HC Deb 15 July 1993 vol 228 cc1101-2
7. Mr. Mullin

To ask the Chancellor of the Exchequer what plans he has to increase income tax and national insurance contributions; and if he will make a statement.

Mr. Kenneth Clarke

I shall be considering options for tax changes in the next Budget over the summer and in the autumn.

Mr. Mullin

I know that the Chancellor is not readily given to embarrassment, but does he feel a tiny twinge of guilt at having been elected on a promise of lower taxes and now to be presiding over some of the largest increases in our country's history. Or am I being naive?

Hon. Members


Mr. Clarke

I am not frequently embarrassed and the hon. Gentleman is not frequently naive. As he knows, we have made spectacular progress, beyond what anyone in his party would have thought possible, in reducing direct taxation. We did so for supply-side reasons and, when we first began to get rid of the extraordinarily high levels of direct taxation that we inherited, we found that revenue actually increased as we reduced the level of tax. We have now cut marginal rates of income tax to 25 per cent. and introduced a lower rate of 20 per cent. as well.

We are committed to continuing to reduce income tax when it is prudent to do so. I do not think that it lies in the mouth of any Labour Member to criticise the Government for their tax-cutting record.

Mr. John Townend

Does my right hon. and learned Friend agree that, with the basic rate of income tax at 25 per cent. and national insurance at 9 per cent., the working man has to pay over one third of his income in tax? Is not that level sufficiently high? Is not the big difference between the Labour party and our party the fact that we believe in taking as little as possible from the pay packet of the working man, whereas the Labour party believes in caning taxpayers, particularly those who are hard-working and enterprising?

Mr. Clarke

I agree with my hon. Friend. If I were a Labour Chancellor of the Exchequer, my Back Benchers would be urging on me a rapid increase in taxation of all kinds. However, I am a Conservative Chancellor, and my hon. Friend reminds me of the basic commitment of the party. I will bear that in mind when I prepare my Budget in the autumn.

Mr. Nicholas Brown

The Chancellor said on Monday that no Chancellor could bind himself on taxation, yet at the time of the general election the Prime Minister said that there would be income tax cuts "year on year". Whom are we to believe—the present Prime Minister or the Chancellor, who clearly hopes to be the next Prime Minister?

Mr. Kenneth Clarke

I have related the Government's record on income tax. I do not recall the Labour party voting for any of the reductions in income tax, so the idea that those tax cuts are suddenly being held against us or are being adopted by the Labour party strikes me as unlikely. The commitment of the Government is to continue to cut direct taxation and income tax when economic circumstances permit and when it is prudent to do so.