Income Tax

Debate between Michael Meacher and Sheila Gilmore

Wednesday 28th November 2012 Commons Chamber

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

First, I congratulate my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) on making such an extraordinarily good maiden speech. It was elegant, forceful, confident and amusing, and it had a global sweep, covering most of the current political agenda. I am sure that we will hear a great deal more from my hon. Friend, and I wish him well.

The basic reason why the 50p rate decision is so unfair is that the very rich caused the financial crash, yet those at the top of the banks have hardly suffered at all, while the rest of the population are having to fund the bail-out and are now paying the price in rising unemployment, shrinking incomes and reduced services. To cap it all, in those current circumstances of austerity, the Chancellor flagrantly and provocatively cut the 50p tax rate to give the 1% very richest in the country—those on more than £3,000 a week—an average £10,000 tax break, including giving 14,000 millionaires a gift of £40,000 each, which is an extra £800 a week.

The Exchequer Secretary gave two reasons for doing that, one of which was that not much money will be lost as a result, but Her Majesty’s Revenue and Customs report on the 50p rate reduction plainly states, in table A2, that the Treasury will forgo £3 billion as a result.

[Sheila Gilmore]

Does my right hon. Friend think the Government’s rush to judgment on the effect of the 50p rate decision will be as good as their rush to judgment on the value of the future jobs fund?

[Mr Meacher]

My hon. Friend makes her own point. It is very difficult to reach a final conclusion on this matter, because of forestalling and because this change is seen as temporary. The very rich will, therefore, ensure that most of their income is put forward until the rate is lowered.