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The Economy

Part of the debate – in the House of Commons at 3:06 pm on 24th October 2019.

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Photo of Craig Mackinlay Craig Mackinlay Conservative, South Thanet 3:06 pm, 24th October 2019

I refer Members to my entry in the Register of Members’ Financial Interests.

Let us contrast where we are today with the background we inherited in 2010. We have unemployment down by 1.3 million—a 50% reduction from 2010. We have halved the number of young people who are out of work. We have made progressive increases to the national living wage. We have had a tax cut for 32 million through much bigger than inflation increases to the personal allowance, meaning that a basic rate taxpayer—the lower-paid—are paying £1,205 less in tax. Add that to increases in the national living wage, and the take-home pay—what lands in people’s bank accounts—is £4,000 more for the lower-paid, and that really matters.

We have reinforced our position as a world leader in financial services. That industry provides £127 billion of value added to our economy, paying £29 billion in tax and with a trade surplus of £61 billion. We have seen corporation tax reduced from artificially high levels of 28% to 19% today, and that will come down to 17%. That is a key driver in making sure that Britain remains a place to do international business and in keeping businesses that might consider going abroad in this country earning money for us. We have an infrastructure plan of the kind that we have never seen before to increase services on our roads and rail, and, of course, superfast broadband, on which we have been lagging behind for some time.

In the limited time left to me, I want to concentrate on our tax system. We need a debate about liberating our tax system to make sure that risk versus reward is properly in place and we do not penalise those who are willing to take risks and employ people to earn the money in the future. We have done very good work with the personal allowance, increasing it from the 2010 rate of £6,475 to £12,500 today. If we had had an inflation rate of 27%—on the figures during that period—we would have had a personal allowance of only £8,230, so we have got rid of the fiscal drag in that system. I am asking the Chancellor of the Exchequer, as he progresses towards his Budget, to consider the other aspects of fiscal drag that we have seen over the years.

For instance, on inheritance tax, the £325,000 limit has remained unchanged since 2009, whereas the house price index shows that house prices have increased quite substantially. We have had the main residence nil-rate band, but it has its complications, so this is a plea that we address fiscal drag across the system. We should treat tax not as though it is one move at a time; we need to play it strategically. We have done lots to improve the stamp duty system by getting rid of the rather hated “slab system” some years ago, but we are now seeing the additional 3% second property surcharge and, with the rates that exist at higher levels, a reduction in the tax take. We saw an increase in the tax take when we reduced the higher rate of income tax from 50p to 45p, and I propose that we can do the same with stamp duty.

I have advanced many of my proposals on capital gains tax to the Treasury, because I perceive there to be hundreds of thousands of properties stuck in second ownership owing to the application of penal CGT rates to those who own second properties but do not rent them out. We have a great opportunity to put our tax system back on the right footing—and please, please, let us not return to those old times when we penalised such people; let us support them.