Finance Bill

Debate between Ian Murray and Ian Swales

Tuesday 1st July 2014 Commons Chamber

[Ian Swales]

I am not committing anything for our next manifesto, just as the hon. Gentleman’s party is not as yet. Our manifesto is being discussed now.

[Ian Murray]

I will check Hansard to make sure that this is accurate, but I think the hon. Gentleman said that some of the figures were dubious. If he genuinely believes that, why does he not vote for the new clause so that we get figures that are not dubious? Perhaps we can then assess whether a 50p tax rate is correct. Indeed, while he is going on about tax rises, will he confirm to the House whether he thinks a VAT increase is a Tory tax bombshell?

[Ian Swales]

I do not see VAT mentioned in the new clause. I was pointing out that, as the hon. Gentleman’s own Front Benchers say, the analysis of the benefits of the policy comes out as plus or minus zero: it could have a large cost or be a significant benefit. If we are in that sort of ballpark, we are clearly not talking about huge measures that will cut the deficit.

Under this Government, the wealthy have been paying a lot more every year in income tax than they ever did in any year under Labour. They are paying more in many other ways as well. The Labour Government thought it was okay for the wealthy to pay £250,000 in pension contributions and get full tax relief; the coalition Government have reduced that to £40,000, making £95,000 a year of tax benefits that the Labour Government were happy to give but this Government are not. Capital gains tax was at the derisory level of 18%, and is now 28%. The level the Labour Government charged on capital gains was lower than the rate of income tax, so hedge fund managers could be paying a lower rate of tax than the people who cleaned their offices, a truly shameful record.

If anyone is lucky enough to be spending £1 million a year, they will be paying £25,000 more in VAT. To answer a point made by the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) earlier, people on low pay spend very little on standard rate VAT items. Once again, the right hon. Member for Wokingham mentioned this: most of the day-to-day living costs of most people—housing, energy, food and many other costs—do not carry standard rate VAT, so the wealthy are paying more there.

The thresholds for inheritance tax were going up under Labour but have been frozen under this Government through the efforts of the Liberal Democrats. We know that the party with which we are in coalition would like to return the level to £1 million, as it campaigned on that during the last election and I believe it will do so again next time. We are pleased that the threshold for inheritance tax has been frozen throughout our time in Government, because we feel it is the right thing to do at this time. We also saw industrial-scale tax avoidance under the previous Government, and many cases now arriving in court go back to the days when they were in power. The idea that this Government are not taxing the wealthy does not stand up to examination.