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House of Lords

Tuesday, 22 March 2005.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by the Lord Bishop of Liverpool.

Taxation

Lord Geddes asked Her Majesty's Government:

The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): My Lords, the percentage of earnings paid in income tax has fallen for all families, except married couples with no children, since the Government came to office in 1997. Table 2.7, "Percentage of earnings paid in income tax", on the Inland Revenue website provides the relevant information. A single earner also pays less.

Lord Geddes: My Lords, while thanking the Minister for that Answer, he may or may not have noticed that my Question did not refer to income tax, but to taxes. Can he confirm that since his Government came to power, taxes have increased by some 50 per cent in cash terms, or 24 per cent in real terms, resulting in average households paying an estimated £5,000 more tax now than they did eight years ago? Can he further confirm that, from the Treasury's own figures in last week's Budget, taxes are predicted to increase by some £35 billion over the next four years which, as a share of GDP, means an increase from 35.6 per cent to 38.5 per cent in 2008–09?

Lord McIntosh of Haringey: My Lords, none of those further questions arises from the original Question put to me, but I shall do my best. I responded in terms of income tax because, as the noble Lord, Lord Geddes, well knows, other forms of personal taxation like value added tax are not capable of the same analysis as income tax. When someone pays value added tax, you do not know whether they have children, whether they are single or whether they are married. You cannot know the incidence in the same way and thus VAT and other forms of taxation cannot simply be added to income tax and tax credits.

In response to the second part of the noble Lord's question, no, I cannot confirm what he has said. The claim sounds most implausible and I do not know where it has come from. I shall be delighted to investigate it in more detail.

Lord Barnett: My Lords, does my noble friend accept that making party political points on either side of the argument is pretty much a waste of time? No one
 
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here has a vote, and no one outside is listening. But would not the simple answer to the noble Lord have been to say that, yes, there has been an increase in taxation, but there has been an even bigger increase in average earnings?

Lord McIntosh of Haringey: My Lords, I agree with part of what my noble friend says; certainly it is true that no one is listening. But when one is asked a party political question, it is good fun to make party political points in response and I am not going to be deprived of that pleasure.

However, the more serious point made by my noble friend is absolutely true. The reason why there are more taxpayers is that more people are earning more money. That is also true for higher rate taxpayers.

Lord Northbourne: My Lords, can the noble Lord explain why the Government's munificence in relation to income tax has been denied to married parents with children?

Lord McIntosh of Haringey: My Lords, on the contrary, married couples with children are doing better, which is a conscious issue of policy as part of our aim to reduce and ultimately eliminate child poverty. What I said in response to the original Question was that the only group of taxpayers for whom taxation as a percentage of earnings has not gone down is married couples without children. All families with children are better off in those terms.

Baroness Noakes: My Lords, is it not true that, since the Government came to power, some 7.5 million more people are paying a higher marginal rate of tax? Is it not also true that the Budget indicated that under this Government income tax will rise by another 1.1 percentage points? Can the Minister tell us how many more people will be paying a higher marginal rate of tax if this Government are re-elected?

Lord McIntosh of Haringey: My Lords, I can only think that the noble Baroness was not listening when I responded to my noble friend Lord Barnett. Of course more people are paying tax and more are paying higher rates of tax. That is because more people are better off and therefore able to pay those taxes. That is quite different from saying that tax rates have gone up. What has happened is that the tax yield has risen because we are better off, and I am not ashamed of that.

Lord Tomlinson: My Lords, if my noble friend is succumbing to the temptation to be party political, will he do it a little better? Will he tell the Opposition about the benefits of low inflation, high growth, low unemployment, and point out very clearly that it is not just average earners whose prosperity is greater, it is also greater for above average earners and below average earners, and in particular for pensioners? Let us tell the story as it is.

Lord McIntosh of Haringey: My Lords, I am not constrained in my willingness to make party
 
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political points like those made by my noble friend Lord Tomlinson, but I am constrained by my willingness on the whole to answer the Question and not to stray wide of it.

Lord Lawson of Blaby: My Lords, since the Minister is so anxious to respond to questions about income tax specifically, will he give an undertaking that, if the Government of which he is such a distinguished member are re-elected, there will be no increase in the top rate of income tax?

Lord McIntosh of Haringey: My Lords, my refusal to anticipate our manifesto must not be taken as an indication that there will be changes—or not, as the case may be.

Lord Newby: My Lords, does the Minister agree that one of the most important features of any system of taxation is that it is seen to be fair? Can the Government take a major step towards making the tax system fairer by scrapping the grossly unfair council tax and replacing it with a fair local income tax?

Lord McIntosh of Haringey: My Lords, I shall resist the temptation to go wide of the Question by responding to a point about council tax, which was not part of the Question tabled by the noble Lord, Lord Geddes. But I will respond to the point about fairness. In addition to the figures we have considered in Table 2.7 on the Inland Revenue website, the most striking ones show the extent to which the bottom decile of earners has done so much better in terms of personal taxation than the top decile. While there are far too many figures for me to read out, I urge the noble Lord, Lord Newby, to look at the table. As a measure of social justice, it is very powerful indeed.

Lord McKenzie of Luton: My Lords, will my noble friend confirm that if we look at the record of the previous Conservative government, we see that in the 1990s they froze personal allowances for three years on the trot; they froze the capital gains tax annual exemption limit for four years in succession; and they froze the level at which higher rate tax kicks in for four years in succession? Will he confirm that we now enjoy the lowest rates of corporation tax in our history, the lowest effective rates of capital gains tax since that tax was introduced, and enjoy basic and starting rates of income tax lower than those which we inherited, and the lowest for decades? Can he also give us his view, when the question is put asking who can be trusted on the economy and taxation, on how the country will answer?

Lord McIntosh of Haringey: My Lords, I have learnt from happy experience never to question the figures given by my noble friend Lord McKenzie. He is always right.
 
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Firearms Offences and Violent Crime

2.44 p.m.

The Earl of Shrewsbury asked Her Majesty's Government:

The Minister of State, Home Office (Baroness Scotland of Asthal): My Lords, between 1989 and 1996 there was an increase of 36 per cent in offences involving firearms (excluding air weapons). Changes in reporting and recording mean that figures for 1997 and 2003–04 are not directly comparable.

Between 1989 and 1996 there was an increase of 44 per cent in violent crime. Again, changes in reporting and recording mean that figures for 1997 and 2003–04 are not directly comparable.

Without the NCRS and increased reporting, recorded violence would have fallen.


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