HC Deb 01 April 1993 vol 222 cc483-4
4. Mr. David Shaw

To ask the Chancellor of the Exchequer if he will estimate the number of taxpayers in 1993–94 who will be paying income tax solely at a rate of 20 per cent. and the number of taxpayers whose incomes are at a level where more than half the income tax they pay is calculated at the rate of 20 per cent.

Mr. Lamont

The figures are 4.9 million and more than 8 million respectively.

Mr. Shaw

Does my right hon. Friend accept that many of my constituents are among those millions who are benefiting from the 20 per cent. band of income tax? Is not that 20 per cent. rate of income tax, as it is being implemented, a firm example of the way in which we meet our manifesto commitments? Can he explain why the Labour party refuses to support the 20 per cent. band?

Mr. Lamont

My hon. Friend makes a good point. I should have thought that it was eminently desirable that our starting rate of tax should come down to a level comparable with that of many other countries. The Labour party used to support that policy, but when the Conservative party implements it, it suddenly becomes wrong and the Labour party no longer supports it.

Mr. Rooker

Will the Chancellor confirm that, as a result of freezing personal allowances, 300,000 more people will pay tax at 20 per cent. rather than at zero? Before the right hon. Gentleman brings the order to the House to implement that outrageous policy, will he invite his hon. Friends to sound out the 500 people in each of their constituencies who will have a tax increase from zero to 20p in the pound in order to discuss with them the fairness of such a policy before his hon. Friends vote on it?

Mr. Lamont

What the hon. Gentleman ignores is the fact that, as a result of the Government's policies, almost 1.5 million more people are non-taxpayers than would be the case had we carried on with the tax regime that we inherited from the Labour Government when we came to power. Furthermore, when one takes into account the Opposition's promises and their public expenditure consequences, they cannot give us any lectures about taxation. We shall listen to the Opposition on income tax only when they join us in promising to work to reduce the basic rate of income tax to 20p in the pound.

Mr. John Townend

Does my right hon. Friend agree that low marginal rates of direct income taxation are not only an incentive to hard work and enterprise, but are a significant factor when overseas companies are deciding where to put their manufacturing plant and, even more importantly, their European head offices? They will not invest in countries where their highly qualified executives are excessively taxed. Is not that why the previous Labour Government, with a marginal rate of 83 per cent., had a much worse record than this Government in attracting inward investment?

Mr. Lamont

My hon. Friend is right. Britain has one of the most attractive and competitive direct tax systems in the world and we have made it clear that we intend to maintain it that way. The Opposition favour high rates of tax and, in the past, such high, confiscatory rates of tax have been counter-productive because they raise less revenue.