§ Sir Brandon Rhys Williams (Kensington)I beg to move,
That leave be given to bring in a Bill to end the taxation of personal income at higher than standard rate.On a number of occasions the House has allowed me to introduce a Bill under our old-established First Reading procedure, which afterwards has been put into effect by the Government. I hope that this may be another such occasion.At this time of year the attention of hon. Members is particularly directed to matters of taxation. It is the particular responsibility of the House of Commons to resist taxation which is arbitrary, unfair or adverse to the health of the economy.
I think that the House knows that I am concerned that we have so many millions of people at the lower end of the income scale who are inhibited from working and saving, for the good of themselves and the economy as a whole, by our obsolete and unpopular system of income support. I believe in Sir Winston Churchill's policy that we should ensure that every citizen has an adequate basic income, but that above that level every citizen—male and female—should be encouraged to rise as high as they can.
I believe that it is quite wrong to use the system of taxation and benefit in such a way as to inhibit effort and thrift at any level of society. I have accordingly written to my right hon. Friend the Chancellor to suggest that in his Budget he should end the long-term capital gains tax; that he should reform the transfer-and-inheritance tax so that no one incurs a capital levy at a higher rate than the standard rate of income tax; and, in particular, that he should take this opportunity to end the higher rate taxes on income altogether.
It is wrong in principle to use the tax system to punish success. The British economy is not so successful that we can afford to restrain our most active entrepreneurs, or to drive them offshore. The countries of the Pacific area are streaking ahead of us. We cannot allow that situation to continue; but we should ask ourselves why. It is not because the British people have become inert or incompetent, but we do have systems which are inhibiting the growth of the economy, and they need urgent attention.
Higher rate tax was introduced in 1909. The 80 years that have followed have been years of relative economic decline for this country. The yield of personal tax, if the higher rates were abolished, would soon increase to overcome the possible loss of 1 or 2 per cent. of total revenue which might occur in the first year. Everyone in Britain would stand to gain from the reform, from the highest to the lowest, if the economy were set free to grow faster.
I would not be seeking leave to bring in this Bill if there were anyone in Britain who would suffer from it —except, of course, the armies of professional people who advise on tax avoidance. They could well be turning their agile minds to something more constructive. The higher rate tax is a survival of class-war attitudes which have no place in modern Britain; the reform that I am suggesting is one from which everyone would gain and no one would lose.
860 We know what is needed to make a free enterprise capitalist economy really fruitful. All that we need is the will power to do it. I have written accordingly to my right hon. Friend the Chancellor of the Exchequer as follows:
The vigour of the people who are capable of earning the highest incomes and the discernment of the most far-seeing investors are the most precious assets of the economy. It is senseless to weaken their motivation and diminish their effectiveness by incorporating a discriminatory punitive mechanism in the tax system. Even if the sole object were to raise revenue, it would in a short time prove to be better attained by removing the limitations on the most active entrepreneurs, rather than by forcing them to adopt time-consuming tax avoidance routines or to take their energies and fortunes abroad. Britain should be a tax haven for its own citizens and a magnet for the best brains of other countries.I believe that the extreme simplification of the taxation and benefit system, for ease of comprehension and administration in the private as well as in the public sector, should be a major Treasury objective in its own right. Computers now make that possible, but I would prefer that everyone should be able to calculate their tax bill in their heads.At present the national insurance contribution raises the marginal rate of tax for the majority of earners to 36 per cent. I would like therefore to suggest that the new standard rate of tax should include the national insurance contribution and should be set at not more than 35 per cent. I believe that that would be in line with other countries that are also contemplating considerable reductions in the higher rates of taxation for their citizens. There should be suitable exemptions to compensate those people whose investment income is not large enough to make them liable for higher rates of tax.
I hope that the House will see the logic of what I am suggesting and that my Bill will not be opposed. If there is a Division, I trust that there are enough true Thatcherites here to enable me to carry my Bill.
§ Mr. John Battle (Leeds, West)I do not really want to make a speech on this matter, but I wish to divide the House.
I find it strange that the hon. Member for Kensington (Sir B. Rhys Williams) is seeking to introduce this Bill yin the light of his previous comments on child benefit when there was some consensus.
