§ 2. Mr. Michael Forsythasked the Chancellor of the Exchequer what assessment he has made of the impact of reductions in the tax rates on the buoyancy of tax revenues since 1979.
§ The Financial Secretary to the Treasury (Mr. Norman Lamont)A precise estimate cannot be made but certainly the reduction in taxes increases motivation and encourages enterprise. Tax cuts will lead to a healthier, more competitive economy, higher incomes and more resources to improve public services.
§ Mr. ForsythWill my right hon. Friend confirm that the proportion of tax revenue that comes from the highest paid has increased as a result of the reduction in high marginal rates of tax? Is this not entirely in line with the American experience, which shows that a cut in taxes increases revenue?
§ Mr. LamontMy hon. Friend is right. The proportion of income tax revenue paid by the top 10 per cent. has risen from 34 per cent. in 1978–79 to 37½ per cent. in 1986–87.
§ Mr. Carter-JonesIn looking at the figures, has the Minister considered the public's attitude to increased public expenditure on health and education in preference to tax cuts? Has he any observations to make on that?
§ Mr. LamontThe hon. Gentleman knows that it is the Government's objective to have a good Health Service and a good education service. We also believe that tax cuts are long overdue and are necessary to improve our economic performance.