HC Deb 14 July 1988 vol 137 cc543-4
5. Mr. Clelland

To ask the Chancellor of the Exchequer if he will estimate the impact of top rate tax cuts on imports.

The Paymaster General (Mr. Peter Brooke)

The elimination of the top rates of tax over 40 per cent. will improve economic performance and thus lead to higher living standards all round.

Mr. Clelland

Will the Minister confirm that Britain's balance of trade in cars with West Germany has deteriorated more sharply than any other part of the balance of trade since 1979? Will he also confirm that his £2 billion tax give-away to those on the highest tax rates will find its way into the purchase of BMWs, Audis and Porsches, which will further deteriorate the balance of trade in cars?

Mr. Brooke

The hon. Gentleman has asked me a rather long question, especially if the terms of it are taken back to 1979. He referred to the current balance of payments deficit. He should realise that the increase in investment goods imported is considerably larger than the increase in consumer goods imported.

Mr. Latham

Less than two years ago imports were lower, the economy was stagnant and in recession and tax rates were much higher. Were the Opposition whingeing then as well?

Mr. Brooke

My hon. Friend is right.

Mr. Chris Smith

Is not personal consumption the highest import content of any economic activity within the economy? If so, why did the Chancellor of the Exchequer decide in his Budget to place such emphasis on top-rate tax cuts? Those cuts will undoubtedly fuel consumption rather than investment in our infrastructure and worsen the already bad balance of payments position. Will the Minister now answer the question that was put to him earlier this afternoon by my hon. Friend the Member for Dunfermline, East (Mr. Brown)? Will the balance in manufacturing trade reach a deficit of£10 billion this year?

Mr. Brooke

The hon. Gentleman's question linked a series of hypotheses. I continue with the observation that I have just made. In terms of the current balance of payments deficit, the increase in investment goods imported is rising much faster than the increase in consumer goods.

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