I believe that the proposed Bill would clearly signal the time when the tax system increasingly favoured the rich. For those who have a good job the effect of the Bill wound be that they would be rewarded even more, but those with low-paid, part-time jobs would have to work even harder for even less. In other words, the tax system is clearly stacked in favour of the rich. The wealthier will get wealthier—as they do now—and the Bill will perpetuate that situation. Therefore, with the leave of the House, I seek to divide the House on this issue.
§ Question put, pursuant to Standing Order No. 19 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business)
§ The House divided: Ayes 58, Noes 180.
862| Division No. 160] | [4 pm |
| AYES | |
| Alexander, Richard | Bevan, David Gilroy |
| Arbuthnot, James | Biggs-Davison, Sir John |
| Ashby, David | Blackburn, Dr John G. |
| Aspinwall, Jack | Bonsor, Sir Nicholas |
| Bennett, Nicholas (Pembroke) | Boswell, Tim |
| Boyson, Rt Hon Dr Sir Rhodes | Montgomery, Sir Fergus |
| Burns, Simon | Moss, Malcolm |
| Carrington, Matthew | Paice, James |
| Coombs, Anthony (Wyre F'rest) | Powell, William (Corby) |
| Coombs, Simon (Swindon) | Rathbone, Tim |
| Davies, Q. (Stamf'd & Spald'g) | Redwood, John |
| Dickens, Geoffrey | Riddick, Graham |
| Dicks, Terry | Rost, Peter |
| Dover, Den | Shaw, David (Dover) |
| Evans, David (Welwyn Hatf'd) | Skeet, Sir Trevor |
| Fookes, Miss Janet | Smith, Tim (Beaconsfield) |
| Gill, Christopher | Speed, Keith |
| Gorman, Mrs Teresa | Stanbrook, Ivor |
| Griffiths, Peter (Portsmouth N) | Stewart, Allan (Eastwood) |
| Hunter, Andrew | Taylor, Ian (Esher) |
| Janman, Timothy | Walker, Bill (T'side North) |
| Jones, Gwilym (Cardiff N) | Warren, Kenneth |
| Jones, Robert B (Herts W) | Wheeler, John |
| Kellett-Bowman, Dame Elaine | Widdecombe, Miss Ann |
| Kilfedder, James | Wiggin, Jerry |
| Knight, Dame Jill (Edgbaston) | Wilkinson, John |
| Lawrence, Ivan | Woodcock, Mike |
| Mans, Keith | |
| Marlow, Tony | Tellers for the Ayes: |
| Marshall, John (Hendon S) | Sir Brandon Rhys Williams |
| Mitchell, Andrew (Gedling) | and Mr. Edward Leigh. |
| NOES | |
| Abbott, Ms Diane | Cook, Frank (Stockton N) |
| Adams, Allen (Paisley N) | Corbett, Robin |
| Allen, Graham | Corbyn, Jeremy |
| Alton, David | Cox, Tom |
| Archer, Rt Hon Peter | Crowther, Stan |
| Armstrong, Ms Hilary | Cryer, Bob |
| Ashdown, Paddy | Cummings, J. |
| Ashton, Joe | Cunliffe, Lawrence |
| Banks, Tony (Newham NW) | Dalyell, Tam |
| Barron, Kevin | Davies, Ron (Caerphilly) |
| Battle, John | Day, Stephen |
| Beith, A. J. | Dewar, Donald |
| Benn, Rt Hon Tony | Dixon, Don |
| Bennett, A. F. (D'nt'n & R'dish) | Doran, Frank |
| Bermingham, Gerald | Duffy, A. E. P. |
| Blunkett, David | Dunnachie, James |
| Boyes, Roland | Dunwoody, Hon Mrs Gwyneth |
| Bradley, Keith | Eadie, Alexander |
| Brazier, Julian | Eastham, Ken |
| Brown, Nicholas (Newcastle E) | Ewing, Mrs Margaret (Moray) |
| Bruce, Malcolm (Gordon) | Fatchett, Derek |
| Buckley, George | Fearn, Ronald |
