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Value Added Tax

Volume 175: debated on Thursday 5 July 1990

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To ask the Chancellor of the Exchequer what a family with two children on average earnings paid in a year in value added tax in 1978–79 and in 1989–90.

Approximately 2.7 per cent. of gross earnings and 5 per cent. respectively.

Is the Minister aware that, for an average family with two children, that represents an increase of £364 a year over the figure that applied in 1979, when this wicked Government came in? Why does not he tell the truth, the whole truth and nothing but the truth about total taxation? Why does not he tell the British people that total taxes have increased from 34 to 37 per cent. under this Government? Instead of ripping off pensioners with value added tax, why does not he claw back the £26.2 billion that the wealthiest 1 per cent. in Britain have had from the Government in the past 10 years?

The hon. Gentleman's remarks were based on a working man with two children.

The truth is that the take-home pay of a working man with two children has risen by 34 per cent. in real terms since the Government took office. Under the Labour Government, it rose by a measly 1 per cent.

When my hon. Friend is telling the nation about the effects of VAT and the tax burden will he remind our people that the Labour party has a habit of inventing new indirect taxes, such as selective employment tax, which add considerably to the burdens of our taxpayers?

My hon. Friend is right, and we look forward to receiving the full details of the new taxes that the Labour party would impose if it ever took office.

Will the Economic Secretary confirm that the Government are good at inventing new taxes and increasing indirect taxes—for example, almost doubling VAT, increasing national insurance contributions and inventing the poll tax? Will he confirm that the burden of taxation has increased under his Administration, and will he admit that the Conservatives are the high-tax party and that Labour is the low-tax party? Will he further admit, without squirming, that the rich have benefited from cuts in income tax in the past 10 years which have not compensated for the increases in indirect taxation, whereas those who have no jobs or low-paid jobs have borne the brunt of the Government's disastrous tax policies?

The hon. Gentleman asked several questions. The Labour party has four new taxes planned for Scotland alone. The contribution to the Revenue of the top 5 per cent. of income tax payers has risen by more than a quarter since 1979. The hon. Gentleman made several other claims about taxation. The truth is that if the Labour party ever took office it would need to raise taxes enormously to pay for the pledges made by the hon. Gentleman and his hon. Friends.

Does my hon. Friend agree that the figures merely show that there has been a shift from direct taxation, which is a tax on work, to indirect taxation, which is a tax on spending? Was not that policy precisely the one on which the Government were overwhelmingly elected to office in 1979?

I agree entirely with my hon. Friend. The policy is based on the extension of the freedom to choose. That was the reason why we made that change in 1979.