HC Deb 12 March 1992 vol 205 cc958-9
4. Mr. Cox

To ask the Chancellor of the Exchequer what was the cash amount paid in value added tax by a family with two children on average earnings in 1979; and what is his latest estimate for the amount at the present time.

The Minister of State, Treasury (Mrs. Gillian Shephard)

At today's prices, such a family would have paid approximately £340 in VAT in the financial year 1978–79, compared with £985 in 1991–92. Over the same period, this family will have enjoyed a 35 per cent. rise in real take-home pay.

Mr. Cox

One can say only that that is a dodgy reply. There has been an increase of some £15 a week in VAT. Against that background and the background of other indirect taxes that ordinary families have had to experience, is not it clear that on 9 April the British people will not be taken in by promises but will be persuaded by the income tax and VAT changes which they have seen from the Government over the past 13 years?

Mrs. Shephard

What matters is real take-home pay and that is what people will take into account on 9 April. The 35 per cent. increase in real take-home pay amounts to £78 per week. That is what people will be concerned about. If the Labour party is so concerned about the tax burden, why is it proposing to vote against tax cuts twice in the next 24 hours?

Mr. Watts

Will my hon. Friend tell the House how much of that £78 increase in take-home pay is attributable to the reduction in the basic rate of income tax from 33p to 25p and, now, the lower band of 20p and the over-indexation of personal allowances introduced by the Government?

Mrs. Shephard

Perhaps my hon. Friend would be interested in the fact that the indexation of allowances has taken 2 million people out of tax compared with what happened under the Labour Government's regime. The tax cuts announced by my right hon. Friend the Chancellor in his Budget on Tuesday, against which the Labour party will vote twice in the next 24 hours, will take a further 380,000 individuals out of tax.

Mrs. Beckett

Has not the Government's consistent record over the years been one of balancing cuts in taxes on income by increases in other taxes? Therefore, are not people eminently justified in fearing that the Government's long-term plan is to pay for the cuts in tax, of which the Government boast so proudly, by widening the scope of VAT and by increasing the other charges and taxes that people have to pay?

Mrs. Shephard

We have given categorical pledges that there will be no rise in the standard rate of value added tax either before or after the election. I wonder whether the hon. Lady would like to give such a categorical pledge. What is certain is that two parties are going into the election with pledges to increase taxation and one is going into the election with a pledge to decrease it—the Conservative party.

Mr. Summerson

Will my hon. Friend confirm that the Government have no intention whatever of increasing VAT on televisions to 25 per cent., as was done by the previous Labour Government?

Mrs. Shephard

I am happy to repeat the categorical pledges given by my right hon. Friends the Prime Minister and the Chancellor that there will be no increase in the standard rate of VAT either before or after the election. We have no need and have no plans to extend the standard rate or to put up other taxes.

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