HC Deb 26 November 1996 vol 286 cc169-70

The Government are committed to reducing and then abolishing capital gains tax and inheritance tax. I repeat those commitments. But we have always said that we will cut these taxes only when we can afford to do so. This is a responsible Budget which is protecting future growth and prosperity by putting the public finances into a healthier state. We will not be able to make progress on both these taxes this year.

Mr. John Prescott (Kingston upon Hull, East)

Next year.

Mr. Clarke

The right hon. Gentleman can come back next year and discover from the same seat that he is now occupying.

I am pleased to announce that we can take a further significant step towards abolishing inheritance tax. Inheritance tax is nowadays a penalty on thrift, independence and enterprise. It is a growing anachronism.

Lloyd George's maxim that the "the most convenient time to tax the rich is when they are dead" no longer holds. Inheritance tax today is largely paid by people of modest means who either cannot or simply do not make careful plans to avoid it. [HON. MEMBERS: "Modest!"] Modest means in the opinion of all those outside the hard core of the labour movement, that is.

Last year I made significant progress towards our commitment. In this Budget I will build on that by raising the value of the inheritance tax threshold to £215,000.

Mr. Dennis Skinner (Bolsover)

I read that this morning.

Mr. Clarke

The hon. Gentleman appears to know that from this morning. Is he also aware that the Government have raised that threshold by 40 per cent. in only two years?

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