Jack Dromey
Main Page: Jack Dromey (Labour - Birmingham, Erdington)Department Debates - View all Jack Dromey's debates with the HM Treasury
(12 years, 7 months ago)
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Nigel Mills
No, I will happily discuss the granny tax. I feel no shame about my Government’s policies. Unlike Opposition Members, I am not trying to airbrush out most of the last 12 years of history and pretend that all those disasters never happened. I am happy to address what the Government are doing.
We need to put the position in context. In the financial year that has just ended we were still spending £126 billion more than the tax revenue that was raised, and we expect to spend more than £90 billion more than tax revenue in the current tax year. That is not a healthy financial situation, and it is not a desirable position. We do not have enough money to go around doing many things that we would like to do, no matter how useful or socially valuable. The global financial situation is very difficult, and we must make difficult decisions. During the election campaign, Government Members told potential constituents “This will be a difficult Parliament. We will have to make cuts, not because we do not think the things we are cutting are good and not because we would not prefer to leave them as they are, but because we must try to sort out the horrible mess that exists.”
Jack Dromey (Birmingham, Erdington) (Lab)
Did the hon. Gentleman say to his constituents “Elect me, and we will introduce a granny tax to fund a tax cut of £40,000 for 14,000 millionaires”?
Nigel Mills
Obviously I did not say that, because I would have been wrong if I had, but I did say that no section of the population would be spared the pain caused by our sorting out the mess that we would have to deal with. I would also have said that I considered the 50p or, more accurately, 52p tax rate an invidious measure which had been devised as a political trap, that it was a terrible tax policy, and that it would probably raise very little money.
The two independent studies that support the Budget have shown that the cost of lowering the rate to 45p is about £100 million a year. The saving from the so-called granny tax is approximately 10 times the size of that. If anything in the Budget is being funded by the granny tax, it is the reduction in personal allowances for the low earners in society.