New Clause 14 — Report on the additional rate of income tax

Part of Finance Bill – in the House of Commons at 2:30 pm on 1st July 2014.

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Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington 2:30 pm, 1st July 2014

I want openness and transparency. I would prefer people to put their cards on the table in the run-up to the general election, so that the electorate know where everyone stands. It would be invaluable for all parties in the House to have the information that is requested in the new clause, so that they could test it and see whether the hypothesis that has been put forward by Mr Redwood and others is accurate. I do not believe that it is.

This debate goes much wider than the 50p rate of income tax. Members need to wake up to that. A few months ago, the Mayor of London ordered water cannon in case there are more demonstrations and riots. There is a deep feeling of unease and a building anger in our community about inequality. People do not usually mobilise and go out on the streets in the depths of a recession. Let us look at what has happened elsewhere: people get angry, mobilise and go out on the streets when they feel that the country is coming out of recession, but they are not sharing in the benefits from the sacrifices that have been made. We have asked people in this country to make immense sacrifices.

We should must look at the various reports that have come out. A few months ago the Oxfam report exposed the fact that for the first time more of the people who are in poverty are in work than out of work. More children are therefore growing up in poverty in working families than in non-working families. I think that that is a first in the history of this country. A survey by Save the Children showed that, as a result of poverty, a staggering number of parents are going without food so that their children can eat. It showed the number of children who have never had a winter coat because their parents are unable to afford one. All that is building up into a significant anger about the inequality in our society.

Taxation rates are therefore not just about the income that they raise; they are about tackling inequality. The right hon. Member for Wokingham said that this ha been happening over a long period. We now live in a society that is more unequal than it has been since Victorian times. It is true that for a short period in this recession, the Gini coefficient went down for two years. However, according to HMRC figures, it started rising again in 2012-13. I think that that will provoke anger in our community. Politicians need to be aware of that anger. Unless we do something about it, it will be difficult to contain.

That is why Governments need to be seen to be addressing the appalling inequality in our society. One way of doing that is to redistribute wealth, as Governments ought to do. The new clause does not talk about the vast maldistribution of wealth in our society. One publication from the Treasury revealed:

“The top 10% of earners in Britain have salaries which are equal to more than the bottom 40% of earners”.

That is absolutely staggering, and that is just about earnings: in some FTSE 100 companies, the chief executive and the directors earn 166 times the average wage of the workers.

Taxation is about addressing inequality. The new clause simply looks at one element of taxation and asks for an accurate report on whether it helps in the redistribution of wealth and in tackling inequality.