Non-oil GDP (Hansard, 15 March 1990)

§ 11. Mr. McAvoy
To ask the Chancellor of the Exchequer what proportion of non-oil gross domestic product, non-oil taxes and national insurance contributions represented in (a) 1978–79 and (b) 1989–90.

§ Mr. Norman Lamont
Non-oil taxes and national insurance contributions amounted to 34.1 per cent. of non-oil GDP in 1978–79 and 37.1 per cent. in 1988–89, the latest available year.

§ Mr. McAvoy
Will the Minister admit that under the Tories, tax take has increased as a proportion of GDP? Will he further admit that the Tory claim to have reduced taxes is entirely bogus, given that the Government have reduced taxes only for the rich and increased them for the rest of us? Does the Minister think that the poll tax will help to reduce the overall burden of tax?

§ Mr. Lamont
I am sure that I speak for all my hon. Friends when I say that if the Labour party were to choose to fight the next general election on which party would deliver tax cuts, we know who would win it. The hon. Gentleman is not on a good point, when the Labour party has voted against every tax cut that the Government have ever made. Is reducing the rate of income tax from 33p in the pound to 25p in the pound a tax cut or not? If we had simply carried on with the tax regime that we inherited, with the same rates, bands and allowances, and adjusted them for inflation, a married man on average earnings would be paying nearly £20 a week more. That is the tax burden that we had under the Labour party.

§ Mr. Anthony Coombs
Does my right hon. Friend agree that the virtuous circle brought about by the Government's low tax policies has meant more growth, more incentive and therefore a higher tax take for the Treasury? Does he further agree that, should the Labour party have the opportunity, unlikely as it seems, to put its policy of higher taxes, a wealth tax and an investment tax into operation, that would damage the good of the economy and therefore that increased tax take?

§ Mr. Lamont
My hon. Friend is right, and the truth of what he says is shown in the rise in average living standards, which have gone up by nearly one third for the man on average earnings in the past 10 years, in contrast to the stagnation in living standards under the Labour party. In addition to the tax burden, the Labour Government also had a debt burden, which could not be financed out of taxes because the tax rates were penally high, so they had to finance borrowing out of inflation, which lowered living standards.

§ Dr. Marek
The Chief Secretary is adept at talking about tax cuts, but he talks only about income tax, when the total tax take has increased under the 11 years of this Government. As a result, total tax as a percentage of GDP is higher than it was when the Labour party was in office. If the Tory party is not to be permanently saddled with the tag of being the tax, tax and tax again party—[HON. MEMBERS: "No."] Oh yes. The tax, tax and tax again party. Will the Chief Secretary give an estimate of when the tax level that existed under the Labour Government will come about as a result of the Tory Government's policies?

§ Mr. Lamont
That is a little bit like being lectured on celibacy by Mae West.

§ Mr. Colvin
Does my right hon. Friend accept that he has had it straight from those on the Opposition Front Bench that their policies, if they were elected, would be to put up the rate of tax, reduce the tax revenue to the Exchequer, and plunge the country back into the depths from which we rescued it in 1979?

§ Mr. Lamont
That is absolutely right. If we had a borrowing requirement burden similar to that which we had under the previous Labour Government, that alone would be the equivalent of 14p on income tax.