Finance (No. 2) Bill

Debate between Shabana Mahmood and Ian Murray

Wednesday 25th March 2015 Commons Chamber

[Shabana Mahmood]

The Minister is tempting me to go further than I want to at this stage, because I am going to develop exactly those arguments about the costing, what the measure is likely to raise, and the inherent uncertainty in the Government’s work and the report that they produced. The Minister will be welcome to intervene once I have reached that point in my speech.

[Ian Murray (Edinburgh South) (Lab)]

As always when it comes to talking about the 50p tax rate, my hon. Friend is incredibly persuasive. Does she not find it strange that the Government are projecting a £7 billion tax cut but refusing to raise tax in this way, so the only conclusion the public can come to is that they must be looking to break their promise and raise VAT?

[Shabana Mahmood]

My hon. Friend is both generous and correct. Members who were here for the last debate will know that Government Members utterly failed to meet the charge levelled at them, which was that the combination of their history on VAT and what they wish to achieve in the next Parliament means that a VAT rise is inevitable if the Conservative party is elected to government in a few weeks’ time.

We know that the Government’s decision to reduce the top rate of tax for those earning more than £150,000 is as much at the heart of the current political debate today and in the next few weeks as it was in 2012. The debate is about where we raise revenue from and who we ask to shoulder the burden to help bring down the deficit further.

--- Later in debate ---

[Shabana Mahmood]

My hon. Friend has acquitted herself of that duty in her usual brilliant way. We may not be able to persuade the Conservatives to be fully Thatcherite, but getting them part of the way there would be welcome. If they cannot bring themselves to support bringing back the 50p rate, which of course they will not, they should at least support our amendment. As I said, it comes down to a simple question: is the burden of deficit reduction and dealing with the fall-out from the global financial crisis being shared fairly across all parts of our society? The amendment is genuinely intended to shed some light on that.

[Ian Murray]

I am grateful to my hon. Friend for giving way again. She is always incredibly generous, especially in Committee debates on Finance Bills.

If the Government are correct in their assertions about tax take and behavioural change—that a 45p rate generates more than a 50p rate and is fairer—does my hon. Friend share my surprise that they object to bringing forward a report that would tell us exactly that?

[Shabana Mahmood]

That is exactly the point. If the Government have nothing to hide and nothing to fear from all the data being out there for us to interrogate, they should accept our amendment and get on with the review that we have called for. They should have got on with it when we first called for it, immediately after they made the change to the rate. Our amendment genuinely seeks to shine light on what has been happening to people’s incomes and the impact of changes to the top rate of tax. When the Government commissioned their report, the data were not extensive, and the report has been contentious from the minute it came off the printer. The reasons for that go to the thrust of what the Financial Secretary was asking me earlier, and I will come on to those points shortly.

As we have heard, the Labour Government introduced the 50p rate. It came into effect in 2010-11 and was a decision made after the financial crisis as we sought to get the deficit down. There was nothing in the coalition agreement about abolishing the 50p rate, but in 2011 HMRC was asked to look into it and the yields it produced. It did not take a genius to work out that the Chancellor was thinking about cutting the top rate of tax, and in 2012 with HMRC’s report, the Exchequer effected a 50% additional rate of income tax to back up the Chancellor cutting the rate to 45p.

Finance Bill

Debate between Shabana Mahmood and Ian Murray

Tuesday 1st July 2014 Commons Chamber

[Shabana Mahmood]

I am pleased that the right hon. Gentleman is here. I recall in the debate in Committee of the whole House that he argued for a further cut in the rate to 40p, citing in evidence the increase in revenues resulting from the cut, but as he should know—I am sure he does—that is a result of bonuses being deferred. I shall return to that point, but I think it tells us all we know about where the Government stand on fairness.

[Ian Murray (Edinburgh South) (Lab)]

My hon. Friend talks about the amount that may be raised, but rather than having a regular debate across this Chamber about the 50p tax cut and the massive tax cut for millionaires, perhaps the Government could just accept the new clause and bring all the facts before the House?

[Shabana Mahmood]

My hon. Friend makes an excellent point. We do indeed have a regular debate about the facts and figures—I will come to the detailed data on the yield from the 50p rate later—but if the Government accepted our new clause, much of that debate could be put to bed, especially as Her Majesty’s Revenue and Customs now has much more data with which to produce an analysis that is less flawed than the one in 2012.