Personal Tax Allowances

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 3rd March 1994.

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Photo of Mr Greville Janner Mr Greville Janner , Leicester West 12:00 am, 3rd March 1994

To ask the Chancellor of the Exchequer how many representations he has received concerning his plans to freeze personal income tax allowances.

Photo of Stephen Dorrell Stephen Dorrell The Financial Secretary to the Treasury

Treasury Ministers have received a number of representations.

Photo of Mr Greville Janner Mr Greville Janner , Leicester West

Does the Minister accept that freezing personal income tax would place a heavy burden on people who are on the borderlines of poverty? Does he know, as a Leicestershire Member, that the average women's wage in the city of Leicester is the lowest in the country and that among the people who will be hit most by the proposals are those who can put up with them least?

Photo of Stephen Dorrell Stephen Dorrell The Financial Secretary to the Treasury

We shall not accept lectures from the Opposition on the importance of indexing personal allowances. Between 1974 and 1979, the Labour Government cut the value of the single personal allowance by about a quarter. We have seen it increase by roughly an equivalent amount since then. The hon. and learned Gentleman should regard this measure in the context of all the other measures in last year's Budget. As I said in answer to an earlier question, those measures raise extra revenue in roughly equal proportions across the income scale.

Photo of Mrs Angela Knight Mrs Angela Knight , Erewash

Will my hon. Friend tell the House how many fewer people are paying income tax now than would have been paying it, had the 1978–79 regime continued? Of those who pay income tax, how many pay it only at the 20 per cent. rate which we introduced?

Photo of Stephen Dorrell Stephen Dorrell The Financial Secretary to the Treasury

My hon. Friend is on to an important point. More than 1 million people who would have paid income tax had we simply indexed the allowances that we inherited from the Labour party are not paying income tax this year or next because we have over-indexed the allowances since 1979.

Photo of Harriet Harman Harriet Harman Shadow Chief Secretary to the Treasury, Member, Labour Party National Executive Committee

Will the Minister confirm that, from this April, 400,000 people on low incomes who do not currently pay income tax will start to pay it for the first time? Is it not a scandal that, of those people, 160,000 are pensioners who will start to pay income tax on their low occupational pensions? Does that not show that the 1993 Budget not only broke election promises but hit hardest at those who could least afford it?

Photo of Stephen Dorrell Stephen Dorrell The Financial Secretary to the Treasury

The hon. Lady, not for the first time, is misunderstanding an answer that she has been given by a Treasury Minister. It is perfectly true that we expect there to be more income tax payers next year, for a simple reason: we expect incomes to rise next year so that more people are brought into the income tax bracket.