HC Deb 07 July 1983 vol 45 cc393-4
4. Mr. Kenneth Carlisle

asked the Chancellor of the Exchequer if he has any plans to raise the level of tax thresholds.

Mr. Ridley

We have already increased thresholds by 14 per cent. this year—8.5 percentage points more than needed to index last year's levels. Further increases in allowances will have a high priority in future years.

Mr. Carlisle

I am very grateful to my right hon. Friend for that reply. Will he reaffirm more strongly that one of the most important tasks facing the Government and Parliament is so to control Government expenditure that there will be room to increase tax thresholds by substantially more than the rate of inflation in each of the Budgets? Is not that really important, not only because many people are paying tax who should not do so, but to increase incentives?

Mr. Ridley

I entirely agree with my hon. Friend. Under the previous Labour Government, the marriage allowance fell by 5 per cent. and the single allowance by 20.5 per cent. in real terms, whereas in the last four years the marriage allowance increased by 6.7 per cent. and the single allowance by 6.2 per cent. in real terms. Those figures are evidence of our real desire to increase allowances. I agree that the only way to achieve that is to be extremely frugal in Government expenditure.

Mr. James Hamilton

Does the Minister recognise that the Finance Bill which received its Second Reading last night proves conclusively that people on £17,000 and above are gaining more than the lower paid worker? Does he also recognise that family income supplement is taxed? On that basis, will he increase the thresholds for the lower paid workers to give them some incentive to remain at work?

Mr. Ridley

The threshold for the lower paid worker went up by 14 per cent. Had the threshold for the higher rate taxpayers gone up by only 5½ per cent.—the amount of the index—it might have been possible to reduce the standard rate of income tax from 30p to 29⅚p for this year.

Mr. Body

What advice ought I to give my farm worker constituents with two or three children who are certain that they would be better off on social security than working on the land?

Mr. Ridley

I agree with my hon. Friend that such families are easy to find, but I am sure he would equally agree that the only solution to this problem is to increase allowances. The only way of doing so is to get public spending down.

Mr. Shore

Is the Financial Secretary not aware of the astounding contrast between the 14 per cent. indexing of higher rate income tax thresholds and the 3.7 per cent. indexing uprating for retirement pensioners later this year? Does he not now consider that the proposals put forward in yesterday's Finance Bill, costing about £400 million, need to be reconsidered in the light of the announcement that will be made later today?

Mr. Ridley

Is the right hon. Gentleman equally aware that the 14 per cent. increase in thresholds applies to the taxation of pensioners and the age allowance? Is he further aware that the Opposition's complaint, which has some substance, that we have increased national insurance contributions is to the advantage of the pensioner who does not pay national insurance?