HC Deb 18 December 1975 vol 902 cc1636-7
13. Mr. Durant

asked the Chancellor of the Exchequer if he will take steps to ensure that the tax liability of widows over 50 years of age is especially protected against the effects of inflation.

Mr. Denzil Davies

The rate of inflation is one of the factors which is taken into consideration in fixing the level of tax thresholds.

Mr. Durant

Will the Minister consider introducing extra tax relief in the first year of bereavement, the most crucial time for widows? Will he also urgently look at tax thresholds, which affect all these minority groups to such a great extent? Why do not the Government get their priorities right?

Mr. Davies

The problems of tax thresholds affect other taxpayers as well as widows. I accept that there is a problem, but I should correct a mistaken impression that the right hon. and learned Member for Surrey, East (Sir G. Howe) has given today, and before outside the House, that a widow who receives nothing more than the basic widow's pension in this tax year pays tax on it. She does not, because her pension is less than the single person allowance which she receives for the year 1975–76.

Mr. Ashley

Is my hon. Friend aware that it would be wrong to help widows without helping other single-parent families and that the Treasury should help both? I have always found the Treasury to be unimaginative and ungenerous in considering these groups. It is always prepared to give money to a dubious project involving motorways, motor cars or airports, rather than such groups. Will my hon. Friend ask my right hon. Friend to reconsider his values?

Mr. Davies

We have this problem very much in mind. There is a great difficulty within our tax system about giving relief to people at the lower end of the scale without giving it throughout the tax system. For instance, an increase of £100 in both the single allowance and married allowance costs more than £800 million a year. That goes to all taxpayers, not just those at the lower end of the scale. It is a problem that we have very much in mind.

Sir G. Howe

As the Minister challenged what I have been saying, does he accept that women receiving the standard rate of widow's benefit from the age of 60 over a full year are now receiving an income which takes them above the tax threshold? Does not the very problem which the hon. Gentleman has just identified, the expense of raising the tax threshold by even a modest amount, demonstrate beyond doubt that this Government are now taxing the poor to pay benefits to the poor? Does not that underline that we have reached the limit of the nation's taxable capacity and ram home the case for getting public spending under control? There are no more taxes to be raised.

Mr. Davies

A widow receiving the basic widow's pension in this year receives £637, if she has no other income. [Interruption.] I am talking about 1975–76. I said that in this year she will pay no tax on her income if her only income is the basic widow's pension. That is the mistake the right hon. and learned Gentleman has been making.