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Finance (No. 3) Bill

Part of the debate – in the House of Commons at 9:39 pm on 12th November 2018.

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Photo of Charlie Elphicke Charlie Elphicke Independent, Dover 9:39 pm, 12th November 2018

The hon. Gentleman seems to be muddled: is he a tax raiser or a tax cutter? It seems to me that the evidence of history is really clear. Back in 2006, I wrote a paper for the Centre for Policy Studies saying that we should halve the rate of corporation tax, which then stood at over 30%. I basically said that that would pay for itself, because if we cut the rate, we up the take. I made the case that we would have more revenues than were coming in at the time if we halved the rate to less than 20%. Since then, that policy has been put into action, and that has turned out to be the case: if we cut the rate, we up the take. In the 1980s, they cut the higher rate of tax from 80% to 60% and then to 40%. Each time the rate was cut, what happened? The tax take rose. That is why we ought to be looking at how we can reduce the burden of taxation in areas where we can raise more taxes.

There are some cases where we increase the burden of taxation and see revenues falling. We can see that in what has happened with stamp duty land tax on very high-value properties: we freeze the market, and we see lower revenues as a result.