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Personal Incomes

Volume 131: debated on Thursday 14 April 1988

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To ask the Chancellor of the Exchequer what is his estimate of the weekly gain of a single person earning £300,000 a year from his Budget tax changes.

Just over £1,000 for an individual with no reliefs other than the single person's allowance.

Is it not ridiculous in the present day that that answer confirms the fact that an income tax saving of £1,037 per week will accrue to someone earning £300,000 a year? Was the Minister not in the House yesterday to hear the Secretary of State for Social Services describe his cuts for the poor as a charter for self-respect? In view of that, will he give an assurance to the House that the next Budget will be one-nation Budget whereby the poor get richer as an incentive, rather than being ground into the dust as they are at present?

The hon. Gentleman concentrates on an extraordinarily small proportion of the tax-paying public, and a very small part of the cost of the higher rate reductions,. Even of the higher rate reductions, 60 per cent. of the gainers are earning less than £40,000, which shows, incidentally, that the point made by the hon. Member for Dunfermline, East (Mr. Brown) was wholly wrong arithmetically.

Will my right hon. Friend tell the House exactly how many taxpayers are in that position, and by how much the basic rate of tax for the rest of us could have been reduced if their gain had been taken away entirely?

It certainly would not have enabled any reduction in the basic rate for the rest of us.

Is it not clear that the large majority of ordinary taxpayers will be paying tax at 25 per cent. and national insurance contributions at 9 per cent.—a total of 34 per cent. and the higher taxpayers in the land will be paying only 40 per cent.? Therefore, the difference between the people at the bottom and the people at the top paying tax is only 6 per cent. It is not clear that we are now coming to the end of progressive taxation, which has been embraced by every Administration this century until this one?

No. It would be quite wrong to say that the tax system was still not progressive. I point out to Opposition Members that a person on five times average earning will still be paying 10 times the amount of tax of a person on average earnings.