AXE TAX
Mr. Healey 's Election Plans
Some people in the Labour Party like to hold Mr. Roy Jenkins responsible for the Labour Government's defeat in 1970. He was Chancellor of the Exchequer at the time. They think that if only he had cut taxes more in his last Budget, he could have bought the necessary votes.
I do not believe you can buy the votes of the British electorate like that. Mind you I do believe that Mr. Healey thinks you can. On past form he will certainly leave nothing to chance.
The Size of the Problem
But whatever he says and does, the key question for the taxpayer is how heavily will he be taxed after this budget compared with when the Tories were last in office.
The fact is that he will still be left far worse off. To restore the pattern of income tax to what it was under the Tories would cost nearly £5 billion. That is about £250 a year for each household in the land.
So even after his budget, even after the boost of North Sea oil, we are almost certainly going to be paying far more tax than we did in 1973 when there was no oil money. All of us. [end p1]
The Standard of Living
We shall still be suffering under Socialism—suffering under high taxes, high Government spending and low standards of living.
The Socialist tax system of today might have been designed to make us a nation of spectators and moon-lighters, an impoverished nation.
For as surely as our taxes have risen our incomes have fallen. If you are a family man, earning £70–£80 a week, after nearly four years of Labour Government your take-home pay is worth £8 a week less than when they took office. But during the four years of Conservative Government the take-home pay of that same family would have been £6 a week more.
In fact Labour has largely cancelled out the increased standard of living the people gained when we were in office.
Most of us could do with that lost £8 a week now. It's over £400 a year. You could pay your gas, electricity and rates with a sum like that.
The Forthcoming Budget
And now let us get back to Mr. Healey's thirteenth budget—the real pre-election budget on 11th April. The lights are already burning late as Treasury officials work out how much of the people's own money the Chancellor should be prepared to hand back to them.
What about the TUC's idea of a 25 per cent income tax rate on the first £1,000 of taxable income?
“An attractive idea” , Mr. Healey will say to himself, “if I can pull the wool over people's eyes and make it look as if I have cut the basic rate of income tax from 34 per cent to 25 per cent” .
Don't be taken in. The effect of reducing the rate of tax from 34 per cent to 25 per cent on £1,000 of income is to reduce people's tax bills by £1.73 a week at most. Very welcome. [end p2]
But remember that in the same month of April, National Insurance contributions are going up. Some will pay 60 pence a week more. Others up to £1.75 a week more—enough to wipe out that tax relief.
This Government takes with one hand what it gives with the other.
Tax Take from Top Earners
Our top tax rates are the highest in the Western world.
To take 83 per cent is sheer confiscation. It is ridiculous to leave a man with only 17 pence out of a pound of his own earnings.
Britain must stop driving its most able and best qualified people abroad. We need them here.
We have just seen what has happened in the case of the North Sea divers. They compared notes on rates of tax with other divers from America, Germany, France, Norway.
They had more opportunity than most of us for forming a view on the British tax system. They protested to the British Government. They were met by a stone wall because they did not fit into the pattern of a Socialist state. So they quietly moved elsewhere.
The disappearance of British divers from the North Sea was so serious for the oil companies' operations that the Government decided it must give way. A few days ago it was announced that divers would be treated specially. It simply had to be made possible for them to keep a bigger share of their earnings. They are highly skilled, take high risks and deserve high rewards.
This was a significant breach in the fiscal wall surrounding Britain.
Skilled and professional people have gone abroad in their thousands, sometimes as a direct result of the British tax system. [end p3]
How foolish we are. How much better it would be for Britain if these people applied their skills and talents here. We cannot all be top people. But none of us can do without them. Top countries have got to have top people. They are the one export we cannot afford. We want them working for us, not for our competitors.
83 per cent—The Symbol of Sociàlism
A country's top rate of tax is a symbol. Very little revenue is collected from people in this country who pay tax at the highest rates. A top rate of 83 per cent is not much of a revenue raiser, it is the symbol of British socialism—the symbol of envy.
Concern for Retired Folk
We are just as deeply concerned for another group, at the other end of the scale. Those are the retired people struggling to make ends meet on small savings incomes.
These people, who have not had the good fortune to qualify for indexed occupational pensions, have had the worst deal from inflation. Prices have nearly doubled in the past four years. Savings incomes have lagged far behind. There was a time when we were worried about the plight of people on small fixed incomes. We still are, but now those incomes are small falling incomes and they worry us even more. [end p4]
They are mostly very modest and independent people who made their own provision for retirement. They could not have foreseen that in the last four years the value of their money would be halved. Socialism has wrecked their security and replaced it with perpetual worry.
To them I give a firm pledge. We shall lighten the burden of the tax that is called “Investment Income Surcharge” . I wish to leave retired folk in no doubt at all that we mean to give them a fair deal in this matter.
