Taxation

Oral Answers to Questions — Treasury – in the House of Commons at 12:00 am on 25th January 2001.

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Photo of Andrew Tyrie Andrew Tyrie Conservative, Chichester 12:00 am, 25th January 2001

What representations he has received from interested organisations on the level of the tax burden. [145803]

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

The Chancellor receives a wide range of representations on taxation matters.

Photo of Andrew Tyrie Andrew Tyrie Conservative, Chichester

Most of those representations will explain how the rise in the tax burden is impairing economic performance. Could the Minister, on behalf of the Government, tell us to what level the tax burden will have to rise before the Government believe that a higher tax burden impairs economic performance?

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

Actually, the tax burden is falling. When making those claims, Opposition Members should recall what they themselves said, on the record and in government, about what was likely to happen to the tax burden in this country. In the November 1996 "Financial Statement and Budget Report", the Conservative Government said: These changes, along with the existing commitments to future real increases in road fuel and tobacco duties, raise the ratio of government receipts to GDP. So, the Conservatives said that the ratio would go up. In fact, under this Government, last year, this year and next year, there is a lower ratio than the Conservatives were planning.

Photo of Caroline Flint Caroline Flint Labour, Don Valley

Is my right hon. Friend aware that last Friday's Financial Times described the Conservatives' attempts to reduce the tax burden as a mess of which Harry Potter would have been proud? How can the Opposition square what they preach with what they do, when they voted on Tuesday against cuts in national insurance contributions for the self-employed, employers and small firms?

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

My hon. Friend is right: there is a sharp contrast between what the Conservatives say and do now and what they did in office. We remember the 22 tax rises and the VAT increases that they promised not to introduce. This Government have kept every promise that we have made on tax. [Laughter.] We have cut the basic rate of tax and have not raised the upper rate. We have introduced the 10p rate and cut VAT on fuel. Opposition Members will not be laughing when they go to the electorate on the subject of real living standards, because year on year under this Government, take-home pay after direct and indirect tax has been rising—I am allowing for everything—by £400 or more a year, whereas under the Conservative Government it increased by less than £300 a year.

Photo of David Ruffley David Ruffley Conservative, Bury St Edmunds

Is the Chief Secretary aware that many couples whose married couples allowance has been slashed by the Chancellor will not receive the children's tax credit? Will he tell the House how many such married couples will face a higher tax burden as a result of this disgraceful new Labour stealth tax?

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

The hon. Gentleman makes a somewhat uncharacteristic attack on his own Front Bench. It was the now shadow Chancellor who said in office that the allowance was an anomaly. Indeed, it was the Conservative Government who started to cut it. The Government are introducing help through the children's tax credit. As my right hon. the Chancellor has said, we hope to benefit families with children to the tune of £10 a week.

Photo of Michael Connarty Michael Connarty Labour, Falkirk East

Does my right hon. Friend accept that we must consider not only the overall tax burden, although that is important, but timing and distribution? In particular, is he aware of the deep concern in manufacturing industry about the fact that the Government are to pursue the climate change levy? Although the levy is tax neutral—fiscally neutral—it will impose a burden on that sector. Perhaps we should be rethinking the timing of the measure, given the condition of manufacturing in this country.

Photo of Andrew Smith Andrew Smith The Chief Secretary to the Treasury

We strongly support manufacturing industry. Nissan's announcement that it is to bring production of the new Micra to Sunderland has occurred partly because of our energetic efforts. I am sure that my hon. Friend will join me in welcoming that decision, about which we are very pleased. It is evidence of our commitment to success in manufacturing industry. He also mentioned the climate change levy, which has been carried forward in close consultation with industry. We have negotiated agreements on the levy with particularly energy-dependent industries. As my hon. Friend acknowledged, the levy is fiscally neutral, not only as a whole but within each sector. Moreover, we will generate jobs and help manufacturing by reducing national insurance contributions.