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Clause 2 - Personal allowance for 2013-14 for those born after 5 April 1948

Part of Finance (No. 2) Bill – in a Public Bill Committee at 12:00 pm on 23rd April 2013.

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Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East 12:00 pm, 23rd April 2013

As I said on Second Reading to one of the hon. Gentleman’s colleagues—I am afraid that the audience for what I said was quite small—that is the old Laffer curve argument: if tax rates are set at zero, nothing will be collected; if tax rates are set at 100%, people will be so disincentivised that nothing will be collected. The question is, at what point in between should tax rates be set? That will always be a matter for debate. When I researched the Laffer curve to find out how many people had written on it, I found that there is remarkably little research evidence—far less than I had imagined. It is so often thrown around that I had assumed everybody understood it and it was well researched. When we have that discussion, we could clearly debate at what point in the spectrum it should be set.

Like every Government, we are trying to do various things. We want to deal with a deficit in Government finances—nobody has said that we do not—and we want to make sure that what we do is fair. Those are the balancing factors. Some of us would argue that some of the measures that the Government have looked at are far less fair than they might be.