Tax Fairness

Lindsay Hoyle Excerpts

Tuesday 12th March 2013 Commons Chamber

[Kelvin Hopkins]

No, no. I live in the real world, and I suspect that even my hon. Friends on the Front Bench will not start considering 98% marginal tax rates.

George Bernard Shaw, a witty man but a socialist, who was paying 98%, said, “I consider myself to be a tax collector for the Government, in return for which I receive a 2% premium.” I thought that that was one way of putting it. Shaw was, as I said, a socialist, who no doubt accepted that wealthy people such as himself should pay substantially more than the poor.

I realise that we will not return to that rate, but I will say that during a Budget debate in the last Parliament, on a cold Thursday afternoon when it was raining and there were about six people in the Chamber, I suggested that we could consider a 50% rate for those on £60,000 a year—this was then!—a 60% rate for those on £100,000, and a 70% rate for those on £200,000. That would have taken us nowhere near where we had been in the 1970s, but it would have been a substantial change from where we were then.

I did not get much of a reaction in the Chamber, but the Deputy Speaker spoke to me privately afterwards. I am giving away no secrets, because she is no longer a Member of Parliament. She said, “I do so agree with you. Why do the Government not just do as you say?” Well, if only; but I had said what I thought, and I thought that would be a reasonable move. I suggested the 50% rate for those on £60,000 because at least it would mean Members of Parliament paying a tiny bit extra on the top part of their income. I thought that was right then, and I still think it is right.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I fear that the hon. Gentleman has run out of time. Much as I was enjoying his speech, I must now call Catherine McKinnell.

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[Mr Foster]

No, I will not.

A number of speakers debated the 50p tax—[Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Mr Davies, you have spoken. It is up to the Minister when he gives way. It is not for you to keep reminding him, saying that he should give way.

[Mr Foster]

Thank you, Mr Deputy Speaker.

It is worth repeating yet again that the Opposition put the 50p tax rate in place for a whopping 36 out of their 4,758 days in power. As my hon. Friend the Exchequer Secretary made clear, a recent review showed that the additional rate is a distortive and economically inefficient way of raising revenue. So we have decided—sensibly, in my view—that it is neither efficient nor fair to maintain a tax rate that is not effective at raising revenue from high earners and risks damaging growth. That is why we have introduced a top rate of 45p, which will be higher than the top rate that existed under Labour for all but 36 days of their 13 years in office.

It is not true to suggest, as some have done, that the Government are not requiring the wealthiest to pay more. We have continually increased the tax contribution of the richest since the election. The 2010 Budget introduced a higher rate of capital gains tax; the 2011 Budget tackled avoidance through disguised remuneration; and the 2012 Budget increased stamp duty land tax to 7% on residential properties costing £2 million or more. We are also the Government who took action in the autumn statement to reduce the cost of pensions tax relief, and we introduced a 15% rate of stamp duty for properties owned through a corporate vehicle. I am grateful to my hon. Friend the Member for Rochester and Strood (Mark Reckless) for a number of suggestions of further measures that we can take in this area, which we will certainly consider, but I can confirm that if a property is taken out of a corporate envelope, SDLT will be paid in full.

As a result of the Government’s actions, the richest pay more tax on capital gains, more stamp duty on their homes, more tax on their pension contributions, and more on income tax. As the Institute for Fiscal Studies has confirmed, the rich are now paying a higher percentage of income tax than at any time under the previous Administration. Given our measures to boost compliance, more of the tax owed will be collected. I thank the hon. Member for Scunthorpe for his praise for our work in this area.

As well as making the wealthiest in society pay more, we are asking less of the poorest in this country. As the hon. Gentleman said, we are helping the hard-working families in this country. From April 2013, the income tax personal allowance will increase yet again by £1,335 in cash terms to £9,440. This change will benefit 24 million individuals, lift an additional 1.1 million out of income tax altogether, and provide a real-terms gain of £223 a year to basic rate taxpayers.

In total, the coalition’s actions since we came into office mean that 2.2 million people under the age of 65 will have moved out of paying income tax altogether, and there is a tax cut of £600 for more than 20 million people. We are proud of the way in which we are putting fairness firmly on the agenda. As the Secretary of State for Business, Innovation and Skills said earlier today, parties should be judged on what they deliver on fairer taxes, not on what they say about them. It is deeds not words.

The Labour party when in office failed to back our mansion tax proposals, and now we are not even clear whether it is willing to include a mansion tax in its 2015 manifesto. The Liberal Democrats have made it clear that we are in favour of such a scheme, but I urge my colleagues to support the Government’s amendment, which reiterates our party’s support for the mansion tax without putting the coalition Government at risk. It is the country’s economy and people that need a strong, co-operative and working Government, which this coalition Government are providing. The do not need a Labour party playing the exact kind of cynical political games that the public so revile. The hon. Member for Ashfield (Gloria De Piero) said that the public disliked infantile Punch and Judy politics. So do I, and that is why I urge the House to support the amendment.

Question put (Standing Order No. 31(2)), That the original words stand part of the Question.

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[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

On a point of order, Mr Deputy Speaker. I wonder whether you have had any indication from the Government on whether they plan to make an oral statement on the subject of the bedroom tax. Yesterday, in questions to the Department for Work and Pensions, Ministers assured us that the scheme was running smoothly, yet this afternoon we have another rushed U-turn that offers no money and no protection for disabled children. Right hon. and hon. Members would have welcomed the opportunity to put those points directly to the Secretary of State, and expose today’s announcement for the shallow nonsense that it is.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I can tell the right hon. Gentleman that the Chair has received no notification that there will be a statement before the House. I am sure that those on the Treasury Bench and other Secretaries of State will have heard the comments that have been made, and the right hon. Gentleman is well aware that there are other avenues he may wish to pursue.