Taxation

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 12th March 1992.

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Photo of Kim Howells Kim Howells , Pontypridd 12:00 am, 12th March 1992

To ask the Chancellor of the Exchequer what was the overall tax burden for a married man with two children on 75 per cent. of male average earnings in 1978–79; and what it was in 1990–91.

Photo of Dr Norman Godman Dr Norman Godman , Greenock and Port Glasgow

To ask the Chancellor of the Exchequer what was the overall tax burden for a married man with two children on 100 per cent. of male average earnings in 1978–79; and what it was in 1990–91.

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury

The tax burden is estimated to have moved from 27½ to 28½ per cent. for a man on three quarters of average earnings and from 32 to 33½ per cent. for average earnings. That compares with increases of 32·2 and 35·5 per cent.—about 3 per cent. higher—if Labour's 1978 regime had been indexed. During the same period, real take-home pay for a man on three quarters of average earnings has risen by £45 per week and at average earnings by no less than £60 per week. [Interruption.]

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. I ask the House to listen to questions in silence because it is difficult to hear at this end of the Chamber.

Photo of Kim Howells Kim Howells , Pontypridd

In 1980, the then Chancellor of the Exchequer, the right hon. and learned Member for Surrey, East (Sir G. Howe), abolished the reduced rate band by saying, and I quote—

Hon. Members:

Reading.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

The hon. Gentleman should not quote. Please paraphrase.

Photo of Kim Howells Kim Howells , Pontypridd

I will paraphrase. The right hon. and learned Gentleman said that the case for the reduced rate band was never at all clear. Why have the Government suddenly found a clear case for it? Is it not because they hope to use it to bribe the electorate?

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury

It is extraordinarily offensive to people who work hard for their income for the Labour party to talk about that income as though it belonged to the Government and not to those people. It is their money, for which they have worked hard, and the Government believe in leaving more of it—and especially more of the money that the lower paid earn—with them. It is extraordinary that, although this is explicit Labour party policy, the Labour party has decided to vote against the proposal and to increase tax by 5p in the pound for some of the lowest paid in our country.

Photo of Dr Norman Godman Dr Norman Godman , Greenock and Port Glasgow

Thank you, Mr. Speaker, and all the very best.

Is it not the case that the overall tax burden has increased? I remind the Financial Secretary that in Scotland, gross domestic product stands at 93·2 per cent.

of the United Kingdom average, when as recently as 1984 it was 97·4 per cent. Is it not the case, therefore, that, despite the fantastical riches given to the Government by the revenues from offshore oil and gas, for the people of Scotland things have got worse and worse? It is no wonder that the Government are slipping down the political plughole in Scotland: they are down to 18 per cent. in the opinion polls, and they have further to go.

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury

If the tax burden has gone up by so much, and if that is such a bad thing, why does the hon. Gentleman want to increase it further? Does he really want to increase the tax burden on the lowest paid in our society by voting against the Government's measure to reduce the tax for the lowest paid by 5p in the pound?

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

Does the Minister agree that families in the lower income brackets will benefit from the Government's success in maintaining the zero rate for food? Does he further agree that those families and pensioners in particular spend an above average amount of their incomes on zero-rated food?

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury

That is so, and people right across the income spectrum have seen their real take-home pay increase dramatically while we have been in power. As I said, the real take-home pay today of average earners is no less than £60 per week higher than it was in 1979.

Photo of Mrs Maureen Hicks Mrs Maureen Hicks , Wolverhampton North East

Is it not a fact that the average family man can rely on us for continuity when it comes to income tax? [Interruption.] We have brought income tax down from 33p to 25p and it is now going down to 20p. Does my hon. Friend agree that whereas we shall continue to reduce income tax, Labour would insist on increasing it?

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury

It is a constant feature of history that Conservative Governments like to bring tax down—[Interruption.] so as to leave more of people's hard-earned money with them, whereas every Labour Government, apart from the first Ramsay MacDonald Government, increased the basic rate of tax. [Interruption.] All history is against the Labour party. I look forward to seeing my hon. Friend the Member for Wolverhampton, North-East (Mrs. Hicks) back here in April.

Several Hon. Members:

rose

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. There is a great deal of excitement this afternoon. I hope that the House will settle down.

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

In relation to family income, what comfort does the Budget bring to the working woman, or the woman who wants to work? It contains nothing on child care or child benefit. Is it not clear that this cynical and incompetent Government put women and children last?

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury

Not only is child benefit going up already, as the hon. Gentleman would know if he had done his research, but the lower rate 20p income tax band will particularly help working women. The hon. Gentleman would also know, if he had done his research, that a great many of the groups concerned with children urged us not to go ahead with a move on tax relief for child care.