HC Deb 18 April 1996 vol 275 cc825-6
1. Mr. Pawsey

To ask the Chancellor of the Exchequer by how much tax revenue has changed since 1990. [24303]

The Paymaster General (Mr. David Heathcoat-Amory)

Receipts of taxes by Inland Revenue and Customs and Excise were £174 billion in 1995–96 compared with £138 billion in 1990–91.

Mr. Pawsey

That answer underlines, if nothing else, the substantial improvement to the United Kingdom economy over the past six years, an improvement that has been fuelled by low inflation and low interest rates, which in turn have reduced unemployment substantially. Will my right hon. Friend reject any appeals to increase taxation to ensure that he is not taken short?

Mr. Heathcoat-Amory

I entirely agree with my hon. Friend. We have an almost uniquely favourable set of economic circumstances at present, including low inflation, steady growth and falling unemployment. We have recently cut income tax. We have no policies from Opposition Front Benchers on Treasury matters, but we have a hint from the Opposition spokesman on transport. My hon. Friend was probably referring to that. We all know that Labour Governments increase taxes. If the Opposition Treasury team does not know that, the hon. Member for Birmingham, Ladywood (Ms Short) obviously does.

Dr. Bray

Will the Minister say whether the receipts from value added tax, being lower in the outturn than they were in the Budget forecasts over a period of years, are due to errors in forecasting or to failures in the collection of VAT? If so, what remedial measures are the Government taking?

Mr. Heathcoat-Amory

Actually, the VAT receipts for the year just ended, 1995–96, have come in very slightly under the Budget forecast made last November, but considerably under the forecasts made a year before that. The reason for that is not clear. If there has been an increase in avoidance schemes, that will be actively investigated by the Treasury. In the Finance Bill, which has just completed its passage through the House, we put a stop to a large potential avoidance scheme to prevent any erosion of the VAT tax base.

Mr. Michael Brown

I hope that my right hon. Friend will not be too hard on the hon. Member for Birmingham, Ladywood (Ms Short). Should we not congratulate the hon. Lady on at least being the authentic voice of the real Labour party? Will my right hon. Friend take it from me that most of us regard her as the real voice of the Labour party, whose voice would ultimately be heard if the hon. Member for Dunfermline, East (Mr. Brown) were ever to be Chancellor of the Exchequer?

Mr. Heathcoat-Amory

I agree with my hon. Friend. The hon. Lady has been hauled up and silenced for speaking the truth about Labour tax plans.

Mr. Andrew Smith

Is not the truth of the matter that the Paymaster General and his right hon. and hon. Friends have a right nerve talking about tax when it is they who are in breach of all their general election promises? They increased taxes, costing a typical family £800 extra last year. Is it not the reality that, despite those increases and impositions, tax revenues have not increased as quickly as the Government predicted, landing the United Kingdom with a £32 billion bonanza public sector borrowing requirement? That proves that, just as the public cannot trust the Tories on tax and living standards, they cannot trust them on public borrowing either.

Mr. Heathcoat-Amory

There is still no indication from the Opposition Front-Bench team of its tax plans. I remind the hon. Gentleman that we have cut and are cutting taxes. This month, wage earners and salary earners will see a further cut in their standard rate of income tax. A quarter of all taxpayers are now paying tax at only 20 per cent.

I remind the hon. Gentleman also that, when the Conservative party took office in 1979, the standard rate of corporation tax was 52 per cent.; we brought it down to 33 per cent. Small company corporation tax stood at 40 per cent., which we have reduced to 24 per cent.

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