HC Deb 15 March 1990 vol 169 cc653-4
6. Mrs. Gorman

To ask the Chancellor of the Exchequer if he has recently received any representations about the relationship between incentives to work and the level of income tax.

The Financial Secretary to the Treasury (Mr. Peter Lilley)

My right hon. Friend has received a number of representations about income tax.

Mrs. Gorman

I thank my hon. Friend for his reply. Does not the incentive effect of lowering direct taxes more than offset any loss to the Treasury because it increases the general buoyancy of the economy? Will he apply that logic to women who may wish to go out to work and who would be encouraged to do so if they were allowed to offset some of the costs for help in the home or with children?

Mr. Lilley

I am sure that my right hon. Friend the Chancellor heard that late pre-Budget representation. All that I can do is to refer my hon. Friend to my answer to a similar question in the previous Question Time.

Mr. Nicholas Brown

Surely a better answer for the Financial Secretary to give to his hon. Friend the Member for Billericay (Mrs. Gorman) would have been to say that the Government's tax policies are specifically designed to advantage the well-off rather than the generality of the community. If he had wanted to give his hon. Friend an alternative answer, he could have said that the parliamentary Labour party was absolutely right and that next Tuesday, the Government would abolish the tax on workplace nurseries.

Mr. Lilley

I can answer the hon. Gentleman's question a little more fully by referring to the past and not to the future. The previous Labour Government had tax rates of 83 per cent. on the rich, but only 30,000 people paid them. Now that we have reduced the rates to 40 per cent. at the same level of income, 190,000 people pay them. People in the top 5 per cent. of incomes are paying 30 per cent. of the total income tax burden against only 24 per cent. at the end of the Labour regime. If anything, we have soaked the rich to everyone's satisfaction.

Mr. Tim Smith

Does my hon. Friend agree that one person's tax relief is another person's tax bill? Introducing a new tax relief erodes the tax base. Will my hon. Friend, therefore, concentrate on the Government's long-term objective of reducing the standard rate of tax and thereby helping all taxpayers?

Mr. Lilley

I recognise my hon. Friend's point, which continues a fruitful discussion that we had at a recent Adjournment debate. [Interruption.]

Mr. Speaker

Order. Will the House settle down please? It is very difficult to hear at this end of the Chamber.