Kelvin Hopkins
Main Page: Kelvin Hopkins (Independent - Luton North)Department Debates - View all Kelvin Hopkins's debates with the HM Treasury
(12 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ian Swales
Well, £4,000 extra VAT is obviously one way that they are contributing as a result of this Government’s policies.
The hon. Member for Nottingham East (Chris Leslie) said in the previous debate that the important focus of the tax and benefit system is on need and alleviation of poverty. I believe that VAT increases, which impact on the wealthy more than on the poor, are a good way of doing that.
Kelvin Hopkins (Luton North) (Lab)
The hon. Gentleman keeps referring to VAT as a progressive tax. It is a flat tax, proportionate all the way up the income scale. Progressive taxes have increasing rates at higher incomes.
Ian Swales
Technically, VAT is a progressive spending tax because the average rate paid increases the more one spends. That is the definition of a progressive tax.
Mr Hanson
I suppose that is why the Federation of Master Builders only today—[Interruption.] Just for the record, on my uttering “Federation of Master Builders”, Conservative Members fell about with laughter, but the FMB’s members build houses and employ people in the construction industry. Only today—in a brief dated today—it stated:
“The situation for small construction firms has been made more perilous by the VAT increase at the start of the year,”
and that we risk
“11,400 construction job losses and 34,000 total potential job losses”
because of the VAT increase. The hon. Member for Bristol West (Stephen Williams) and his colleagues may recall that the OBR expects some 200,000 additional people to become unemployed this year. The lack of consumer confidence, the impact of VAT and the lack of consumer spending will be critical to those potential job losses in the community.
Kelvin Hopkins
The Tories have a track record on this. My right hon. Friend may recall that in 1979 they raised VAT from 8% to 15%, massively deflating the economy. Unemployment rose by 2 million and a fifth of manufacturing industry disappeared, and it was all down to that policy.