Income Tax: Top Rate

Lord Lawson of Blaby Excerpts

Tuesday 15th July 2014 Lords Chamber

[Lord Newby]

My Lords, there is no £3 billion, as I have explained. The effect of the cut is £110 million. The other measures we have taken will bring in over a three-year period some £7 billion extra from the same people. For people on ordinary incomes, the rise in the income tax threshold means that by next year the typical basic rate taxpayer will be £805 per annum better off and 3.2 million people who were otherwise paying income tax will not be paying income tax at all.

[Lord Lawson of Blaby (Con)]

My Lords, it may be difficult for the party opposite and my noble friends on the Liberal Democrat Benches to understand, but taxation has one purpose, and one purpose only, which is to raise revenue. The Minister said his memory is not very good, so may I remind him that when in 1988 I reduced the top rate of income tax from 60% to 40%, it brought in much more revenue and also resulted in the wealthy paying a higher proportion of tax than ever before? Will he reconsider his previous answer?

[Lord Newby]

No, my Lords, it simply is not true that the sole purpose of tax is to bring in revenue. Obviously every tax does bring in revenue, but some tax is introduced in order to affect behaviour. We are about to have a plastic bag tax but I do not think that the primary purpose of that tax is to bring in money.