HC Deb 30 April 1981 vol 3 cc893-4
4. Mr. Dubs

asked the Chancellor of the Exchequer what is his assessment of the effect of the various tax changes he has introduced since May 1979 in providing incentives to the individual taxpayer.

The Minister of State, Treasury (Mr. Peter Rees)

While I have no doubt that the cuts in income tax introduced after May 1979 have had a positive effect on work incentives, it is impossible to assess the precise impact.

Mr. Dubs

Has the Minister seen the article in The Times today, which shows that since the Labour Government left office the personal tax burden has increased for every group of taxppayers except those earning five times average earnings? Is not that a sign that the promises made by the Government in their first Budget have not been met? Or does the Minister believe that incentives allegedly created by tax reductions should apply only to the very rich?

Mr. Rees

We certainly do not believe that tax cuts should apply only to the very rich. Indeed, the hon. Gentleman will recall that one of my right hon. and learned Friend's first measures was to cut the basic rate of income tax. I think that the hon. Gentleman has slightly misunderstood the thrust of today's article in The Times. Only by taking account of indirect taxes and putting a somewhat misleading construction on them could he possibly reach the conclusion that he has.

Mr. Major

While on the subject of incentives, will my hon. and learned Friend calculate what the standard rate of income tax might be if the Government were to implement the spending plans pressed upon them by the Opposition? Is it not likely that the standard rate would rise by about 15p in the pound? What would that do for incentives?

Mr. Rees

As my hon. Friend knows, it is difficult to cost Labour Members' plans as they alter from debate to debate, but I think that the figure that he puts on those plans is a fair estimate of their likely cost in terms of direct taxation.

Mr. Harry Ewing

Does the Minister accept that district nurses are individual taxpayers? If he does, will he agree to abandon his rather stupid and penny-pinching decision to begin taxing the car mileage allowance of district nurses throughout the United Kingdom? What kind of incentive is that to those individual taxpayers?

Mr. Rees

If the hon. Gentleman had studied the matter a little more closely he would know that no ministerial decision was involved with that taxation. If he had been following the problem closely, he would know that some of his hon. Friends had brought a delegation of district nurses to see me and that we had promised to look into the matter to see how far, consistent with the existing tax laws, which were enforced under the Labour Administration, it would be possible to meet their case.

Mr. Nicholas Winterton

I welcome as strongly as my hon. and learned Friend the reduction in the higher rates of taxation and in the basic rate of taxation. Does he agree that overall taxation has increased under the Government, bearing in mind that the national insurance contribution, which is a form of direct taxation, has been dramatically increased? When will the Government really cut taxation to provide the incentives promised in our manifesto?

Mr. Rees

I take issue with my hon. Friend in regarding the national insurance contribution as a form of direct taxation. It is a contribution to an insurance fund. As regards the general thrust of my hon. Friend's observations, I am sure that he will support my right hon. and learned Friend in his endeavours to moderate public expenditure and to control inflation, which will open the way to meaningful tax cuts over the lifetime of this Parliament.