Income Tax Receipts (Hansard, 19 October 1989)

§ 8. Mr. Bowis
To ask the Chancellor of the Exchequer what are the current receipts from income tax; and what were the comparable figures for 1979.

§ Mr. Lilley
Net income tax receipts in the financial year 1988–89 were £43.4 billion, compared with £18.7 billion in 1978–79.

§ Mr. Bowis
Is it not a paradoxical fact, but a fact nevertheless, that under this Government as tax rates have come down the tax take has gone up, which has enabled us to increase in real terms spending on the services that are so necessary to this country? Is it not a fact that the public do not yet fully understand the relationship between lower tax rates and better public services? Is that not partly because Opposition Front-Bench spokesmen fail to understand that concept?

§ Mr. Lilley
My hon. Friend makes a good point. It is true that the higher the initial rate that we cut, the greater the response of revenue has been. Whereas under Labour, with tax rates of up to 98 per cent., the top 5 per cent. of taxpayers paid only 25 per cent. of income tax revenue, since we introduced those rates the top 5 per cent. of taxpayers pay nearer 30 per cent. of revenue.

§ Dr. Marek
When the Government tax the British people more heavily than they were taxed in the 1970s and when taxation as a percentage of gross domestic produced is still several per cent. higher than it was when the Labour Government left office in 1979, why does the Financial Secretary pile on the agony for home owners and insist on taxing them by making them pay twice as much for their mortgages as they would pay if they lived in Germany?

§ Mr. Lilley
I could answer that question more readily if I could explain why the Labour party has voted against every cut in the basic rate of income tax since this Government have been in office. Real standards of living, taking into account the rise in the retail price index, which includes mortgage interest payments, have risen for as long as I have been in Parliament under this Government.

§ Mr. Patrick Thompson
Is it not a fact that cannot be emphasised too much that tax reductions since 1979 for the top 5 per cent. of earners have led to increased revenue for the Exchequer? Does my hon. Friend agree that the economic policies of the Labour party would simply lead to less revenue for education and the Health Service?

§ Mr. Lilley
My hon. Friend makes a good point. Labour's punitive taxes amount to killing the goose that 259 lays the golden egg. Since we have reduced taxes, that goose has been laying fruitfully, and we have been harvesting it to the benefit of public services.