HC Deb 30 July 1981 vol 9 cc1154-5
10. Mr. Andrew F. Bennett

asked the Chancellor of the Exchequer whether a woman aged between 60 and 64 years who, as a result of receiving a State pension and a graduated pension of 33 pence per week or over, becomes liable for tax at a rate over 33 pence per week need not draw the graduated pension and will not then be taxed.

Mr. Peter Rees

Any part of a pension that a pensioner has voluntarily relinquished does not form part of her total income for tax purposes. Because of the Inland Revenue's assessing tolerance, no assessment will be made for 1981–82 where, following any relinquishment, the total income for tax purposes of a woman aged between 60 and 64 whose only income is a State pension including any graduated pension does not exceed £1,475.

Mr. Bennett

Is the Minister aware of the increasing hardship caused to the low paid as a result of not increasing the tax threshold, and of the total chaos that he has caused to people between the ages of 60 and 65 on pensions? Will he rethink his policy inmediately and at least raise the tax threshold for such groups, with pensioners by perhaps extending the age allowance to those between the ages of 60 and 65?

Mr. Rees

I am sure that in general terms the hon. Gentleman, in making those points, will support the Government in their move to open the way to future tax reductions in subsequent Budgets. As to the question of an age allowance for women between the ages of 60 and 64, the suggestion has been considered and rejected by successive Governments of both parties. Age allowance is given in recognition of the reduced taxable capacity that comes in old age. It is not in any true sense an allowance for retirement.

Sir Brandon Rhys Williams

If we are to have one nation in benefit, should not everybody be encouraged to draw the benefit to which they are entitled by right of citizenship? And, if we are to have one nation in taxation, should we not encourage everybody to make his contribution even if it is only two mites?

Mr. Rees

I am certainly not encouraging pensioners in that situation to relinquish their pension. I am merely directing my remarks to the question put to me by the hon. Member for Stockport, North (Mr. Bennett). Of course, it is not just a question of pensions, but of a pensioner who has any alternative source of income, as I am sure my hon. Friend recognises.

Mr. Cook

Will the Minister clarify how he reconciles the taxation of this group of pensioners with the election pledge of his Prime Minister that her income tax proposals would result in those pensioners who had another little pension of their own paying less in tax? Is 33p a week too much pension to come within the scope of that pledge? Does not the Minister appreciate the insanity of an arrangement by which we bring into the tax net 50,000 pensioners who are each so poor that they will all be entitled to go to the DHSS and claim supplementary pension to pay the tax bill that he is about to send them?

Mr. Rees

Of course, we regret that we were unable to valorise the threshold this year. The House will recall the considerable increase in the threshold in the first year of this Administration's life. The increases did not receive the full-hearted support of the party of which the hon. Gentleman is a member.