§ 3. Mr. Enright
To ask the Chancellor of the Exchequer if he will give the rates of VAT since the beginning of 1979; and the dates of each change.
§ The Economic Secretary to the Treasury (Mr. John Maples)
Until 18 June 1979, 8 per cent. and 12½ per cent; from 18 June 1979 to 1 April 1991, 15 per cent; and since 1 April 1991, 17½ per cent.
§ Mr. Enright
I am grateful to the Economic Secretary for his diligent research in producing those figures. Will the hon. Gentleman tell the constituent of mine who is over 21 and earns £50 for a 40-hour week why he has taken a greater percentage of the young man's earnings than he has from his right hon. and hon. Friends who go to the City and, for part-time work, earn hundreds of thousands of pounds? Is not it a fact that the Government are robbing the poor to pay the rich?
§ Mr. Maples
The only way to reverse what the hon. Gentleman alleges would be to go back to the sort of tax rates that we had under the last Labour Government—83 and 98 per cent. I am sure that it will be interesting to the right hon. and learned Member for Monklands, East (Mr. Smith) to know that Labour Members advocate such tax increases.
What the hon. Member for Hemsworth (Mr. Enright) said is not true for the vast majority of the population. A married man on average earnings, with two children, has found that his tax burden from central Government has risen from 32.2 to 32.7 per cent. The great increase has come from domestic rates and the community charge, and we know who is responsible for that—high—spending Labour councils.
§ Mrs. Peacock
Will my hon. Friend confirm that it was the last Labour Government who introduced a value added tax of 25 per cent. on certain luxury items?
§ Mr. Maples
My hon. Friend does well to remind the House of what happens under a Labour Government. They had a value added tax rate of 25 per cent. My hon. Friend may have noticed that the Opposition have been floating a similar idea among themselves and discussing again in an internal memorandum the possibility of a luxuries rate of VAT. We have no problem in this regard; we do not need to raise taxes—[HoN. MEMBERS: "You have."] We have set out our tax and spending plans for the next three years. The Labour party has set out only its spending plans, including plans to spend £35 billion. Apparently, it does not need to finance that from raising more tax.
§ Mrs. Beckett
Is the Minister aware that he has just admitted that under this Government there has been a trade-off between income tax cuts and increases in VAT? If we take the Prime Minister's words at face value—that the Conserservative party will not raise the rate of VAT 1095 —does the hon. Gentleman recall an interview given recently by the Chief Secretary, when he was asked about extending coverage of VAT to transport fares? He said:nobody knows what is waiting round the corner.The Chief Secretary then sought to imply that the Government might in some way be forced by the EC to extend the coverage of VAT.
Is the Minister aware that last week in Brussels Madame Scrivener, the relevant Commissioner, assured me that there was no question of our being forced by the European Community to extend the coverage of VAT, and that we cannot be forced so to do? Does he think that his right hon. and learned Friend the Chief Secretary was hinting that the Government might choose to extend VAT?
§ Mr. Maples
This is quite extraordinary. No one could have fought harder than this Government to maintain the zero rates that we have. We have secured the right to do that. My right hon. Friend the Prime Minister has made it clear that we have no intention of raising the rate of VAT either before or after the election. As I told my hon. Friend the Member for Batley and Spen (Mrs. Peacock), we do not need to raise taxes; the Labour party does. How do the Opposition think they are going to finance £35 billion of extra spending without raising taxes on ordinary people? They cannot do it.
§ Mr. Squire
My hon. Friend reminds the House of the 25 per cent. rate under the last Labour Government and mentions that it was a tax on luxuries. Will he confirm that those luxuries included televisions; and does he agree that if there is not to be an income tax rate of 35p to support those massive spending plans, they can be supported only by a large increase in VAT?
§ Mr. Maples
My hon. Friend is, of course, right. There has to be a substantial increase either in income tax or in VAT to pay for the Labour party's spending plans. My hon. Friend does well to remind us that when the Labour party was last in office its idea of luxuries included petrol as well as televisions and caravans.