Clause 23 - Charge and rates for 2004–05

Finance Bill – in a Public Bill Committee at 10:00 am on 11th May 2004.

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Question proposed, That the clause stand part of the Bill.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary To the Treasury, Economic Affairs, Shadow Chief Secretary to the Treasury 10:15 am, 11th May 2004

We are pleased to note that the RPIX is effectively being applied to indexing personal allowances. We also note the continuing wide gap between that and the new consumer price index pick-up measure. Notwithstanding that, there will be substantial fiscal drag as earnings, especially overall earnings in the public sector, rise faster than inflation. We are interested to know how many people are now paying tax in the top 40 per cent. bracket, and how many more the Government anticipate will be paying tax in that bracket after this year's Finance Bill.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I do not have to hand the precise figures on the number of people moving into the higher rate, but they are published regularly and I will ensure that the hon. Gentleman receives them. He needs to be reminded of the signs of prosperity in the economy. Between 1997–98 and 2002–03, average earnings for men and women of all talents increased by 25 per cent., whereas prices only went up by 12 per cent. The sign of a prosperous economy in which people are earning more is that some of them move into the higher rate band.

The hon. Gentleman will also be aware that the interaction of the tax credits and the 10p starting rate is ensuring that those on the lowest incomes are retaining as much as possible, and in particular are avoiding the regressive nature of many changing allowances, which, as he knows, is more of a benefit for those at the top of the income range.

I have already provided a written parliamentary answer to the hon. Gentleman. Perhaps the information has escaped his notice. I am happy to ensure that that information, which is contained on the Inland Revenue website, is made available to him and the Committee.

Question put and agreed to.

Clause 23 ordered to stand part of the Bill.