HC Deb 01 April 1993 vol 222 cc487-8
9. Mr. Foulkes

To ask the Chancellor of the Exchequer what percentage of an average household's income is forecast to be spent on VAT (a) in 1993–94 and (b) in 1994–95.

Mr. Nelson

Around 5½ per cent. of income in 1993–94 for a family on average earnings.

Mr. Foulkes

Does the Minister accept that while the top 10 per cent. of earners spend less than 3.5 per cent. of their income on fuel, the bottom 10 per cent. spend more than 13 per cent of their much smaller income on fuel? Does he accept that a couple on income support, with two children, will have to pay an extra £2 a week for fuel as a result of the Chancellor's Budget proposals? Will he now end people's agony, suspense and misery by giving an assurance that they will be compensated in full?

Mr. Nelson

The Budget as a whole ensures that the better off will pay more. It is undoubtedly true that, as my right hon. Friend the Chancellor has said, substantial help will be made available to assist people with the VAT costs that they will have to pay next year. As for the burden of tax generally, real take-home pay has risen considerably since the Government came to office. All in all, we should be judged according to our deeds rather than our words. We have protected those most in need, and everyone else is better off.

Mr. Nigel Evans

Will my hon. Friend confirm that the Government's policy has been to shift the burden of taxation away from incomes and on to expenditure? Over the past 14 years, the top rate of income tax has fallen from 83p to 40p, and the bottom rate has fallen from 33p—the rate under the last Labour Government—to 20p.

Mr. Nelson

My hon. Friend is absolutely right—there has been a progressive move away from direct taxation and towards indirect taxation. This party, and this Government, believe that people should be left with as much as possible of the product of their own earnings and savings to spend as they think best.

Ms Harman

Will the Minister clarify the position? The Chancellor was deliberately confusing on this point? Is it now admitted that VAT will be imposed on standing charges for gas and electricity as well as on the fuel actually used? If so, will the Minister explain how it can be an environmental matter to impose VAT on standing charges which do not vary according to the amount of gas or electricity used?

Mr. Nelson

My right hon. Friend has made the position perfectly clear on this matter. I have nothing more to add.

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