§ 1. Mr. Rookerasked the Chancellor of the Exchequer how much income tax was lost as a result of the taxpayer leaving the United Kingdom in the latest year for which figures are available.
§ The Minister of State, Treasury (Mr. Denzil Davies)The amount of income tax known to be uncollected as a result of the taxpayer leaving the United Kingdom was £1.2 million in the year ended 31st October 1975.
§ Mr. RookerI thank my hon. Friend for that answer. Will he confirm that the latest report of the Board of the Inland Revenue claims a £14 million income tax loss because people are now untraceable or have gone abroad? How can we distinguish the real loss? Is it not about time that we introduced a system of tax clearance certificates before people are allowed to leave the country?
§ Mr. DaviesThe figure that my hon. Friend mentions includes persons who are untraceable. They may or may not 1520 have gone abroad. There is no way of knowing where they are. I have given the figure for taxpayers who are known to be leaving the country. There would be formidable problems in policing a tax clearance certificate system. There would be administrative delays at ports. My hon. Friend will know that one or two countries have tried tax clearance certificates and that they have not been very successful in practice.
§ 4. Mr. Michael Lathamasked the Chancellor of the Exchequer whether his proposed income tax cut remains conditional upon an agreement with the trade unions for stage 3 of the prices and incomes policy; and whether he will make a statement.
§ 18. Mr. Newtonasked the Chancellor of the Exchequer when he expects to decide the basic rate of income tax for 1977–78.
§ 19. Mr. MacGregorasked the Chancellor of the Exchequer when he now expects to announce a firm decision about the reduction in the basic rate of income tax from 35p to 33p in the £.
§ The Chancellor of the Exchequer (Mr. Denis Healey)I refer the hon. Members to my Budget Statement.
§ Mr. LathamDoes the Chancellor recall his answer to me on 24th March, when he said that a longer-term fall in the rate of inflation required a satisfactory stage 3? Since "Operation Scuttle" of stage 3 is now well under way, may we assume that the longer-term fall will not take place?
§ Mr. HealeyThe hon. Gentleman is making all kinds of assumptions which have no foundation whatever in reality. The continuing fall in the rate of inflation depends on a satisfactory arrangement for pay after the end of stage 2. That is the joint objective of the Labour Government and of the TUC, and it was endorsed again yesterday by Mr. Len Murray.
§ Mr. NewtonWould the Chancellor care to tell us whether there is any truth in Press suggestions, which appear to have emanated from the Treasury, that he is thinking of reducing the standard rate of tax to 32p?
§ Mr. HealeyI think of little else, but I am unlikely to do it in the immediate future.
§ Mr. NewtonTo 32p.
§ Mr. HealeyI have no intention of doing that in the immediate future.
§ Mr. MacGregorIs it not fairly clear that the reduction from 35p to 33p will happen willy-nilly? Would it not be better to admit that now and so put taxpayers out of their uncertainty?
§ Mr. HealeyThe hon. Gentleman is confused, or has allowed himself to be confused by his hon. Friend the Member for Braintree (Mr. Newton). The Government have undertaken to reduce the standard rate from 35p to 33p if they get a satisfactory wage agreement, but they have no intention of reducing it to 32p.
§ Mr. MaddenDoes my right hon. Friend agree that the most effective way to help those in most difficulty, particularly low-paid workers with families, is to increase personal allowances rather than reduce the basic rate of income tax?
§ Mr. HealeyMy hon. Friend will be glad to know that we increased personal allowances in the last Budget, and the effect is just being felt in the pay packet. The average family man will get an increase of nearly £1 a week, from this week, in take-home pay, with a rebate of £6.
§ Sir G. HoweDoes the Chancellor recollect telling the House in his Budget Statement that it would be imprudent to reduce the rate of income tax unless and until a satisfactory pay agreement had been reached? Does he also recollect telling the House that he intended to make those tax changes on the Report stage of the Finance Bill, after such an agreement had been reached? Will he now answer the specific question posed by my hon. Friend the Member for Braintree (Mr. Newton): is the introduction of provisions to reduce income tax from 35p to 33p still conditional on the achievement of a satisfactory agreement on pay? If so, when does he expect to arrive at that agreement and in what form? The right hon. Gentleman laughs nervously.
§ Mr. HealeyPerhaps I can answer the right hon. and learned Gentleman's 1522 innocent question. That was not nervousness, but the robustness with which I always find myself filled when I am interrogated by the right hon. and learned Gentleman.
It is still the Governmen's policy to make the reduction to 33p dependent on a satisfactory wage agreement. I have said that on many occasions.
I cannot say when the agreement will be reached, but I hope that it will be reached in time to move a suitable amendment on Report on the Finance Bill. The form of the agreement depends on the negotiations that are now under way.
§ Mr. AtkinsonDoes the Chancellor agree that opinion inside the TUC has changed considerably since the Budget Statement? Therefore, on that basis alone, is it not now necessary to reconsider the whole position? If it is my right hon. Friend's desire, as I am sure it is, to restore confidence in whatever bargaining takes place in the formulation of a wages arrangement, would it not be better to announce now that the tax concession will be made available and in that way eliminate the uncertainty that is bedevilling discussions among trade unions about what constitutes a satisfactory arrangement?
§ Mr. HealeyThe uncertainty is bound to exist until agreement is finally reached. Yesterday, the General Secretary of the TUC said that it was the objective and expectation both of the Government and of the TUC that an agreement would be reached. That is the only way to end the uncertainty.