§ 27. Dame Irene Wardasked the Chancellor of the Exchequer how he intends to make tax reliefs for National 1078 Insurance contributions in respect of persons not subject to Income Tax.
§ Mr. BarberI am afraid that successive Chancellors have not found it possible to give relief from Income Tax to people who are not paying Income Tax.
§ Dame Irene WardIn view of the fact that I have taken a great interest in this problem for a very long time, would not my hon. Friend agree that, if there are Income Tax reliefs in respect of National Insurance contributions, it follows therefrom that people must get their social insurance benefits at a cheaper rate than if they do not get tax reliefs and have to pay the full amount of the new contributions? How does my hon. Friend intend to deal with this inequity?
§ Mr. BarberAs my hon. Friend knows—because we have debated this subject in years past—the general rule is that contributions paid to secure a pension under any form of pensions scheme are allowed as a deduction in computing taxable income and that the pension is taxable when it arises. Relief for contributions and liability on the pensions has always been the principle for approved superannuation funds. It was a principle which was endorsed both by the Millard Tucker Committee and by the Royal Commission on Taxation and I believe that it is the right principle.
§ Mr. CallaghanDoes not the point raised by the hon. Lady the Member for Tynemouth (Dame Irene Ward), together with the increasing burden of the National Insurance contribution as it gets higher, point to the unsatisfactory nature of this system? Would it not be far better if we were to reconsider the system of relating payments of this sort to income?
§ Mr. BarberThat raises a much wider issue than the Question posed by my hon. Friend, which concerns Income Tax reliefs. I would only say to the hon. Member, with great respect to what he has just said, that we have only recently increased social service benefits, which will be of real help to the people who are outside the range of Income Tax.
§ Dame Irene WardCan my hon. Friend explain the justice of the fact 1079 that people receive increased social security benefits because they have to pay more for them than those who get them at a cheaper rate? Is not the hon. Member for Cardiff, South-East (Mr. Callaghan) right when he asks whether the time has not arrived to do something to ensure that there is a fair payment for National Insurance benefits? If I catch your eye, Mr. Speaker, I hope to raise this matter in debate, so I am giving full warning. Cannot we have a better answer than my hon. Friend has been able to give this afternoon?
§ Mr. BarberI will certainly do my best to provide a better answer for my hon. Friend in the course of the debate which, I have no doubt, will arise on the Finance Bill.