Independent Taxation within Marriage (Hansard, 3 February 1998)

§ Lord McIntosh of Haringey
My Lords, decisions on tax are a matter for the Chancellor's Budget and the noble Lord would not expect me at this time of year to anticipate his Budget Statement. However, the Chancellor has made it clear that there is no question of returning to the pre-1990 position in which a wife was effectively treated as a chattel for tax purposes.

§ Lord Goodhart
My Lords, is the noble Lord aware that the establishment of the right of married women to separate taxation from their husbands is regarded as one of the most important steps forward to the independence and equality of women? Will he accept that there is now considerable concern about the possible erosion of that principle, especially in view of the proposed introduction of the working family tax credit, since it seems inevitable that that credit will have to be 503 calculated on the basis of the joint income of husbands and wives and indeed of co-habiting couples? Will the Minister take note of the fact that any further extension of joint taxation of couples would be vehemently opposed? Can he give an undertaking that there will be no changes in taxation which will make married couples subject to a higher degree of income tax than if they were single and living separately?

§ Lord McIntosh of Haringey
My Lords, I entirely agree with the noble Lord that the principle of independent taxation within marriage is a very important element of equality between the sexes. The noble Lord referred specifically to the proposal which is out for consultation as regards the working family tax credit. I do not think he need make a conjunction between that proposal and independent taxation. After all, in Canada, for example, there is a perfectly effective system of independent taxation combined with a credit of this type.

§ Lord Mackay of Ardbrecknish
My Lords, I believe that I welcome the noble Lord's original Answer, although I shall have to read it in Hansard with care. Is the Minister aware that the reform which the previous government carried out of independent taxation was widely welcomed? We shall be greatly disappointed if this Government ever move away from that. Is he further aware that, if in an attempt to tax child benefit an effort is made to shift the benefit to the husband, that would be a reversal of Labour policy which I imagine the "Blair's Babes", as I believe they are called, in the Commons would be firm about? They should not move money from the purse to the wallet, I believe is the expression.

§ Lord McIntosh of Haringey
My Lords, I am aware, and the Chancellor is certainly aware, of the concerns which the noble Lord has expressed. He rightly said that the move towards independent taxation was undertaken by the previous government both in 1980, with the earnings election, and in 1990. We pay tribute to that. It is an important advance, as the noble Lord, Lord Goodhart, rightly said. However, if the noble Lord is seeking to tempt me to make a guess about the Chancellor's Budget, even if I knew the answers, I would not respond.

§ Lord Northbourne
My Lords, does the noble Lord agree that husbands and wives living peaceably together and bringing up their children are likely to cost the taxpayer less than some other forms of family structure and give their children the advantages of a stable and loving home? Therefore, can he assure the House that the Government will not do anything in their tax or benefits policies to discourage two-parent families living together?

§ Lord McIntosh of Haringey
My Lords, I can certainly confirm that the Government will not do anything to discourage two-parent families. The noble Lord is quite right in that. But the issue of independent taxation takes two forms: first, there is privacy between 504 the partners. As I indicated, using the Canadian and American examples it is perfectly possible to maintain privacy. The second issue is whether the taxman takes more from two-parent families or from married couples. That is an issue on which it is much more difficult for me to respond at this time.

§ Baroness Lockwood
My Lords, is my noble friend aware that his Answer on separate taxation will be warmly welcomed by the women who campaigned for many years to bring about independent taxation for women? Is he also aware that there is unease among these women? If there is any infringement of that principle it is likely to lead to the kind of campaigning that we had in the 1970s and 1980s.

§ Lord McIntosh of Haringey
My Lords, I am aware of the force of the point that my noble friend makes. I know from his public statements that the Chancellor of the Exchequer is equally aware of them.

Lord Campbell of Croy
My Lords, is the noble Lord aware that his original Answer will be generally welcomed, in that wives should not be treated as chattels? Is there not another reason for not making a change at this time; namely, that for some time the Inland Revenue and the tax-returning public will find themselves recovering from the impact of the new system of self-assessment?

§ Lord McIntosh of Haringey
My Lords, when the noble Lord looks at the Minutes tomorrow he will find that the topical Question for Thursday, raised by the noble Lord, Lord Newby, is on this point. We might discuss the matter at greater leisure at that time.

§ Baroness Gardner of Parkes
My Lords, I support every word said by the noble Baroness, Lady Lockwood, and I, too, welcome the original Answer, but I hope the Minister will agree that it is important to investigate new ways, while retaining independence, to establish the family credit system? Something of that kind is desperately needed.

§ Lord McIntosh of Haringey
My Lords, the noble Baroness rightly indicates the complexity of the issues facing the Chancellor in his decisions about working family tax credit.

§ Earl Russell
My Lords, will the Minister consider the possibility that, since over the next generation we may legitimately hope that more and more women will join the ranks of top earners, in future the demand for independent taxation may also come from men with the same vigour as it now comes from women?

§ Lord McIntosh of Haringey
My Lords, the noble Earl is undoubtedly right.

Lord Bruce of Donington
My Lords, in consideration of matters raised by the Question on the Order Paper and in particular taking note of the expressed views of the House, will the noble Lord give 505 the House an assurance that in the course of all this overriding consideration can be given to the simplification of the chaotic taxation laws?

§ Lord McIntosh of Haringey
My Lords, I believe that every Chancellor of the Exchequer this century, and probably going further back, has on coming into office indicated the need to simplify tax regimes. Some succeed more than others.

§ Baroness Carnegy of Lour
My Lords, for clarification, can the Minister confirm that the reply he gave two or three questions ago sounded like reassurance? Was he assuring the House only that the way in which tax returns are made will enable privacy to prevail or was he also saying that the amounts people will pay relatively will be preserved?

§ Lord McIntosh of Haringey
My Lords, my answers were more cautious than that. I was saying that there are two elements with which this Question is concerned. One is the issue of privacy. That can be dealt with by the way in which tax returns are submitted and considered. The other is whether the taxman takes more from a couple than from two individuals. My overriding response must be—particularly to the second question of the noble Lord, Lord Goodhart—that I cannot guess what will be in the Chancellor's Budget.