HC Deb 24 February 1983 vol 37 cc1042-3
7. Mr. Race

asked the Chancellor of the Exchequer if he will introduce a rate band of income tax below the present standard rate.

The Financial Secretary to the Treasury (Mr. Nicholas Ridley)

I cannot anticipate my right hon. and learned Friend's Budget statement.

Mr. Race

Does the Minister recall the reply given to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), which stated that a married couple with two children on two thirds average earnings has suffered a combined tax and national insurance increase of 25 per cent. since the Government took office, while an identical family on 10 times average earnings had benefited from a reduction in tax and national insurance of 21 per cent? Why is the Minister not prepared to tell us now that the Government will do something to redeem their election promises to cut taxation, especially for the low-paid?

Mr. Ridley

The hon. Gentleman asked about a reduced rate band. The publication "Labour's Programme 1982" states: Our first priority, however, is a significant real increase in tax thresholds. That is the combined wisdom of both sides of the House about how to use any money that my right hon. and learned Friend may have to reduce taxes.

Mr. Timothy Smith

Would not the introduction of a lower rate band lead to considerably higher administrative costs for the revenue, taxpayers and employers? Is not the greater priority the increasing of tax thresholds generally?

Mr. Ridley

The Inland Revenue would require about 1,500 extra staff. However, I prefer to stress my hon. Friend's second argument, which is that one can do more good to more people by raising thresholds than by reintroducing a lower rate band.

Mr. Cook

Does the Minister acknowledge that the reason why the first priority must now be to raise the thresholds is that his Government reduced them in 1981? Does he remember that when his Government abolished the reduced rate band they thereby increased the margin of taxation for 2 million low-paid workers? As the Prime Minister at Question Time on Tuesday admitted candidly that only the most wealthy are paying less tax under this Government, does the Minister accept that common decency requires him to reintroduce the low rate band and that he should do for the low-paid what the Government have already done for the higher paid?

Mr. Ridley

It has been conceded many times from this Dispatch Box that taxation has increased under this Government. However, the counterpart to that is that taxation upon companies and industries has been greatly reduced. Hon. Members on both sides of the House have urged the Government to do more to help industry. It has been done.