Taxation: Income Tax

Lord Brooke of Alverthorpe Excerpts

Wednesday 6th March 2013 Lords Chamber

[Lord Newby]

My Lords, the Government do not have any plans to raise the threshold for national insurance simply because—as noble Lords will be aware—to do so would be extremely expensive. The Government looked at merging national insurance and income tax but have decided that they will not take that consideration any further forward for the course of this Parliament.

[Lord Brooke of Alverthorpe]

My Lords, is it not true that the 5 million people who may have benefited from the changes have in fact had to pay extra VAT since this Government came to power? They are all paying 2.5% extra in VAT. Could we not look for a reduction in the VAT rate, which in turn would then be a great stimulus to the economy?

[Lord Newby]

My Lords, the Government do not think that a reduction in the VAT rate makes any sense at this point. A 1% reduction in the VAT rate costs about £12 billion. If we were to reduce the VAT rate, we would have to find that £12 billion from somewhere else—so we do not propose to reduce it.