§ This Budget has been concerned with longer-range plans for reform as well as with the immediate measures which the economic outlook now requires. These latter measures will lead to a reduction in revenue of £546 million in 1971–72, and about £680 million in a full year. The effect on demand in 1971–72 will be substantially less than the cost in terms of revenue, but, as I have said, my aim is to raise the rate of growth of output over the year ahead to about the rate of growth of productive potential.
§ For 1971–72, the central Government's borrowing requirement is now forecast to be a little over £600 million and that of the public sector as a whole about £1,200 million. This figure may seem large—and it would have been somewhat larger, but for the postal strike—but the public sector borrowing requirement is in no sense a measure of the extra spending power which will be injected into the economy by the Budget. The monetary policy which I have announced reflects my determination not to allow an undue expansion of the money supply. Overall, the balance of fiscal and monetary policies 1397 is intended to produce the right stimulus to demand in the circumstances we face at the present time.
§ I have dealt with a large variety of taxation proposals this afternoon, including estate duty, capital gains tax, and other proposals. But it may be helpful to the House if I conclude by summarising the basic programme for taxation reduction and reform over the next two years.
§ As from 6th April, the cut in the standard rate of income tax will become effective for all taxpayers.
§ As from the same date, the increases in the child allowances will take effect. At the same time, the penal rates of taxation on the higher earned incomes will be reduced.
§ As from 5th July, all the rates of S.E.T. will be cut by half.
§ In this year's Finance Bill, we shall legislate to replace the existing income tax and surtax with a new and simpler system of personal taxation. The Bill will provide also for the reduction of corporation tax.
§ During the coming months, we shall he consulting representatives of industry, commerce and the professions about the reform of corporation tax and about the value-added tax.
§ Next Session, we shall legislate for the introduction of the value-added tax.
§ In April, 1972, we expect to be ready to announce our decisions for the reform of corporation tax, and to implement them in next year's Finance Bill.
§ Finally, by April, 1973, all the legislative and administrative processes will be complete and the reforms will come into full effect.
§ I must pay tribute to the magnificent co-operation of the Revenue Departments. The Inland Revenue and the Customs and Excise tell me that these changes constitute the most comprehensive and far-reaching reform of the tax system this century. The magnitude of the operation, to be completed within two years, is self-evident.
§ It is right that I should end with this warning. All our hopes for the future will be but dust in our mouths if we do not repel the assault upon the value of our money. This must remain our first priority.1398
§ This Budget alone will not solve all our economic problems; but it does herald a new approach, an approach based on the belief that lower taxation and simpler taxation will, over the years ahead, help to create a new spirit—a new spirit of personal endeavour and achievement which alone can provide our nation with growing prosperity.
§ Mr. Deputy Speaker (Sir Robert Grant-Ferris)
I remind the House that there are a further 15 Resolutions to be put to the House on the last day of the debate. The only one which we are now to debate is No. 1, and the remainder will be put from the Chair—in condensed form, I hope—on Monday.
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