Increase and Indexation of Annual Exempt Amount

Part of Orders of the Day — Finance Bill – in the House of Commons at 4:15 pm on 27th April 1982.

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Photo of Jack Straw Jack Straw Shadow Spokesperson (Treasury) 4:15 pm, 27th April 1982

No one yet knows what will be the long-term costs to the Government arising from the Falklands crisis. As the crisis arose from the bungling and ineptitude of the Government, the costs in political terms for those responsible are likely to be very great. There will also be the financial costs, which the British taxpayer will have to bear in one way or another.

Whatever the long-term costs and consequences for the Conservative Party and the Government arising from the crisis, there are, sadly, many short-term advantages for them. One is the media concentration on the crisis, which has acted as a convenient smokescreen behind which the Government are able to carry on almost unnoticed their principal task of securing a fundamental shift of power and wealth in favour of the already rich and powerful and away from the 90 per cent. of the population who have to work for a living or who would like to do so if they were given the chance.

It is not only in respect of the movement of Britain's forces that a news blackout operates. The Government have not needed a "D" notice to black out concentration on what they have been doing to capital taxation and tax handouts to the rich. That has already been done for them. I invite the Committee to study examples of what the Government have done under the smokescreen provided for them by the Falklands crisis. Last week the Secretary of State for Employment—that semi-house—trained polecat, as my right hon. Friend the Leader of the Opposition so eloquently described him—announced additional punitive measures in the Employment Bill to enable strikers to be instantly dismissed with no warning or recourse to justice.

There was another example last night of the Government and their supporters confirming one of the meanest, nastiest and, in our judgment, least defensible of all the decisions that they have made—their denial to the unemployed of the restoration of the 5 per cent. abatement of benefit promised when taxation was introduced.

Another example occurs this evening to show that the Falklands crisis acts as a smokescreen for the Government. No one should be in any doubt that the Government are abolishing, through clauses 65 and 71, capital taxation as we have known it. The system of capital taxation that has stood for 17 years is being ended. I pray in aid of that assertion the Financial Times whose writer on capital gains tax said on 13 March: However, with the raising of the annual slice of exempted gains to;£5,000—a figure which itself is to be indexed in future—it is clear that for most investors CGT will cease to be a relevant factor in planning their future investment strategy". The reality, simply from the proposal in clause 65, is that capital gains tax, in the words of the Financial Times, will cease to be a relevant factor in planning people's future investment strategy. The first full-year cost of the proposals in clauses 65 and 71, according to the Red Book, taking account of what the Government are doing in terms of the threshold, in terms of benefits to trusts and in terms of the indexation of the tax itself, is a cool £260 million from a tax yielding only £600 million. Even in the first full year of the operation of these changes virtually half the yield of the taxes is wiped out.