§ 7. Mr. Greenwayasked the Chancellor of the Exchequer by what percentage the basic rate of income tax could be reduced if the top rate were raised to its 1979 level.
§ Sir Geoffrey HoweThe re-imposition of an 83 per cent. top rate of income tax would finance a reduction of less than one quarter of 1p in the basic rate.
§ Mr. GreenwayWill my right hon. and learned Friend reaffirm the Government's commitment to reductions in direct taxation? Does he agree that those statistics nail the cruel deception that we have so often from Opposition Members that almost everything that people want in any part of the spectrum can be financed by raising taxation to the level it was when the Government came to office?
§ Sir Geoffrey HoweI agree entirely with my hon. Friend, and I welcomed what he said at the conclusion of his question.
Any attempt to whoop up envious onslaughts on the higher paid could generate—[Laughter.] That is characteristic of the Opposition. I am glad that they applaud it in that way. Any attempt of that kind could generate negligible revenue for the reduction of taxes on the rest of the community. If, for example, the yield of the higher rates of tax which prevailed under the last Government were directed not to reducing the basic rate but to changing the tax allowance, it would be worth no more than about 14p a week to the basic rate taxpayer. It was entirely right for the Government to do what the last Government in some respects wanted to do but never had the courage to do, which was to sweep away crazy high-level direct taxes which were almost unique in the world.
§ Mr. StrawIf there is any deception, is it not of the electorate, which was promised lower income tax and national insurance deductions? That was the word used by the Prime Minister in her speech in Birmingham on 19 April 1979. She said that deductions from people's wage 1078 packets would be cut at all levels. Instead, deductions have been increased at all levels, except for the very rich. The Government are practising the politics of greed.
Is not the further truth that the cumulative total of tax concessions to the very rich now runs at more than £3,000 million, taking account of those on income tax and capital taxes, and that the Government, instead of losing those revenues, could have used them to increase benefits to the unemployed or the living standards of the poor in work?
§ Sir Geoffrey HoweAlmost every proposition contained in what was put as a question lacks a foundation in fact.
§ Sir Geoffrey HoweThe reality is that this Government, unlike the Opposition, are committed to the reduction of the burden of direct taxation. However, that has not been possible to the extent that we would like during a time when personal living standards rose very sharply as a result of the pay explosion that we inherited from the last Government, and during a time when we have been sustaining sensible spending programmes, as I am sure the Opposition would wish us to do. I hope, as a result of the repeated demonstration of the Opposition's enthusiasm for reductions and for lower taxation, to have their profound commitment to containing the growth of public expenditure.