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Tax Burdens

2. Mr. Rob Wilson (Reading, East) (Con): What recent assessment he has made of the average tax burden on a family. [62324]

The Paymaster General (Dawn Primarolo): The tax for a single-earner family with two children on male mean earnings of £31,600 a year will be 20.4 per cent. of    gross family earnings in 2006–07, which is 0.8 percentage points lower than in 1997–98. For the same family on median earnings of £24,000 a year, tax will be 14.2 per cent., which is a 3.4 percentage points lower than in 1997–98.

Mr. Wilson: According to the Organisation for Economic Co-operation and Development, Britain pays more tax than Germany and our tax burden is growing almost 30 times faster than that of France. Does the Minister agree with the chief economic adviser to Ernst and Young who has warned that the high level of taxation now threatens the stability of the UK economy?

Dawn Primarolo: The hon. Gentleman is wrong in his assertion. The recently published OECD report on family income demonstrates that the UK is below the European average and below levels in Germany. As the Chancellor said in his Budget speech, the child benefit and child tax changes mean in effect that income tax liability on a family with two children, with earnings of up to £425 a week, is wiped out. That means 3 million families in Britain with no income tax liability.

Mr. John McFall (West Dunbartonshire) (Lab/Co-op): May I refer the Paymaster General to the OECD report, which indicates that income tax as a percentage of labour costs for people on 67 per cent. of average earnings in the UK is 8 per cent. below the EU 15 countries and 4 per cent. below the average for OECD countries? Does not that indicate that progress has been made on our poverty targets? We need to engage in a national debate on tax to ensure both economic growth and social justice in this country.

Dawn Primarolo: My right hon. Friend is entirely right. He quotes from the correct OECD study, as I would expect him to do, and it demonstrates that the cuts in tax undertaken by the Government—the 10p rate and the 22p rate—the increases in child benefit and the tax credits not only ensure that we can give the most resources to those who are least well off, but that we are lifting children out of poverty: precisely the points that my right hon. Friend makes.

Mr. Michael Fallon (Sevenoaks) (Con): Table 2 of the OECD report this morning shows that the tax on a married couple with two children has been cut over the past five years in Australia, Belgium, Canada, Germany, Ireland, the Netherlands, Portugal, Slovakia and the United States, whereas it has risen in the United Kingdom. When will Ministers wake up to the damage that they are doing to our economy?
 
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Dawn Primarolo: I am surprised at the hon. Gentleman's comments, because he is very well-informed on these things, and he knows that the tax wedge—the calculation that the OECD uses for those figures—also takes into account the contribution of employers in working them out. He will also know, because he has been a Member for a long time, that this Government introduced the 10p rate, that this Government reduced the tax rate to 22 per cent., that this Government increased child benefit when the Government of whom he was a member froze it and that this Government introduced tax credits in the teeth of opposition from the Conservative party.

Angela Eagle (Wallasey) (Lab): Will my right hon. Friend not listen to the siren voices of Opposition Members or fall for their interpretation of the tax burden and recognise, as I think that she has, that tax has an important role to play in ending child poverty? How does she think that the Government can redouble their crusade against child poverty, which has already taken 700,000 children out of the poverty that the Conservative party left them in when it left office, so that we can reach the target to halve it by 2010?

Dawn Primarolo: As my hon. Friend acknowledges, the number of children in absolute poverty has been halved by the Government: 1.8 million children and low-income families have been lifted out of poverty since 1996–97. She will also have noted the comments that my right hon. Friend the Chancellor made in his Budget speech about the importance of the commitment to tax credits and child benefit rises in continuing to challenge the level of child poverty in this country and to raise children out of poverty. That is the only suggestion on the table. Despite the fact that Opposition Members constantly complain, they make no positive suggestion on how to improve the situation and raise more children out of poverty.

Sir Peter Tapsell (Louth and Horncastle) (Con): Now that the Chancellor has had it explained to him from afar that he will be expected to introduce at least another two Budgets, will the right hon. Lady try to persuade him to apply his mind to the reduction of the vast overall increase in taxation that he has imposed on the people of this country?

Dawn Primarolo: It does not matter how many times Opposition Members try to assert that view, the fact is that the Government have been reducing tax—[Interruption]—and my right hon. Friend the Chancellor's Budgets, directed specifically at families, ensure that that happens. I look forward to continuing, if I can, to contribute to Budgets that take forward those principles.

Ms Sally Keeble (Northampton, North) (Lab): Further to the question on table 2, does my right hon. Friend agree that the table shows that, over the past five years, the tax burden has gone up by 0.1 per cent. to 27.1 per cent., which is still below that of Germany at 35.7 per cent. and France at 41.7 per cent.? Will she continue with the policies of holding down tax for families and ensuring good quality public services for my constituents?
 
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Dawn Primarolo: My hon. Friend knows that this Government reduced tax from 23 to 22 per cent., that this Government introduced the 10p starting rate, that this Government pay tax credits to ensure that families do not start to pay tax, in effect, until they are on a weekly income of £425 if they have two children and that only this Government will use those policies to ensure that families get the very best, both from public services and from jobs and incomes.

Mr. Mark Hoban (Fareham) (Con): In Question Time yesterday, the Deputy Prime Minister talked about looking at tax changes in the round. Will the Paymaster General tell me, in the round, how much a two-pensioner household will get to compensate them this year for the loss of their £200 pre-election bribe and an average increase in council tax of £254?

Dawn Primarolo: Those on pension credit will continue to see rises this year in line with the announcements made by my right hon. Friend the Chancellor. They will continue to receive the heating allowance, as he identified, and they will continue to be the beneficiaries of the massive increases that the Government have put into local government to ensure that council tax rises are minimised.

Fuel Duty

3. Mr. David Chaytor (Bury, North) (Lab): What the total revenue from fuel duty has been since 1996. [62325]

The Chancellor of the Exchequer (Mr. Gordon Brown): The answer is £215 billion. In the Budget, I froze duty until at least 1 September. I also announced a renewable transport fuel obligation with a higher 35p differential for biofuels; an environmentally based payment system for vehicle excise duty, ranging from zero to £210; and progress on introducing sulphur-free diesel.

Mr. Chaytor: In spite of the revenue from fuel duty, which is a very large amount, is it not the case that the cost of private motoring continues to decline year on year? Is it not also the case that, in the light of the climate change review programme published this week, sooner or later all parties in the House are going to face up to the fact that an above-inflation rise in fuel duty is the most effective means of reducing congestion, and of reducing CO ₂ emissions in the transport sector?

Mr. Brown: My hon. Friend takes a big interest in environmental issues and I appreciate what he has said on many occasions over the years about the progress that we have made in our environmental policy, but I have to say that the doubling of oil prices—indeed, in many ways, the trebling of oil prices—over the past three years has created a new situation for both motorists and the freight industry in this country. We have got to balance the needs of the economy with meeting our environmental objectives. I hope that he understands that, at a time when oil prices have doubled, we have got to take that into account in setting fuel duties.
 
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