Taxation: Income Tax

Lord Grocott Excerpts

Monday 24th June 2013 Lords Chamber

[Lord Grocott]

Can the Minister explain how it was that he was able to give a very positive answer to his noble friend about, as he described it, the benefits to the Exchequer of reducing the top rate of tax, but that when my noble friend Lord Eatwell asked him a very valid question about people who had deferred taking their bonuses from the high-tax period to the lower-tax period, he said that it was impossible to speculate about it? He understands the benefits but he cannot acknowledge the simple statistic that my noble friend put to him.

[Lord Newby]

The absolutely bald point that lay behind the question of the noble Lord, Lord Eatwell, is that when you do this kind of thing at the top end of tax rates, very well-off people take evasive action. That is why it is an ineffective way of raising additional amounts of money. People do not just sit there and pay the tax: they forestall it, postpone it and avoid it. This is why it was a very ineffective way of trying to raise additional funding.