Oral Answers to Questions

Debate between Jacob Rees-Mogg and David Gauke

Tuesday 29th April 2014 Commons Chamber

[Mr Gauke]

It should be pointed out that unemployment in the hon. Gentleman’s constituency has fallen by nearly 30% in the last 12 months. The challenge with the 50p rate is that it is not very effective at reducing the deficit, but it is effective at driving jobs and growth out of the UK. Maybe that is why Labour supports it.

[Jacob Rees-Mogg (North East Somerset) (Con)]

Is not Her Majesty’s Government right to consider the overall effect on the economy when setting income tax rates and not to use them as a means of squeezing the rich out of Britain? Is it not also sensible to consider the extra revenue that comes from lower rates?

[Mr Gauke]

My hon. Friend is right. The reality is that this Government are raising more from the richest. We are doing it in a more effective and efficient way, and the 50p rate failed on its own terms.

Oral Answers to Questions

Debate between Jacob Rees-Mogg and David Gauke

Tuesday 14th May 2013 Commons Chamber

[Mr Gauke]

Of course that is not true. As the Institute for Fiscal Studies has shown, the biggest contribution to reducing the deficit is coming from the wealthiest 10%. The hon. Gentleman might also wish to ask himself why, when his party was in office, it had a top rate of income tax of 40% for all but 36 days out of 4,758.

[Jacob Rees-Mogg (North East Somerset) (Con)]

The Minister will be aware that in 1978-79 the top 1% of taxpayers paid only 11% of total income tax. That is now nearer 30%, which shows that the Laffer curve works and we are better off with lower rates. May I therefore encourage the Government to cut rates further?

[Mr Gauke]

I note my hon. Friend’s representation. It is worth pointing out that in 2010-11, the year in which the Government came into office, the top 1% paid 25% of income tax receipts: this year it is forecast that the top 1% will pay almost 30% of income tax receipts.

Finance Bill

Debate between Jacob Rees-Mogg and David Gauke

Monday 2nd July 2012 Commons Chamber

[Jacob Rees-Mogg]

We have already discussed this. By and large people pay the taxes that they are supposed to pay, as Parliament has laid down. If they evade tax, the full force and might of the law can and should come down upon them.

I conclude on the crucial point of defending the Government on a decision that, though it has not been immediately well received, will be welcomed by the electorate, because the electorate admire Governments who govern effectively through the tough times. They do not admire Governments who are loose and lazy with their money. They admire ones who are willing to take the tough decisions. We should oppose all the amendments in the group and stick with the Budget as it was—a very fine and good Budget, in which the right decisions were made.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

We have had an interesting debate that has addressed what are perhaps two of the most controversial issues in the Budget: the change to age-related allowances and the reduction in the 50p rate of income tax. The debate has lasted three hours, but at one stage I thought we might finish early, until we heard the tour de force from my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). I hope that I will have time to respond to the various comments that have been made. We heard the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) quote Groucho Marx, which I suppose is an improvement on other Marxes who might have been quoted, although I was reminded of the other Groucho Marx line:

“I’ve had a perfectly wonderful evening, but this wasn’t it”,

at least until I heard the speech from my hon. Friend.

The changes the Government have made to the rates and thresholds of income tax will provide a competitive platform for our tax system while also ensuring fairness. The measures in the Bill will reduce the additional rate of income tax in 2013-14 to 45p, increase the personal allowance to £8,105 and simplify the working of age-related allowances. I will discuss each of the amendments in turn, but it is important first to set out why the Government have taken this approach.

The fact is that the 50p rate of income tax has not raised the revenue it was intended to raise. It is currently the highest statutory income tax rate in the G20. When we came to power we inherited an economy that the previous Government had driven into a parlous state, with regard to not only the state of the public finances but our overall competitiveness. The fact is that the 50p rate came in only at the fag end of the Labour Government, who for 13 years had kept the 40p rate, and when they brought in the 50p rate they declared that it was temporary. There was a reason for that: they recognised that the 50p rate would damage our competitiveness. The hard evidence backs up that claim. The report by HMRC sets out that the 50p rate is distortive, damaging to international competitiveness and an economically inefficient way of raising revenue.

In short, the 50p rate is a failed policy. We were told that it would raise over £2 billion and, given the crippling deficit we were left, that was not something we could just wave away as if it did not matter. However, higher taxes are worth while only if they raise more revenue, and the analysis by HMRC shows that at best the yield would be £1 billion, and at worst it may raise nothing at all. That is because the behavioural response has been substantially larger than expected.

Changes to the Budget

Debate between Jacob Rees-Mogg and David Gauke

Monday 11th June 2012 Commons Chamber

[Jacob Rees-Mogg (North East Somerset) (Con)]

Does the Minister agree that the real things that must not be changed are a tight fiscal policy and a loose money policy? There is no alternative.

[Mr Gauke]

My hon. Friend is absolutely right: this Government, in contrast to the Labour party, remain committed to getting the public finances under control.

Budget Leak Inquiry

Debate between Jacob Rees-Mogg and David Gauke

Thursday 22nd March 2012 Commons Chamber

[Jacob Rees-Mogg (North East Somerset) (Con)]

I wonder whether my hon. Friend notices the incongruity of those who oppose openness in the Budget but were all in favour of it in terms of risk registers. Does he agree that the criticism is either muddled or synthetic?

[Mr Gauke]

In the interests of brevity, Mr Speaker, I agree.