HL Deb 30 March 2000 vol 611 cc909-10

3.25 p.m.

The Earl of Northesk

asked Her Majesty's Government:

On what statistical basis they state that next year's tax burden for the working family will be the lowest since 1972.

Lord McIntosh of Haringey

My Lords, as a result of personal tax and benefit measures introduced by this Government, the tax burden on a typical single-earner couple, on average earnings and with two children under 11, will fall from 21.5 per cent in 1996–97 to 18.8 per cent by 2001, the lowest level since 1972.

The tax burden on such a family is measured as income tax plus national insurance contributions less tax credits and child benefit, as a share of pre-tax earnings. This definition has been used for many years, under successive governments, in the Treasury's Tax Benefit Reference Manual, which is placed in the Library of the House.

The Earl of Northesk

My Lords, I thank the Minister for tint Answer. How seriously can that claim be taken when it fails to take into account the impact of indirect taxation?

Lord McIntosh of Haringey

My Lords, the problem with adding indirect taxation to direct taxation is that indirect taxation depends on the particular consumption patterns of households. It cannot be predicted definitively from a family's level of earnings and family structure in the way that tax credits, income tax, NICs and child benefit can be predicted. No external organisations produce estimates of indirect taxes at the individual level, and that includes the Institute for Fiscal Studies.

Lord Clark of Kempston

My Lords, does the Minister agree teat the so-called "stealth taxes"—such as petrol tax, the disappearance of MIRAS and the marriage allowance, and so on—mean that the take-home pay of the average working family has decreased? Why do not the Government take notice of the various independent reports which have been published by the Library of the House of Commons, the OECD and others? Would it not be a good idea to bring forward the debate on the Budget so that the Government can either substantiate their figures or apologise for misleading the general public?

Lord McIntosh of Haringey

My Lords, the noble Lord used the phrase "so-called stealth taxes"; they are not called "stealth taxes" by me. I take no responsibility for that phrase. As to the noble Lord's reference to the report from the Library of the House of Commons, I do not know whether he knows that the author of that report has written to the Shadow Chancellor and said: I have had to make some detailed assumptions"— that is, in estimating the burden of indirect taxation— the results are therefore unlikely to be representative of the majority of the population".

Lord Saatchi

My Lords, can the Minister confirm that the Government's tax receipts last year and this year have risen by three times the rate of inflation, by three times the rate of wage increases, and by three times the rate of increase in GDP? Can he tell the House why?

Lord McIntosh of Haringey

My Lords, I can suggest one reason: more people in work. That is rather a good reason for increases in Treasury receipts from taxes.

Lord Haskel

My Lords, does my noble friend agree that the stronger the economy, the more tax the Government collect?

Lord McIntosh of Haringey

My Lords, my noble friend has said in more elegant terms what I said rather more bluntly. Of course, he is quite correct.

Lord Northbrook

My Lords, does the Minister agree that another example of a misleading statistic in the Budget relates to the effect of the impact of proposals to tighten tax rules for companies with overseas subsidiaries? Is he aware that, according to the Financial Times of 23rd March, this will cost companies a total tax figure of £10 billion?

Lord McIntosh of Haringey

My Lords, we have departed a considerable way from the Question about the tax burden on the working family.

Lord Strathclyde

My Lords, perhaps I may ask the Government Chief Whip a procedural question. N of for the first time—I do not wish it to become a habit—a Minister has insisted on posing questions to the Opposition. We make no complaint about that. But will the Government Chief Whip have a discussion with the Leader of the House and with the usual channels so as to make time available for the Opposition to answer?

Lord Carter

My Lords, after all his years in the House, the noble Lord should recognise a rhetorical question.