Will They Never Learn?
I am afraid the lesson must be that Socialists at best learn little and late, and often never at all. For the last four years we in the Conservative Party have been shouting ourselves hoarse about the number of jobs being lost as small businesses have had to close down in their thousands—victims of Labour's taxation and bureaucracy.
I remember the debates on Capital Transfer Tax during the winter of 1974/5. It was clear to everyone except the Labour Government that this diabolical new tax would destroy jobs before it brought in a pennyworth of revenue.
Only now, three years later, have they recognised that businesses which have taken generations to build up can be destroyed in months. And the unemployed have learnt too.
Now, with a by-election pending and a General Election due soon, the Socialists have suddenly changed their tune. They have discovered that Britain has a lot of people who know what it is like to have their livelihood shot from under them. Full of people who live in the real world, not the make-believe world of Karl Marx and Mr. Benn.
The first thing the James CallaghanPrime Minister did was to send for Mr. Lever who is Chancellor of the Duchy of Lancaster in his Cabinet. Mr. Lever is a businessman. He knows about the mysteries of high finance and capitalism. “Go” , says the Prime Minister, “Go and study the Conservatives' policies, and come back with some suggestions” . Mr. Lever found it all there, in “The Right Approach” , and in our little booklet “Small Business—Big Future” . [end p5]
All that was needed was to put straight into reverse the whole of the Chancellor's doctrinaire tax legislation of the previous three years. There was no mystery about the loss of jobs in the small business sector; it was due to the disappearance of companies by the thousand, squeezed to death by high taxation.
So the new measures were unveiled in the Chancellor's twelfth Budget, last October. How Mr. Healey must have choked on the words. But even now only a small part of his destructive tax legislation has been withdrawn.
We must not allow ourselves to be misled into thinking that all will now be well. Where, we may ask, was Mr. Lever during the previous three years? And what would Mr. Lever's advice count for if Labour were returned after the next General Election, on a manifesto written by Mr. Benn and his team?
Only a Conservative Government, with its heart in the real job of making business work, will get small businesses going again. Only a Conservative government will cut out the red tape, the bureaucratic interference, the lethal taxes which have so poisoned the business atmosphere of this country. And only a Conservative government will prevent the imposition of the Wealth Tax which both the Labour—and Liberal—parties want.
All told, it's not going to be easy to get the tax burden down to where we Tories left it. That's why it'll be so important to keep public spending under control, to cut back the share of the nation's wealth that is spent by Government. There'll be little hope of that from this Government. They've actually planned to put up State spending by 8 per cent next year. This means higher taxes, higher borrowing—exactly what we've come to expect from Socialism.
The Tax Collecting Industry
While we have been getting poorer, tax collecting has become Britain's great growth industry.
Two and a quarter million hours of overtime were worked in Revenue offices during 1977. What a waste of human effort and taxpayers' money … . [end p6]
During the four years of the present government, the number of staff in the Inland Revenue and the Customs and Excise has grown by 20,000. That is more than the whole working population of my home town of Grantham. That is just the number of new staff alone.
The total staff of the Inland Revenue now outnumbers the number of sailors in the Royal Navy.
What is the cost of all this? Taking salaries, super-annuation and office space together, those 20,000 extra staff are costing us about £100 million a year.
With that sum Britain could be building three new general hospitals each year, or 70 miles of motorway, or more than 100 brand new secondary schools.
Axe Tax
Socialists claim that all they want is to re-distribute income and wealth from the rich to the poor. This is not the effect of high taxation. The effect of high taxation is to switch income and wealth from the people to the State.
I should like to see Britain emerge from the next Conservative administration with taxes that are lower, not higher, than the rest of the world. We are determined to axe tax.
That is the only hope, as I see it, of recreating the healthy business climate which we need so that the marvels of modern technology can bring prosperity to these Islands. [end p7]
(2) IRN Report 17 February 1978MT
They fought the last election on the figure that it was only going up 8.4 per cent a year. Now I believe that it takes a Labour government to boast that prices are only rising by ten pence in the pound a year. I would have thought it a matter for shame, rather than boasting. hear, hear and applause
Let me tell you what that means to your pound. holds up pound note
That was a Conservative pound that they started with. Let's see what Mr Healey has done to it after four years at No. 11 Downing Street. It doesn't buy that number of goods now, it's now down after four years of Labour government to 53 pence. Now I was going to take some scissors and cut it, provided someone's got some sellotape to stick it up again. That one was a Conservative pound. cuts the note in half; general laughter
That's the Labour pound after four years of Labour government. [applause] That's the Labour pound after four years of Healey-Callaghan-Wilson Labour government. And now it's got down to that they have the effrontery to boast that it's only going to lose a further ten per cent a year if inflation goes on at the present rate. I think that's a matter for condemnation, not for congratulation.