§ 5. Mr. Tony Lloydasked the Chancellor of the Exchequer if he will estimate at what income level a family of average size would begin to pay less tax, both direct and indirect, than they would have done in 1979.
§ The Economic Secretary to the Treasury (Mr. Ian Stewart)Families with earnings above about half the average will now be paying a smaller proportion of their earnings in income tax than in 1978–79. The amount paid in indirect taxes depends, of course, on individual spending patterns.
§ Mr. LloydI am grateful to the Minister for not answering my question. Perhaps I can try to help him. Does he agree, not with me, but with the present Foreign Secretary, who said in 1979 that the basic rate of tax plus of course national insurance contributions had the deterrent effect of a tax on earnings? — [HON. MEMBERS: "Reading."] I would not want to misrepresent the Foreign Secretary. Does the Minister agree that even a family on double the average earnings, at 1983–84 prices, is paying about £110 in national insurance contributions and income tax this year although they were paying less than £90 in 1978–79? There has been a £10 increase even in indirect taxation and only the very rich have gained.
§ Mr. StewartAllowing for inflation since 1978–79, the married man on average earnings is now paying £4 a week less than under Labour in its last year in office. My right hon. and learned Friend the Foreign Secretary was absolutely right in 1979 to point to the excessive burden of income tax and the high basic rate.
§ Mr. Kenneth CarlisleHas not the autumn statement given some leeway for tax cuts in the spring? Will the Government consider carefully the merits of raising tax thresholds yet again, as they have for the last two years? If tax thresholds are raised, that will give a greater incentive to people to work. Does my hon. Friend agree that taxes start at far too low a level?
§ Mr. StewartMy hon. Friend's remarks will have been heard by the Chancellor of the Exchequer. The tax threshold has been far too low. I am glad to say that in real terms under this Government in the last five years the threshold has been increased by 16 per cent. in real terms. That is an important achievement.
§ Mr. BlairWill the Minister please confirm in plain terms that, after deducting income tax and national 783 insurance contributions, since this Government took office people have had to earn over £18,000 a year to have less to pay and more to spend.
§ Mr. StewartThe Opposition continually confuse percentages of tax paid. I thought that the Opposition believed that as earnings rose the percentage of tax paid should rise. Disposable income per head has risen by 6 per cent. under this Government. That takes into account all the tax, deductions and the cost of indirect taxes borne in prices.
§ Mr. SpeakerOrder. I sense that the mood of the House is that we should have shorter questions and answers.