Income Tax Rates

HC Deb 13 March 1997 vol 292 cc483-4

4. Mr. Simon Hughes

To ask the Chancellor of the Exchequer what recent representations he has received in respect of (a) the basic and (b) the higher income tax rates; and if he will make a statement. [18522]

The Financial Secretary to the Treasury (Mr. Michael Jack)

I receive a steady flow of representations regarding all aspects of the tax system.

Mr. Hughes

I want the Minister to be really honest to the House. I want him to tell us whether he receives mailbags full of letters stating, "Please put income tax down and please do not put higher rates of tax up for high earners," or whether the strong balance of view is that people want better services—better education, better health, better housing and better transport—and are willing to pay a bit more income tax, and with higher earnings a bit more higher-rate tax, to fund better public services. Is not the second approach the truth?

Mr. Jack

That question comes from the member of a party whose 1996 alternative Budget pledged it to raise public spending, by its calculations, by £4 billion. I receive representations that tell me, "Isn't it good that we can see that the basic rate of tax falls to the lowest level for 60 years while at the same time, year on year, there is a real increase in spending on the health service along with more money spent on education and public services in general, but within a Budget where controls are tight, and we have the fastest growing economy in western Europe?" That is the package that people like to write to me about.

Mr. John Townend

Does my right hon. Friend agree that any Government could increase the overall burden of direct taxation without putting up tax rates, merely by abolishing mortgage tax relief, reducing tax relief on pensions, reducing allowances or lifting the ceiling on national insurance contributions? Does he further agree that any Government who propose to spend £12 billion extra would have to put up taxes, otherwise borrowing would go through the roof?

Mr. Jack

My hon. Friend has clearly been looking at various posters around the country. He is entirely right to give that health warning, because the official Opposition seem to be committing themselves to two of our rates of tax. Therefore, as my hon. Friend inferred, it is clear that everything else is up for grabs. His warning should be heeded by every elector.

Mr. Darling

The House will recall that the Conservatives put up national insurance after the last election, even though they promised not to do so.

Will the Financial Secretary clarify what the Chancellor said and, in particular, give an undertaking that the Conservatives would not seek to increase the rate of VAT on fuel during the next Parliament?

Mr. Jack

The hon. Gentleman was not listening to my right hon. and learned Friend, who made his views entirely clear on every aspect of tax policy, and, indeed, on his policy on VAT. I have nothing to add.

Mr. Duncan Smith

Is my right hon. Friend aware that Labour-controlled Waltham Forest council raised its council tax two days ago and that, over a three-year period, that tax has been increased by 41 per cent.? I have a mailbag full of letters from people telling me that they are sick and tired of paying increased charges. The Liberal Democrats on the council voted with the Labour party to increase that tax and now have an outraged public chasing them.

Mr. Jack

My hon. Friend has illustrated the underlying desire of anybody in the Labour party who is in power to spend more of other people's money and to tax more. He is entirely right.