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Amendment of the Law

Part of Budget Resolutions and Economic Situation – in the House of Commons at 6:26 pm on 21st March 2000.

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Photo of Mr William Thompson Mr William Thompson UUP, West Tyrone 6:26 pm, 21st March 2000

As someone from one of the minority parties, I perhaps feel able to look at the Budget more sympathetically and impartially than members of the two main Opposition parties.

What we have heard today is certainly very interesting. When the Chancellor of the Exchequer comes to the Dispatch Box, he paints a glorious picture of the economy. He tells us that we have never had it so good, and that it is going to get better. Then Conservative Members say that that is not true—it is all a con trick. I can perhaps be more impartial and see where the truth really lies.

From experience, I have discovered that many people believe that they are saving on tax when their income tax comes down. When many people hear today's news that the basic rate of income tax is to drop from 23 per cent. to 22 per cent, they will think, "My wage packet will be bigger in the months ahead." What they fail to recognise is that, when the Government reduce income tax, they generally take the money back through indirect taxation. That has been the pattern of all Governments, as well as the pattern of this Government. It has been acknowledged that the overall percentage of tax has been rising. Income tax may have gone down, but the total amount of taxation has gone up.

With the increases announced in today's Budget, many people will indeed be worse off. For example, someone who smokes will find that a packet of cigarettes is going up by 25p. I am not in favour of smoking. However, because of the continual increase in cigarette prices, the Exchequer is getting less money from taxing cigarettes than before. There is also the problem of smuggling. As the price of cigarettes goes up, more and more smuggling takes place. It is difficult to control or stop, with the result that the tax benefit will probably continue to go down.

We are told that 1 million pensioners will be 20p a week better off. What a paltry sum! A pensioner who buys one packet of cigarettes a week will lose that 20p immediately. If he drives a car, he will be much worse off, because every gallon of petrol will cost 8p more. When the reduction in income tax is seen against what will be taken back in indirect taxes, the country at large will probably be worse off.

Vehicle excise duty and road fuel duty cause tremendous problems in Northern Ireland. Diesel prices will increase, and, as the right hon. Member for Penrith and The Border (Mr. Maclean) said, excise duties differ greatly between European Union countries. That is a particular problem for Northern Ireland, because the excise duty for a 40-tonne lorry is £1,278 in the Republic of Ireland and £5,750 in Northern Ireland. Many road hauliers cross the border to buy diesel, and many register in the Republic of Ireland to save considerably on excise duty. My constituency is adjacent to the border, and nearly every petrol pump for 20 miles on the United Kingdom side has been closed down because people cannot keep them going. Drivers cross the border to fill up. Inevitably, a tremendous amount of money—estimated at around £200 million—is being lost to the Exchequer. The Chancellor must consider whether any remedial action can be taken.

Northern Ireland's proportion of the consumption of petrol in the whole of Ireland is falling. It was 35.9 per cent. in 1994, and has dropped to 24.2 per cent. In the Republic of Ireland, it was 64.1 per cent. and is now 75.8 per cent. In 1995, diesel sold in Northern Ireland represented 27.7 per cent. of the whole of Ireland's consumption, but that fell in 1998 to 16.1 per cent., and has probably fallen further since. A lot of money is being lost to the Exchequer and remedial action is necessary.