photo of Mr Brian Walden Mr Brian Walden , Birmingham All Saints

Why, in spite of my constant pleas, does the Minister only ever talk about tax when he talks about what the Government take from the British people? Why does he not refer to the unavoidable charges that have been imposed on the people by the Government? Is the Minister intending to mislead the House to the extent of saying that the amount coming in does not matter, that the only thing that matters is the rate? Is that not palpable nonsense? Is it not obvious that if the base figure rises and more money comes in the rate does not have to be so high?

Photo of Mr John Nott Mr John Nott , St Ives

It is not palpable nonsense for the British taxpayer. If the rates had stayed the same as they were when we came to office people would be paying £4,000 million a year more in taxation than they are, so the rates are highly relevant. On the first part of the question, taking into account all the charges referred to by the hon. Member, adjusting for inflation and making all the other adjustments that he would wish, since June 1970 the real net income of the family with two children on about half the average industrial earnings has increased by 4·5 per cent. a year compared with 2·5 per cent. a year under the previous Labour Government.