Oral Answers to Questions — Treasury – in the House of Commons at 2:30 pm on 12 October 2010.
What steps he is taking to make the tax system fairer.
The Government believe that the tax system should give more support to those on low to middle incomes and reward the efforts of those who choose to work. At the June Budget, we announced a £1,000 increase in the personal allowance for 2011-12, which will remove 880,000 of the lowest-income taxpayers from tax altogether. Our longer-term goal is to raise the allowance to £10,000, with real-terms steps in that direction every year.
I am grateful for that answer. May I ask my hon. Friend what the coalition Government can do for my constituent Kath Hemmings and many like her? Kath is a single mum who has raised her daughter Victoria with no support and has at the same time worked hard and built her career. She is on the higher rate of tax by just a few pounds. Many children in Victoria's class have two parents who earn under the top rate and have kept their benefit. What can we do to make things fairer for Kath, Victoria and many like them?
I understand the concern that my hon. Friend raises. The situation that we face is that there will be difficult decisions to get the deficit down-a point that Government Members appreciate. The difficulty is that looking at the issue on a household basis would mean creating a complex and large bureaucracy. We have come up with a proposal that will ensure that the poorest households are protected and will continue to receive child benefit.
I welcome the Chief Secretary to the Treasury's weekend announcement about a rural fuel derogation, which will make the tax system infinitely fairer in the islands and is a victory for common sense. I first raised the issue a few years ago. Does the hon. Gentleman feel that time was wasted by the previous Labour Government, who sat on their hands and did nothing for the islands?
When will the fuel derogation come into being? Will the Minister acknowledge that, despite that welcome step, we in the islands will still be paying more tax per litre than those on the mainland?
Was time wasted by the previous Government? Yes. What will the timing be? Negotiations need to be had with Europe, and there will be further announcements in due course.