Does my right hon. Friend agree that those figures strikingly demonstrate that lower, rather than higher, tax rates are at once a fairer and more effective way to maximise revenue to sustain improvement in important public services?
My hon. Friend is absolutely right. We inherited a situation in which there were penal rates of taxation, which we reduced. The effect was to increase revenue. The Opposition seem anxious to repeat the mistakes that they made before. They want to increase tax rates again. The whole country would like to know at what level of income they intend to increase the higher rate of tax. The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) says that it will be at £36,000, but the right hon. and learned Friend the Member for Monklands, East (Mr. Smith) will not tell us and says that he does not think that it is necessary to say so.
Does my right hon. Friend agree that any proposal to raise the higher rate of income tax, as advocated by the Opposition, would he damaging for morale and prosperity, because such a move would not only destroy the will to work but drive some of our best brains out of the country? We Conservatives do not want that. Will my right hon. Friend confirm that we shall always be the party of lower taxes and the Opposition that of' higher taxes?
My hon. Friend makes a good point. In addition to her arguments, I believe that the low rate of top rate tax is also an incentive to bring inward investment into the country. It is very much appreciated and gives us a competitive advantage.
The point implicit in the hon. Gentleman's question is: what is the point of putting up the top rate of tax if one raises less revenue? What good does that do the poor of this country?
Does my right hon. Friend agree that the reductions in personal taxation have played a major role in the revival of enterprise and the increase in risk taking, productivity and output that we have achieved in the past decade? Does he agree that reductions in personal taxation are a highly efficacious means of stimulating simultaneously the demand and the supply sides of the economy?
I entirely agree with my hon. Friend. The benefits of income tax cuts have been widely appreciated. The last thing that the country needs at this moment are the sort of enormous tax increases being advocated covertly by the Oppositionb—the tax increases implied by their sky-scraping public spending plans.
Has not national taxation increased with higher levels of VAT and the introduction of poll tax? Is not it disgraceful that the Government are destroying living standards, yet they claim to believe in human values? Is not it also true that the Prime Minister claimed that he was concerned about third-world debt? As this country is also a third-world country, suffering a Tory Government, what is he going to do about that?
I have long thought that the hon. Gentleman imagined that we were living in Ethiopia, having listened to some of his speeches about the economy. Equally fanciful is his assertion that we are destroying living standards. How he can use that phrase when living standards for a married man on average earnings with two children have risen by about 35 per cent. after increases in VAT and increases in the cost of living, I do not know. The answer lies in the real increase in take-home pay.