Budget Statement

Lord Sikka Excerpts

Friday 12th March 2021 Lords Chamber

[Lord Sikka (Lab) [V]]

My Lords, I congratulate all new noble Lords and welcome them to the House. The Equality Trust states that, before Covid, the poorest 10% of households paid on average 42% of their income in direct and indirect taxes, compared to 34.3% paid by the richest 10% of households. This gap has increased since 2010. Rather than tax justice, the Budget will force the less well-off to pay higher amounts in income tax, national insurance contributions, VAT and council tax, which will inevitably deplete the purchasing power of the masses and damage economic recovery.

Regressive taxation cannot build a just and fair society, but the Government do not seem to grasp that. Just two reforms—taxing capital gains at the same marginal rates as earned income and restricting tax relief on pension contributions to the basic rate of income tax—could generate an additional £25 billion per year for redistribution and levelling up and change the balance of taxation. Hopefully, the Minister can explain why the Government continue to neglect tax justice for the less well-off members of our society.