§ 11. Mr. Newtonasked Mr. Chancellor of the Exchequer what is his estimate of the additional amount of income tax which will be paid in 1978–79 as a result of the increases in national insurance pensions and benefits announced on 12th April 1978.
§ Mr. Denzil DaviesAbout £40 million.
§ Mr. NewtonCan the right hon. Gentleman confirm that well over 1 million people will be liable to tax this year who were not liable last year? Can he tell me how many, in respect of that figure, will be retirement pensioners and widows?
§ Mr. DaviesI cannot give the hon. Gentleman the exact figure for the percentage among retirement pensioners and widows, but he will appreciate that the proposals in the Budget to increase personal allowances and introduce a reduced rate band are in the main more beneficial to retirement pensioners and widows than reducing the standard basic rate of income tax. Since he is concerned about this matter, I take it that he will not be supporting the views put forward in his party for a reduction in the basic rate as opposed to a reduced rate band and increased allowances.
§ Mr. CostainIn view of the right hon. Gentleman's last answer, is he not ashamed of the fact that we are one of the few countries which charge income tax on war widows' pensions?
§ Mr. DaviesThis is a complicated matter. Of course, 50 per cent. of the 1629 pension is not now so charged. I think that the basic principle is a right one—that income should be charged to income tax from whatever source it comes. The way to deal with these problems is to increase thresholds and try to reduce the rate of tax that we charge rather than to exempt some incomes and not others.
§ 15. Mr. Rifkindasked the Chancellor of the Exchequer which countries now have a higher top rate of tax than 83 per cent. other than those countries which incorporate local rates or taxes into their general tax structure.
§ Mr. Robert SheldonThe countries known to have top rates of over 83 per cent. on employment income, if we leave local income taxes out of account, are Algeria, Egypt, Portugal and Tanzania.
§ Mr. RifkindDoes the Minister feel that that answer indicates the depths to which the Government have brought the economy of this country? Was the Chancellor of the Duchy of Lancaster correct in saying at the weekend that the Chancellor of the Exchequer agreed with him that a reduction in top rates of tax was overdue and would be implemented soon?
§ Mr. SheldonIf one takes local income tax into account there are a number of developed countries that come into the category as well. As for the highest rates of income tax, the Chancellor of the Exchequer has said from time to time that he looks forward to easing this burden when circumstances allow.