Income Tax (Hansard, 30 March 1995)

§ 8. Sir Fergus Montgomery
To ask the Chancellor of the Exchequer how much money would be raised by an increase in the top rate of income tax to 50 per cent. [15282]

§ Sir George Young
In 1995–96, £2.9 billion and £4.6 billion in a full year.

§ Sir Fergus Montgomery
Does my right hon. Friend agree that higher income tax rates reduce incentives to work hard and that they limit economic growth? Will he perhaps refresh my memory as I have forgotten what the top rates of income tax were when the Conservatives rescued this country from socialism in 1979?

§ Sir George Young
I am happy to refresh my hon. Friend's memory. Some people were paying tax at 98p in the pound under the Labour Government. [Interruption.] I hear cries of "Not enough" from Opposition Members. We have reduced the top rate to 40 per cent. and we have increased incentives. The higher paid are now paying a higher percentage of the total income tax, so the lower paid have benefited from the reforms.

§ Ms Armstrong
Will the Minister confirm that once the changes in taxation are implemented next week, 1174 additional tax under this Government will be the equivalent of 7p in the pound on the basic rate of income tax?

§ Sir George Young
The average family is about £80 a week better off in real terms since the Conservative Government came into office in 1979, which is a dramatic contrast with the virtually stagnating rate of growth under the last Labour Government.

§ Mr. Jessel
Far from suggesting an increase in the top rate or any other rate of income tax, will my right hon. Friend bear in mind that income tax produces only about a quarter of all Government revenue? The Chancellor of the Exchequer in the early 1950s, Mr. Butler, made it a Conservative target to double the standard of living in 25 years, which was achieved. Should we not make it our target, over 25 years, to abolish income tax lock, stock and barrel?

§ Sir George Young
My hon. Friend invites me to subscribe to an ambitious target. He will understand that it would be wrong for me to prejudge my right hon. and learned Friend the Chancellor's Budget later this year.