§ 11. Sir Anthony Meyerasked the Chancellor of the Exchequer what estimate he has made of the likly effect on imports of any reductions in personal taxation.
§ The Chief Secretary to the Treasury (Mr. Peter Rees)The effects will depend on assumptions about other 787 developments in the economy. But lower personal taxation should help to create a more vigorous and competitive economy, better able to supply the goods and services which consumers demand.
§ Sir Anthony MeyerIs it not a fact that cuts in personal taxation, which inevitably extend all the way up the range, are likely to give increased purchasing power to people who are likely to buy expensive foreign imports such as Japanese goods?
§ Mr. ReesMy hon.. Friend must take account of the fact that any tax cuts which my right hon. Friend the Chancellor may feel able to introduce are firmly within the medium-term financial strategy, and therefore will not be inflationary in their impact. My hon. Friend will take account of the fact—I know that he is interested in these matters—that exports to Europe have not suffered, but have increased since 1979 by about 79 per cent.
§ Mr. WigleySurely the hon. Member for Clwyd, North-West (Sir A. Meyer) is right in believing that, if there is an increase in disposable income at the higher income levels, there is a real danger of that income being spent on overseas holidays and that sort of thing, thereby losing potential jobs in the economy. At the same time, a cut in public expenditure to facilitate that taxation reduction loses jobs in the economy. Surely that does not solve the unemployment problem.
§ Mr. ReesThe hon. Gentleman overlooks the fact that, for example, total fixed investment last year was at its highest level. This year, investment in manufacturing is likely to increase by 12 per cent. and investment in service industries is likely to increase by 8 per cent. Further increases are likely next year. That is the best possible augury of employment increases.
§ Mr. DickensIs it not a fact that this nation is too highly taxed? Is it not also a fact that, if we leave more money in people's pockets, they purchase more products, which leads to more jobs?
§ Mr. ReesMy hon. Friend is right. According to the evidence, there is not a shortage of demand. The kind of tax cuts introduced have increased demand, with exactly the consequences outlined by my hon. Friend.
§ Mr. WareingBecause the tax reductions will aid mainly the richer section of the community, are not their effects likely to be an increase in unemployment, deprivation for more people in the community, and no change to imports?
§ Mr. ReesThe hon. Gentleman is inaccurate. Far more money has been devoted to raising thresholds than has ever been devoted to reducing higher rates.