Taxation Policy

HC Deb 30 April 1981 vol 3 cc900-1

15. Mr. Haselhurst

asked the Chancellor of the Exchequer if it remains his policy not to earmark individual taxes for specific purposes.

Sir Geoffrey Howe

Yes, Sir.

Mr. Haselhurst

Does my right hon. and learned Friend's reply preclude the possibility of a proportion of the revenue from income tax being remitted to local authorities as a substitute for the domestic rating system? My right hon. and learned Friend will be aware of the growing anxiety about the inequities of that system.

Sir Geoffrey Howe

I understand the anxiety. To remit to local authorities a proportion of existing income tax levied nationally, would not achieve the objective of giving local authorities any discretion in relation to that part of their revenue. One effect of the existing rate support grant system is that it achieves the object that my hon. Friend has in mind.

Mr. Cryer

Is there not a good case for allowing people to refuse to make a contribution to weapons of mass destruction when they have a conscientious objection to doing so? Was not that the purport of the decision of the Inland Revenue commissioners to allow a person who wished to do so to opt out of that sort of horrendous expenditure?

Sir Geoffrey Howe

As the hon. Gentleman knows, the case to which he refers did not represent a policy decision by the Inland Revenue. It was a mistake, which was corrected at the time. It would be unworkable if individual taxpayers were allowed to opt out of contributing to that portion of the tax burden that represented their particular dislike of expenditure.

Mr. Eggar

Is there not a case for putting the real increase in North Sea oil revenues into a specific North Sea investment fund?

Sir Geoffrey Howe

I am familiar with the suggestion made by my hon. Friend. The fact is that existing North Sea oil revenues, including increases, contribute to keeping down the present level of public sector borrowing. Although it is important for people to understand the contribution that is being made by North Sea revenue to the economy, successive Governments have rejected the suggestion for a specific North Sea oil fund.

Mr. Woolmer

Will the Chancellor look again at the matter? Is it not strange that the United Kingdom, one of the few countries in the world with oil reserves and resources, appears, in the view of most people, to be throwing away the opportunity that that oil offers? Is there not a case for trying to establish much more clearly the relationship between the benefits that North Sea oil provide and the need to regenerate industry to make sure that the economy is stronger, even when the oil starts to run out?

Sir Geoffrey Howe

There is a strong case for making sure that people understand the link between the benefits of North Sea oil revenue and such improvements as that can bring to the economy. The previous Government, like the present Administration, in their White Paper rejected the idea of a fund of that kind. One reason, no doubt, is that it might raise a presumption that all revenue coming from the North Sea should be directed exclusively to public sector investment. That would not be right.