HC Deb 13 May 1982 vol 23 cc938-9
12. Mr. William Hamilton

asked the Chancellor of the Exchequer what proportion of the income of a typical family on average earnings was paid in taxes of all kinds in 1978–79 and in the current fiscal year, respectively.

Mr. Ridley

On the assumptions made in reply to the hon. Member for Blackburn (Mr. Straw) on 19 March, the figures for a married couple with two children are 41.5 and 45.2 per cent. respectively. As pointed out in the notes to the tables previously given, those totals should not be taken to represent a total liability to tax consequent upon a given earnings level, since the payments of indirect taxes and rates are only estimates based on typical expenditure patterns at that level.

Mr. Hamilton

Despite that answer, is it not the case that all independent inquiries on this matter have shown that almost every family on average or below average earnings is paying a substantially higher proportion of its income in tax now than at the last general election? That is a gross betrayal of the election pledge that tax would be reduced for all people at all income levels. Does not today's statement about top salaries demonstrate that the Government are determined to cosset the rich and clobber the poor?

Mr. Ridley

The hon. Gentleman knows full well that what he just said about less well-off families and those receiving benefits is not true. It is certainly not true of pensioners, who do not pay national insurance contributions. The House will have heard my right hon. and learned Friend say that public expenditure has risen in real terms. The consequence of a rise in public expenditure in real terms is a rise in taxation in real terms.

Mr. Marlow

Since the amount of taxation paid by the average family would be substantially reduced if we reduced significantly our contribution to the European budget, and since the war that we are fighting in the South Atlantic is being fought on behalf of all Europeans, will my hon. Friend, as part of the package that we are negotiating with our European partners, insist that we get a contribution towards our task force from Europe? After all, surely everyone would agree that one British sailor under present circumstances is worth 10 French peasants?

Mr. Ridley

My hon. Friend must not make the negotiations even more difficult than they already are.

Mr. Straw

The Minister should not mislead the House. Is not the truth that while the burden of taxation for those on average earnings has increased, it has increased even more for those at the poorest levels? In real terms, at today's prices, the income tax bill of a family on half average earnings has increased by £6 a week from £9 to £15. Will the Minister confirm what his deputy secretary, Mr. Peter Middleton, told the Treasury and Civil Service Committee yesterday, which is that the poverty trap is getting worse every year and that, according to the Treasury, action on the poverty trap is a low priority?

Mr. Ridley

The hon. Gentleman is not right on his first point. The figures for those on 75 per cent. of average earnings are 39.15 and 43.4 per cent. As to his latter point, it is not normal to quote civil servants in the House, but may I make it clear that the reason for the worsening of the poverty trap has been the Government's determination to maintain the real value of the retirement pension and many other benefits.