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Tax System: Fairness

Volume 745: debated on Tuesday 6 February 2024

Regarding fairness, we have a progressive tax system where the top 5% of income tax payers pay nearly half of all income tax, while the top 1% pay more than 28%. In addition, the national insurance reforms announced at the autumn statement cut taxes for 29 million people. That package also strengthens the fiscal position by helping taxpayers to get their taxes right, while bearing down on the small minority who seek to avoid paying their fair share.

The Minister talks about tax cuts, but in April most households in this country will receive a 5% increase in their council tax. That is not because local councils have mismanaged their finances, but because after 13 years of austerity, the local government finance system is essentially broken and relies on a regressive and unfair council tax. Why in the autumn statement did the Chancellor freeze the budgets of the Department for Levelling Up, Housing and Communities for the whole of the next Parliament, leading the Office for Budget Responsibility to forecast a further £13 billion rise in council tax? Does that not show that the Chancellor has no regard at all for councils and the services they provide, or is he simply deferring a problem that his Government has created for the next Government to sort out?

I am afraid that is a ridiculous characterisation. We on this side of the House care, including about our vibrant, important local councils. That is precisely why they just received an additional £600 million, and future spending will be a matter for future fiscal events.

I am a strong believer in fairness in taxation. Would my hon. Friend care to advise the House about who would bear the heaviest burden of taxation, should His Majesty’s Government choose to adopt the £28 billion spending commitment that the Labour party announced on the radio this morning?

My hon. Friend makes an important point. Of course, we never know from day to day exactly what Labour’s policy is, and I understand there are even differences among its Front Benchers at the moment, but we heard a firm commitment, without any promises at all about where the money would come from. We therefore know where it would come from: it would come out of taxpayers’ pockets or further borrowing, which is deferred taxation. Everybody will pay for it.

The Labour party has set out clear proposals to close tax loopholes on non-doms, private schools and private equity to give a much-needed boost to our public services. Will the Treasury Minister confirm whether the Government have assessed, or plan to assess, the merits of such a policy?

I am pleased to hear the hon. Gentleman’s enthusiasm for closing down tax loopholes and going after the abusers. It begs the question why Labour did not vote in favour of the Finance Bill last night, which included measures along those lines.

That is a short answer, but the answer to the wrong question—perhaps the Minister can have a second go. While he is thinking about the answer, I point out that the Comptroller and Auditor General has highlighted that the Government are wasting up to £28 billion a year on mismanaged procurement and governance of major projects. Does the Minister agree that the Conservative Chancellor and his predecessors have had to raise taxes so much partly because they are wasting so many billions of taxpayers’ money each and every year?

The reason we have had to raise taxes is £350 billion of support during the pandemic, which I did not hear the Opposition oppose, and an additional £100 billion to help people during the cost of living crisis, which I did not hear the Opposition oppose. We therefore had to increase taxes out of necessity, but we reduce them out of choice, which is exactly what we are doing. Labour increases taxes out of necessity and then continues to increase them out of choice.