Taxation (Hansard, 10 May 1984)

§ 11. Mr. Pike
asked the Chancellor of the Exchequer what percentage of earnings is now paid by the average wage earner (a) in direct taxation and (b) in indirect taxation; and how this compares with 1978–79.

§ Mr. Hayhoe
For a married man on average earnings with two children the percentage of earnings taken in income tax and national insurance contributions less child benefit is expected to be 21.7 per cent. in 1984–85, compared to 21.2 per cent. in 1978–79. Assuming that he has the consumption pattern of a typical family man at average earnings, he will pay 12.2 per cent. of his gross earnings in indirect taxes, excluding local authority rates, this year compared to 10.8 per cent. in 1978–79.

§ Mr. Pike
Will the Minister accept that the majority of those on average or lower than average wages, and certainly those who are not earning, are now paying more in taxes as a result of the Government's change in policies on direct taxation since they were elected? Will he accept that it is time for a change of direction to benefit the lower-paid and average—paid rather than retaining the present Government policy, which benefits those earning well above the average?

§ Mr. Hayhoe
By concentrating the income tax changes on raising the basic allowance, my right hon. Friend has helped the lower paid. Moreover, it must be remembered that the real rise in earnings that has been taking place means that all those whose earnings have risen in line with the national average have real take—home pay now that is 8 per cent. higher than in 1978–79.

§ Mr. Hayes
Does my hon. Friend agree that it will not assist the wage earner and the entrepreneur if the Chancellor decides to take into tax private pension schemes, which will discriminate against those who want to protect their families and, furthermore, not allow them to be a burden on the state? Moreover, will my hon. Friend deny the rumours that he intends to do that?

§ Mr. Hayhoe
My right hon. and learned Friend the Chief Secretary gave a categorical assurance on the matter earlier this afternoon.

§ Mr. Rooker
Will the Minister say when he expects the tax burden, either indirectly or directly, measured in either real terms or as a proportion, to get back to what it was in 1978–79?

§ Mr. Hayhoe
No. I cannot give the hon. Gentleman that estimate, but I can give him the clear prophecy that if ever a labour Government are returned there will be higher taxes, higher borrowing and higher interest rates.