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Lord Steinberg: My Lords, I must confess a little disappointment that immediately the debate started the Government Benches practically emptied of Members. It may be, perhaps, that they did not want to listen to the good advice coming from these Benches. So many left, it was rather like the exodus of the children of Israel from Egypt.
I, too, compliment the noble Lord, Lord Howard, on his maiden speech. When I had the great honour of being introduced to this House, the announcement was made on 1 May and 46 new Peers were created, five of whom were on the Conservative Benches. Four have spoken in the debate today and the other was in attendance for part of the debate. I could ask myself, "Where are the other 41?".
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I have always paid a great deal of money in tax. Sometimes I resented it and occasionally I was happy to pay it. I recall that early on in my business career I did not pay my tax on time. I was called in to have an interview with the collector of taxes in Belfast, who said to me, "Mr Steinberg, you earned the money. We are not a credit bureau. You pay the tax".
I believe that the Government have a strategy to extract as much tax as possible from individuals and companies and not necessarily pay attention to their genuine concerns. In that regard, I appreciated the speech of the noble Lord, Lord McKenzie, who gave an unreconstructed view of Labour's thinking. I hope that I will similarly give an unreconstructed view of Conservative thinking.
Perhaps I may start with the tax on gambling, a business with which I am associated and in which I declare an interest. It pays exceedingly high rates of tax. The general betting tax is levied at 15 per cent of gross profits. In casinos, taxation on gross profits runs from 2½ per cent right through to 40 per cent. So the popularity of the high-roller in the press must always take into account that you really only make 60 per cent of his gross losses.
I am not painting a picture where I would ask noble Lords to put out the begging bowl, nor am I asking for a flag day, but I am thinking that our party's policy of taxation on people who spend money rather than on those who save money is a correct and proper policy. People do manage to thrive in a low tax economy which encourages enterprise and, more by luck than judgment, people so far have managed the huge increases in taxation the Government have levied, particularly over the past five years.
I did not mention the earlier two years, when the Government rode on the back of the previous Conservative administration. They were content then to operate their fiscal policies as previously. But the figure has often been repeatedI shall repeat it again, as have other speakersthat there have been 66 tax increases, principally through a stealth approach. It is the approach with which I violently disagree. If the Government ever wanted to be absolutely straightforward with the public, they should have announced their tax increases in a normal way.
It is a shame that stealth taxes have become part of our vocabularyat least on this side of the Houseand to have them repeated as many as 66 times is something of which the Government should not feel proud.
The very first stealth tax the Government introduced was the raid on dividends, which has caused practically in its entiretythe collapse of savings through pensions. The Government say that it is the weakness of the stock market. That is a part of the reason but they are wrong to say that it is the major part. Five
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billion pounds a year was then grabbed and it has gradually increased. Compounded over the intervening years, Government have now taken a grab of more than £40 billion in the seven years they have been in power. Perhaps it would be useful to ask what the total figure is. Then you will realise why the pensions that people receive are being severely devalued. It used to be said that a man's home was his castle and his pension was guaranteed, but now neither of these things are sacrosanct.
I shall now refer to the area of taxation which concerns me deeply. If we acceptand I imagine that most of us would acceptthat one's home is one's castle, how can it be justifiable to tax people twice, once when they earn their money and a second time when they die? I am referring, of course, to inheritance tax, which has become a burden around the necks of most people in our property-owning society. If someone bought a house 20 years or more ago, the probability is that that home has grown sufficiently in value to eat up that part which is free of inheritance tax. When one spends one's working life preparing for eventual retirement, it cannot be right that the family home has got to be sold to pay inheritance tax. It is pretty well immoral.
In a number of countries there is no inheritance tax. Your Lordships may be interested to know that on 1 January 2005 Sweden removed its inheritance tax. There is also no inheritance tax in Australia, Germany and Canada.
"What are the inevitable consequences of being too fond of glory? Taxes upon every article which enters into a mouth or covers the back or is placed under the foot. Taxes on everything on earth and the waters under the earth".
Homes play a major part in the well-being of the country. Although the Government are correct in saying that interest rates and inflation are at a very low rate, this is undoubtedly part of a world-wide phenomenon. Bear in mind that our interest rate is still more than twice that of the USA and is several times more than that of Japan. When figures are quoted, the Government mention nothing but the glorified unemployment figures. They do not mention the 2.7 million people on long-term invalidity benefit.
Coupled with inheritance tax, particularly on one's home, it was interesting to read in the press on Sunday that in 1997, when Labour came to power, 70 per cent of first-time buyers paid no stamp duty. Last year only 24 per cent were fortunate enough to pay no duty and first-time buyers now face an average bill of more than £1,000. It is people in middle England who are being squeezed so severely. A country that staggers under the burden of high personal tax cannot be happy. That is why we Conservatives are so much in favour of a low-tax economy.
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Let me return to the subject of inheritance tax. Currently the tax-free band for inheritance tax is £263,000. If one looks at the record of the Labour Government, and I know it is has been mentioned during the past seven and a half years, one will see that the value of housing has increased considerably, whereas the inheritance tax ceiling has been raised marginally. In a property-owning democracy, it is surely right and proper that people are not penalised beyond the grave and that their beneficiaries do not have to pay substantial amounts of tax or to sell assets that include people's life work or home.
I am in favour of a scheme that increases substantially the upper limit for inheritance tax or of a comparative scheme that eliminates the main home from inclusion in the calculations of inheritance tax. Inheritance tax is iniquitous, but even more iniquitous was the retrospective legislation from the Treasury to cover the schemes by which people tried to ensure that the family home would be passed on to future generations. Unless I am wildly mistaken, the Government introduced retrospective legislation as far back as 1986, which is an unparalleled shame and disgrace.
"Estimates of the number of higher rate tax payers for 200506 depend on the level of the basic rate limit. This will be announced in the usual manner in Budget 2005".[Official Report, 21/12/04; col. WA 141.]
This is a complete fudge. I shall now ask the question again. If the basic rate of tax remains the same, and the Budget confirms that, would the Treasury agree that approximately 100,000 people will be dragged into the top rate tax band? This debate is all about lower taxation and that question is asked on the basis that it would appear that more people are being dragged into the top tax band.
In conclusion, I remind the House, as has been done before from these Benches, that it was a Labour Government that increased the top rate of tax to 83 per cent and had an additional tax rate of 15 per cent on investment income, resulting in a total tax rate of 98 per cent for many entrepreneurs. Unlike my noble friend Lord Kalms, at that time I was not in a position to be paying that rate of tax.
I also remind the House that the Prime Minister said that his Government would not increase the top rate of tax from 40 per cent but they have introduced 66 stealth taxes. Those taxes have effectively reduced the entrepreneurship of people in this country and
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have created a heavy burden on all classes of the population. One of the most iniquitous increases is probably the increase in national insurance, which is effectively an increase in the top rate of tax. It is no surprise that savings under this Government have halved. In the Conservative party, we believe in lower rates of tax that will reward people throughout the country. I hope that some of the points that I have made strike home on the rather empty Benches opposite.
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