Income Tax

Debate between John Glen and Chris Evans

Wednesday 28th November 2012 Commons Chamber

[Chris Evans (Islwyn) (Lab/Co-op)]

Let me make it clear that I am not against success. I believe that everyone should be rewarded with the fruit of their labours. However, it is becoming increasingly clear that the Government are in the grip of a failed economic theory—a theory which claims that tax cuts for those at the very top will somehow trickle down through society and that it is possible to go on cutting taxes and spending and that that will have absolutely no consequences.

I am someone who likes to look forward, but I think that in this instance we must look back to the last occasion on which we followed trickle-down economics. When the Thatcher Government followed that policy, they ran deficits in every year except 1988 and 1989. In 1990, we saw record business repossessions, unemployment above 3 million, record mortgage rates and record inflation, and I fear that we are going back there.

Let me tell hon. Members who say that the argument about cutting the top rate of tax is a “left versus right” argument that they are entirely wrong, because it is not a political argument. It is about something quite simple: mathematics. When we take £3 billion out of the economy, we will have to make up that shortfall somewhere, somehow. Judging by what I have heard from the Chancellor so far, I do not think that the Government are very long on detail.

The Chancellor and the Government talk about tax evasion, which has been mentioned today, including by the hon. Member for Dover (Charlie Elphicke), and they talk about going after all those people who avoid taxes. Well, I say this to the Chancellor: “Good luck to you.” Does he honestly believe that the last Government did not go after tax evaders? Does he honestly believe, when faced with people who have created byzantine systems to avoid the taxman, that it will suddenly be possible to close the loopholes? It is simply not going to happen.

People are working harder than they have ever worked before. Some are working 37 hours a week; some are doing two or three jobs just to make ends meet, and what do they see? They see food prices rising all the time. The worst effect is on their families; when they come home from work, they are too tired to involve themselves in their children’s lives. In my constituency, unemployment has risen by 429% in the past year. More people are struggling than ever before, and what do the Government do? They stand back and give tax cuts to the people who are riding in Bentleys and tax increases to those who drive vans for a living.

[John Glen (Salisbury) (Con)]

The hon. Gentleman is making a powerful speech, but if he is so committed to fairness in the tax system, can he tell me why, for 666 weeks under the Labour Government, the higher rate of tax was lower than it is now? How can he possibly stand up and make the case that he is making, given that his party, which was so recently in power, adopted a very different approach?

[Chris Evans]

I congratulate the hon. Gentleman on his factual recall. Yes, the top rate of tax was lower, but—I do not know whether he is aware of this—we experienced something called the financial crash and the rules changed somewhat. That is the truth: things have changed. We live in a different world now, and that should be accepted. My argument, which I shall maintain throughout my speech, is that the people at the bottom are feeling the pain.

The increase in VAT is a tax on the low-paid, because everyone has to pay it; everyone has to buy goods. When I walk down Blackwood high street, I see that every retail business there has been affected by the VAT increase. VAT on food is zero-rated, but the haulier who delivers the food will pass on the increase in VAT on his petrol to the food shop, just as the increased price of cotton is passed on to the clothes shop. Not a single person has been helped. People in this country are suffering, and what do we see? We see a tax cut for those at the very top.

We hear much talk about rebalancing the economy. We are told that the economy is being built, but what this tax cut shows us is an economy that is being built not on people and products, but on perks and promises. That is the wrong message for us to be sending.