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Taxation (Households)

Volume 491: debated on Tuesday 28 April 2009

7. What estimate he has made of the amount of tax that will be paid by the average UK household in 2011-12 in comparison with 2008-09. (271132)

For a household with a single earner on average male earnings, the proportion of income paid in direct tax was approximately 19 per cent. in both 2008-09 and 2011-12, a little more than 20 per cent. in 2007-08 and more than 21 per cent. in 1997.

Does the Financial Secretary understand that my constituents were fed up with paying more taxes under this Government, even before the Chancellor doubled the national debt? No one is fooled: a 50 per cent. tax rate may make it look as though the rich are paying more tax before the election, but after the election it will be average earners who are paying even more tax, because of increases in fuel duty and national insurance contributions, which by 2012 will cost every family in this country an additional £1,000.

Among the pieces of information that the hon. Gentleman gives his constituents, I hope that he will point out that they will pay less as a proportion of their income in direct tax in 2011-12 than they did in 1997 and that every basic rate taxpayer is, with effect from this month, benefiting from a £145 tax cut, thanks to the increase in personal allowances, which exceeds future national insurance rises. I hope also that he will have the courage to admit to his constituents that the Conservative party’s only tax promise to date is to increase the inheritance tax threshold to beyond £1 million, which would do nothing at all for 97 per cent. of estates, but would give on average a £200,000 tax cut to a tiny handful—3 per cent.—of estates. His constituents might have second thoughts when he explains that to them.

On the question of tax, specifically fair tax, is it not entirely consistent with Labour values and principles that those who have benefited most over the past 15 years—during the good times—such as the 17 millionaires on the Tory Front Bench, should be the ones who pay their fair share now that we are in a downturn? Does the Minister agree?

I think that my hon. Friend is absolutely right, and indeed the vast majority recognise that it is fair that those whose incomes have risen fastest, and those in the best position to do so, should contribute more.

To pick up the question asked by the hon. Member for Liverpool, Walton (Mr. Kilfoyle), why does it fit with Labour values to tax everyone earning more than £20,000 a year by increasing their national insurance contributions—that is nothing more than a tax on jobs—and to save that increase until after the election?

The hon. Gentleman should perhaps have paid a little more attention to what I said a moment ago: the increase in personal allowances in income tax—that is, in the tax-free proportion of people’s income—gives every basic rate taxpayer a tax cut of £145 from this year.

I read with interest at the weekend that certain celebrity millionaires, such as Sir Michael Caine, are considering leaving the country because of the Government’s tax moves. Could they be reminded that it is ordinary, hard-working people, who pay money to watch their films, who put them where they are? We should give those celebrities the message that if they cannot support services for those hard-working people, such as the national health service, when the country is going through a bit of a problem, good riddance to them, and we should say, “Don’t come back.”

I say to my hon. Friend that I hope that Michael Caine is not going to leave the country, but I agree with him that at a time of crisis in the world economy it is fair to ask those who are in a position to do so to contribute more.

I think the situation is even worse than my hon. Friend the Member for Billericay (Mr. Baron) fears. My hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) put his finger on it: the small print of the Budget Red Book shows us that if we fast-forward a couple of years, even with roaring growth in line with the fantasy forecasts that the Chancellor gave us last Wednesday, a further £45 billion-worth of tax increases would still be required. Will the Financial Secretary to the Treasury confirm that that equates to £1,450 a year extra tax per family? Is not the truth that behind the spin about taxing the few with a 50p tax rate, the reality is a secret Labour stealth tax bombshell, targeted at the many and timed to go off after the next general election?

I think I remember that poster. I can say to the hon. Gentleman that for the household that the hon. Member for Billericay (Mr. Baron) asked me about, and that we talked about—the household with the single earner and two children—the proportion of income spent on tax has gone down since 2007-08. It has gone down significantly since 1997, and we will protect the well-being of those families in the years ahead, both through our investment in public services and through the way in which we manage the tax system.