HC Deb 17 April 1986 vol 95 cc999-1000
7. Mr. Greenway

asked the Chancellor of the Exchequer what increase would be needed in the standard rate of income tax in order to raise an additional £24 billion of revenue by this means alone; and if he will make a statement.

Mr. MacGregor

About 20p, bringing the basic rate to 49p in the pound.

Mr. Greenway

Does my right hon. Friend agree that electors opting for the 41 per cent. VAT rate and the 49p in the pound standard rate of tax, currently on offer by the Labour party, and rising like a cash register all the time, must be practising masochists? The Liberal and Social Democratic parties are not much better. Would it not be much better for the electors to stay with the tax-cutting policies and sound economic growth policies of the Conservative party?

Mr. MacGregor

I entirely agree with my hon. Friend's last comment, but to be fair to the Opposition I must make it clear that under their policies the electorate has a choice—either 49p in the pound on income tax, or 41 per cent. VAT. To be fair, it is not both, but either.

Mr. James Lamond

Do not the figures that the right hon. Gentleman has just given show that to finance the £18 billion a year defence budget is costing on income tax alone about 14p in the pound? If that is so, why was it necessary for the Prime Minister to emphasise time and time again that we need hundreds of thousands of American troops in Europe to protect our freedom? How much extra would it cost in income tax if we were able to protect our freedom without American troops?

Mr. MacGregor

The hon. Gentleman is not making a fair point with regard to income tax, because Labour party spokesmen have made it clear that they would not reduce the overall proportionate cost of defence on GDP. Therefore, there is no implication of a reduction in tax from any change in defence policy by the Labour party.

Sir William Clarke

Does my right hon. Friend agree that if £24 billion was added to public expenditure, a married man would be able to retain only 44p from every £1 that he earned over £70 a week for himself and his family?

Mr. MacGregor

I agree with my hon. Friend. The proposals which are still being put forward, and which have not been denied, would have a devastating effect on the overall tax burden and, therefore, on jobs in the economy.

Mr. Hardy

If unemployment were reduced by half, would not the savings to the Treasury and the contributions of those employed, certainly if they were on anything like half average earnings, equal the amount of money that the hon. Member for Ealing, North (Mr. Greenway) mentioned in his rather extravagant, if obedient, question?

Mr. MacGregor

It is certainly not extravagant, because the figures that I have put forward have still have not been denied. The hon. Gentleman will know that his right hon. Friends on the Opposition Front Bench, even with their high levels of expenditure, are not predicting anything like a drop to half in the level of unemployment. They are expecting a comparatively small drop over two years, but are completely ignoring the devastating effect on existing jobs of those high expenditure programmes.