§ 11. Mr. MilburnTo ask the Chancellor of the Exchequer what was the average total annual payment in income tax and national insurance per employed person in 1992–93.
§ Mr. DorrellA married man on average earnings of £17,992 would pay £3,107 in income tax and £1,423 in employee's national insurance contributions.
§ Mr. MilburnDoes the Minister recognise that the March Budget has meant a huge tax hike which will bear down hardest on those who are least able to afford to pay? Will he take this opportunity to tell the House and the public what further tax rises he has in store? Will he now admit that the whole country is being asked to foot the bill for the £ 10 billion-worth of tax handouts that have been given to the very rich since 1988? Why should the poor, pensioners and NHS patients be asked to pay the price for the Government's extravagance?
§ Mr. DorrellThe hon. Gentleman refers to the record of the 1980s. One might have thought that he would take the opportunity to welcome the increase in the real take-home pay that was available to all people as a result of the 987 economic policies of the 1980s. Under the Labour Government, real take-home pay for the man on average earnings rose by £1.20 a week at today's values—between 1979 and 1993, it has risen by £81.50 a week. Real take-home pay is what matters, not the statistical analysis offered by the hon. Gentleman.
§ Mr. Barry FieldIs it not a fact that no post-war Government have done so much to simplify the personal taxation structure of the United Kingdom as this Government? When my hon. Friend puts the final cornerstone in place in the autumn Budget with regard to future expenditure and taxation plans, I invite him to go a stage further and introduce the reform that is so necessary in the European Community—bringing our pay-as-you-earn year into line with the calendar year. Only Ireland and this country continue with the peculiar date of 5 April.
§ Mr. DorrellMy hon. Friend is meddling with a long-standing piece of history when he wishes to put the tax system on the same calendar as that by which every one has lived since the 1750s, but I shall certainly look at it.
On the more substantive point, my hon. Friend is right to stress that the simplification of the tax system is one of the major steps that the Government have put in place which has enocuraged the development of a more competitive and successful economy and delivered the improvement in real take-home pay to which I referred earlier, and which is the bell-wether of success.
§ Mr. Nicholas BrownHas the Financial Secretary seen the revised parliamentary answer given to me yesterday stating that the number of people who earn less than the basic rate tax threshold but will pay more in national insurance contributions in 1994–95 as a result of the Budget changes is not 500,000, as previously stated, but 2.5 million? Is not he ashamed that 2.5 million of his fellow citizens who are in work but are too poorly paid to have to pay basic rate income tax will still be required to pay extra national insurance contributions as well as extra value added tax on fuel? Can the hon. Gentleman give the House an assurance that that parliamentary answer has not anticipated Government policy—[interruption]—and called the 20 per cent. band the basic rate band, solely for the purpose of—[Interruption.]—restric-ting allowances?
§ Mr. DorrellIt must be a long time since the hon. Gentleman asked a question that secured two cheers while he asked it, particularly one so badly based on the facts. His question reflects the fact that we have increased the personal allowance in real terms by 25 per cent. since 1979. The hon. Gentleman might like to refer also to our change in the system of national insurance contributions for employees, which has reduced the burden on the low paid. It is now a more rational system and more friendly to incentives. The key to a tax system is that it is friendly to incentives and makes it worth while for people to make extra effort. That is the guiding light of our tax policy and will continue to be so.