Finance (No. 4) Bill

Debate between Elizabeth Truss and Sheila Gilmore

Wednesday 18th April 2012 Commons Chamber

[Elizabeth Truss]

I am not quite sure whether their amendment expresses what they wanted it to express. As with the HMRC report, there may be some uncertainty about what exactly the Opposition intend to do.

First, the introduction of the 50p tax rate diverted resources from the productive economy at a very important time—just as we were heading into the worst recession, thanks to the dreadful economic policies of the previous Government.

[Sheila Gilmore (Edinburgh East) (Lab)]

How can people postponing their income from one tax year to another, but nevertheless presumably still getting that income, prove so damaging to the economy? Is the hon. Lady suggesting that, having got the income a year early, they simply sent it abroad? Surely it can still be invested.

[Elizabeth Truss]

When income is artificially moved from one year to the next, it is not properly used for investing in projects. Under the previous Government, a lot of expenditure went into unproductive areas of the economy. Much of it went on excessive public spending and into the property industry, leaving us with the scorched-earth situation that we have had to address.

The signal that the previous Government sent to the rest of the world was that Britain was anti-aspiration, anti-business and anti-work. That happened at a time of increasing international competition, as it is now ever easier to move people and capital around the world because of improved technology and globalisation. Other countries were reforming their tax system, however, so as they were moving forwards, we were moving backwards.