Income Tax

Oral Answers to Questions — Treasury – in the House of Commons on 21st May 2019.

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Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

What progress he has made on reducing income tax.

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

The Government are proud of their record of reducing income taxes to enable people to keep more of what they earn. We have increased the personal allowance by over 90% in less than a decade. We have given 32 million people an income tax cut compared with 2015-16, and thanks to the changes that I made at the last Budget, a typical basic rate taxpayer will pay £130 less income tax this year than last year.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

I thank the Chancellor for that answer, and I thank him and his team for getting to grips with the extraordinary annual structural deficit inherited from the Labour party. Bearing that in mind, and given that we are now on a course towards a balanced budget, will he focus with laser-like precision on continuing to reduce income tax for hard-working families, putting clear blue water between us and the socialists in the run-up to the next election?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

My hon. Friend is absolutely right to focus on the much improved state of the public finances and the direct link between that and our ability to consider further tax cuts. What I said at the spring statement remains the case: for the first time in a decade, this country now has choices—we have headroom because of the improved state of the public finances. We can choose to use that to support additional spending on public services, or we can choose to reduce the deficit more quickly. We can choose to invest in Britain’s future, or we can choose to cut taxes on ordinary working families. The luxury of choice is something that this country has not seen for a decade.

Photo of Alison McGovern Alison McGovern Chair, Speaker's Advisory Committee on Works of Art

I think there must be an election coming up, because Dominic Raab is on the front page of The Daily Telegraph today saying that we should “Cut income tax for a ‘fairer’ Britain”. We do need a fairer Britain, because we have the highest level of inequality in Europe. The so-called living wage does not solve inequality, according to the Institute for Fiscal Studies and the House of Commons Library briefing of yesterday, so when it comes to the choices that the Chancellor is going to make, what is his choice in tackling inequality in Britain?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

I am afraid I do not agree with the hon. Lady about the national living wage. We have set out an ambition for it to reach 60% of median earnings by next year, which we will achieve. As I said in the spring statement, we now need to give a new mandate to the Low Pay Commission for the future trajectory of the national living wage, and I want us to be ambitious in doing that, but I do not want us to price low-skilled people out of work. That is why I have started a series of roundtables, the first of which was the week before last, with representatives from industry and the trade unions to decide what our strategy will be to increase the national living wage in this country.

Photo of Mike Wood Mike Wood Conservative, Dudley South

How many people in the west midlands are benefitting from recent increases to the personal allowance and the higher-rate threshold?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

The answer is lots. Had I known my hon. Friend was going to ask me that, I would have been able to give him a precise answer. I will write to him.

Photo of Gregory Campbell Gregory Campbell Shadow DUP Spokesperson (International Development), Shadow DUP Spokesperson (Cabinet Office)

My party has advocated the raising of the personal allowance, and I am glad that the Chancellor has done that over the past few years, but does he agree that part of the problem now is that part-time and full-time employees on low pay, just below the threshold of £12,500, pay national insurance contributions? Will he consider eliminating that to the same level as the allowance?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

We always have to find the most cost-effective way to deliver the effect we are looking for. We have chosen so far to do that by raising the personal allowance thresholds, but the hon. Gentleman makes a perfectly legitimate argument for a different approach in the future. As I have said, we will have choices as a result of the much improved state of the public finances.