§ 33. Mr. Costainasked the Chancellor of the Exchequer what income is now necessary to give a married man with two children the equivalent purchasing power, after tax, of an income in 1970 of £2,500 a year on the basis (a) that the whole income is earned, (b) that the whole of the income is from investments and (c) that half the income is earned and half from investments.
§ Mr. Robert SheldonOn the basis of the latest information about the retail price index, and assuming that the children are both aged under 11, the figures are:
- (a) £4,710 where the income is all earned;
- (b) £4,900 where the income is wholly from investments and
- (c) £4,620 where half the income is earned and half is from investments.
§ Mr. CostainDo not these figures show why there is a need to bring pressure for wage rises? Would we not reduce inflation more quickly if the Government were to face the situation and took account in their proposals of the effect of inflation.
§ Mr. SheldonThe hon. Gentleman is wrong. In order to take account of inflation it has been necessary to increase the tax rates. My right hon. Friend the Chancellor of the Exchequer, both in his Budget Statement and after, pointed out that it would be necessary to increase taxes to allow for the inflation that had been induced.
§ Mr. AdleyWhat conclusions does the hon. Gentleman draw, bearing in mind what he has just said, from the American experience of reducing taxation and inflation simultaneously?
§ Mr. SheldonOne can run into many problems if one tries to compare two 735 different economies at two different phases in the way the hon. Gentleman is trying to do. We recognise the problems that we face, and they will be dealt with in the statement tomorrow.