| Caborn, Richard | Fields, Terry (L'pool B G'n) |
| Callaghan, Jim | Fisher, Mark |
| Campbell, Menzies (Fife NE) | Flannery, Martin |
| Campbell, Ron (Blyth Valley) | Forth, Eric |
| Campbell-Savours, D. N. | Foulkes, George |
| Canavan, Dennis | French, Douglas |
| Carlile, Alex (Mont'g) | Fyfe, Mrs Maria |
| Clark, Dr David (S Shields) | Galbraith, Samuel |
| Clarke, Tom (Monklands W) | Galloway, George |
| Clay, Bob | Garrett, John (Norwich South) |
| Clwyd, Mrs Ann | Garrett, Ted (Wallsend) |
| Coleman, Donald | Godman, Dr Norman A. |
| Golding, Mrs Llin | Mowlam, Marjorie |
| Gordon, Ms Mildred | Mullin, Chris |
| Gould, Bryan | Murphy, Paul |
| Graham, Thomas | Nellist, Dave |
| Grant, Bernie (Tottenham) | Nicholson, David (Taunton) |
| Griffiths, Win (Bridgend) | O'Brien, William |
| Grocott, Bruce | O'Neill, Martin |
| Hargreaves, A. (B'ham H'll Gr') | Parry, Robert |
| Harman, Ms Harriet | Patchett, Terry |
| Hattersley, Rt Hon Roy | Pendry, Tom |
| Haynes, Frank | Pike, Peter |
| Heffer, Eric S. | Powell, Ray (Ogmore) |
| Henderson, Douglas | Primarolo, Ms Dawn |
| Hinchliffe, David | Quin, Ms Joyce |
| Hood, James | Redmond, Martin |
| Howarth, George (Knowsley N) | Rees, Rt Hon Merlyn |
| Howells, Geraint | Richardson, Ms Jo |
| Hughes, John (Coventry NE) | Roberts, Allan (Bootle) |
| Hughes, Robert (Aberdeen N) | Rogers, Allan |
| Hughes, Roy (Newport E) | Ross, Ernie (Dundee W) |
| Hughes, Sean (Knowsley S) | Ruddock, Ms Joan |
| Hughes, Simon (Southwark) | Salmond, Alex |
| Illsley, Eric | Sedgemore, Brian |
| Ingram, Adam | Sheerman, Barry |
| Jack, Michael | Sheldon, Rt Hon Robert |
| Janner, Greville | Short, Clare |
| Jones, Martyn (Clwyd S W) | Skinner, Dennis |
| Kaufman, Rt Hon Gerald | Smith, Andrew (Oxford E) |
| Kirkwood, Archy | Smith, Cyril (Rochdale) |
| Lambie, David | Smith, Rt Hon J. (Monk'ds E) |
| Lamond, James | Soley, Clive |
| Leadbitter, Ted | Spearing, Nigel |
| Lewis, Terry | Steel, Rt Hon David |
| Litherland, Robert | Steinberg, Gerald |
| Livsey, Richard | Stott, Roger |
| Lloyd, Tony (Stratford) | Strang, Gavin |
| Lofthouse, Geoffrey | Straw, Jack |
| McAllion, John | Taylor, Mrs Ann (Dewsbury) |
| McAvoy, Tom | Taylor, Matthew (Truro) |
| McFall, John | Tredinnick, David |
| McGrady, E. K. | Turner, Dennis |
| McKay, Allen (Penistone) | Vaz, Keith |
| McKelvey, William | Wall, Pat |
| McTaggart, Bob | Wallace, James |
| Madden, Max | Walley, Ms Joan |
| Mahon, Mrs Alice | Wardell, Gareth (Gower) |
| Marek, Dr John | Welsh, Michael (Doncaster N) |
| Marshall, Jim (Leicester S) | Williams, Alan W. (Carm'then) |
| Martlew, Eric | Wilson, Brian |
| Meacher, Michael | Winnick, David |
| Meale, Alan | Wise, Mrs Audrey |
| Michael, Alun | Worthington, Anthony |
| Michie, Bill (Sheffield Heeley) | Wray, James |
| Michie, Mrs Ray (Arg'l & Bute) | Young, David (Bolton SE) |
| Millan, Rt Hon Bruce | |
| Moonie, Dr Lewis | Tellers for the Noes: |
| Morgan, Rhodri | Mr. Harry Barnes and |
| Morley, Elliott | Mr. Harry Ewing. |
§ Question accordingly negatived.