HL Deb 08 February 1978 vol 388 cc1037-8

2.45 p.m.

Lord BOYD-CARPENTER

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what, calculated to the most recent convenient date, would be the annual amount of revenue lost as the result of a provision that no part of an individual's earned income should be taxed at a rate exceeding 70 per cent.; and what proportion this figure would represent of the total yield of direct personal taxation.

The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey)

My Lords, on the assumption that tax on investment income were to remain unchanged, the annual amount of revenue lost as a result of such a provision would be about £60 million, or approximately 0.3 per cent. of the estimated yield of income tax for the year 1977–78.

Lord BOYD-CARPENTER

My Lords, I thank the noble and learned Lord for those figures. Since the amount involved is well within the normal doubts involved in the calculation of revenue in any Budget, does it not follow from those figures that the reasons for imposing these confiscatory rates of tax on higher earnings are political and social rather than in order to raise revenue?

Lord McCLUSKEY

No, my Lords.

Lord HARMAR-NICHOLLS

My Lords, is the noble and learned Lord aware that, even if my noble friend's 70 per cent. figure were accepted, it would still leave us among the very highest taxed nations in the world, a fact which can only encourage the emigration of investment and personnel at a time when we want both of them in this country if we are to deal successfully with our production and unemployment problems?

Lord McCLUSKEY

My Lords, international comparisons have to be made with great care. Many other factors are involved—for example, local taxes, social benefits, various allowances and a great many complicated matters. For the noble Lord just to say that our tax rates are among the highest in the civilised world is to mislead us.

Lord BOYD-CARPENTER

My Lords, will the noble and learned Lord amplify his admirably terse reply to my supplementary question? If the reasons are not political and social, can he give any other reason for imposing taxation at this level for the sake of raising this derisory amount of revenue?

Lord McCLUSKEY

My Lords, we are accustomed to graduated taxes. Governments of all colours have introduced taxes of this kind. Let us turn to the future rather than rake through the embers of the past. In the course of the next few weeks my right honourable friend the Chancellor of the Exchequer hopes to look at the whole burden of taxation with a view to avoiding the kind of mischief which the noble Lord has in mind.