HC Deb 08 June 1989 vol 154 cc359-60
9. Mr. Butler

To ask the Chancellor of the Exchequer if he will make it his long-term policy to abolish income tax.

Mr. Lawson

In my Budget last year, I set the target of reducing the basic rate of income tax to 20 per cent. as soon as it was prudent and sensible to do so. That remains the target.

Mr. Butler

Does my right hon. Friend believe that there is some innate benefit in income tax? With strong economic growth, is it not conceivable that we could do away with the tax altogether?

Mr. Lawson

I think that that is unlikely to occur during my time as Chancellor of the Exchequer.

Mr. Battle

Will the Chancellor tell the House how much of the burden of taxation has shifted to indirect taxes such as VAT? How much will indirect taxation increase as he proceeds with his policy of reducing direct taxation?

Mr. Lawson

The increases in direct taxation that have occurred during the time that I have been Chancellor of the Exchequer have been negligible—in fact, very small indeed. Nor during my time as Chancellor of the Exchequer have I increased the national insurance rates, so let us get that straight. What I will say to the hon. Gentleman is that if the policies which have been proposed by the Labour party were ever put in practice, we would see a very substantial increase in income tax at almost all levels.

Sir William Clark

Does my right hon. Friend agree that Conservative Governments reduce income tax because they always control public expenditure wisely, whereas Labour Governments invariably increase income tax because they are profligate in their public spending?

Mr. Lawson

My hon. Friend is right, and that is how we have been able to get income tax down and that is how we will be able to get income tax down still further in the years that lie ahead, to the great benefit of the economy as a whole and also giving individuals a wider choice of how they spend the money that they earn. As for the Labour party and their spending plans, they have yet so far still failed to answer the question put to them by the right hon. Member who was formerly running the GLC—I cannot remember his constituency at the present time—[Interruption.]—Brent, East (Mr. Livingstone)—who said very pointedly that they have not said where they are going to find the money to spend on all those programmes.

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