Taxation: Deficit Reduction

Lord Forsyth of Drumlean Excerpts

Thursday 28th October 2010 Lords Chamber

[Lord Sassoon]

My Lords, as compared with the Labour Government’s plans, an awful lot of things have changed. The first is that we have a credible deficit reduction plan. We have yet to hear the Opposition’s plans on that. There will be a reduction in public spending of £81 billion by 2014-15, but, critically, we need growth, and so 77 per cent of the deficit reduction plan will come out of a reduction in spending. We absolutely want to keep the pain of increased taxation to a minimum. That is why it is absolutely critical and right that our taxation plans aim for lower revenue than do the Opposition, because that is what is required to get growth in the economy going.

[Lord Forsyth of Drumlean]

My Lords, will my noble friend confirm—as I think the noble Lord, Lord Myners, did before the election—that the actual revenue from increasing the top marginal rate of tax to 50 per cent is very much less than was anticipated? Is that the case? Will he also confirm that the lesson of the 1980s, and of the experience of other countries around the world, is that if you want the rich to pay more in taxes, you do that by cutting rates, not increasing them?

[Lord Sassoon]

I am very grateful to my noble friend. I completely agree with his sentiments. This is not a Government who believe in medium and long-term high marginal rates of taxation. We have to incentivise the private sector to go out and generate wealth in order to deal, among other things, with the rebalancing of the economy which is now so necessary.