HC Deb 27 July 1978 vol 954 cc1781-2
8. Mr. Newton

asked the Chancellor of the Exchequer if he will review the working of the tax system in its application to disabled people.

Mr. Denzil Davies

This aspect, like other aspects of the tax system, is always kept under review.

Mr. Newton

Will the right hon. Gentleman recognise that there is a growing body of opinion on both sides of the House that we should be moving away from the present hotch-potch of disablement benefits towards a tax-free disable- ment costs allowance? Would it not be sensible in this context to consider giving early priority to the removal of tax from the mobility allowance?

Mr. Davies

I do not agree that there is necessarily a growing body of opinion suggesting that we should move away from the taxation of benefits in that way. Indeed, it is often fairer to tax benefits within the tax system and then provide for relief through the social security system than to proceed in the way the hon. Gentleman suggests.

Mr. George Rodgers

Is it not true that a great number of disabled people, by the very nature of their handicap, are totally dependent on State benefit and accordingly do not pay income tax? Would it not be much better, therefore, to make reductions in indirect taxation, such as value added tax, which falls unfairly not only on the disabled but on families and the elderly?

Mr. Davies

My hon. Friend is right when he says that a vast number—perhaps the majority—of disabled people do not pay income tax at all and so would not benefit from some of the suggested changes in the tax system in relation to them. As regards VAT, it is fair to point out that it is not entirely a regressive tax because many of the necessities of life are exempt from VAT.