MR SPEAKER: This House accrued its powers to contain and moderate a rapacious monarchy. Our job remains the same. Yet today our duty is to contain and moderate a rapacious bureaucracy.
We authorise far too much taxation because we offer the illusion of "free services" whether they be roads or hospitals or schools. Taxation neuters the economy. I want to be remembered as the Chancellor who opened up our national life. I am going to cut all taxes - sharply.
Let us agree to examine the success of my measures next year. My assumption is that lower duties may raise higher revenues. Freed of the burden of taxation, everyone will be more active; the very nature of the economy will take a surge. At low tax rates, the evasion of taxes becomes a waste of time. History confirms this, but in modern China and India we observe this paradox that a light tax regime generates far more revenue.
My first measure is to impose a rule that all retailers must price their wares with pre- and post-tax prices. Every forecourt will make it plain that a litre of fuel may cost 75p but that 70p of that is tax. No longer, I hasten to add, I am lopping 50p off a gallon.
In all the supermarkets we will see what foods would cost but for the levies that they carry. The iniquitous Common Agricultural Policy is beyond my powers to reform but at least everyone will see how it doubles the cost of everyoneâs groceries.
Income tax, in league with the tax we call national insurance, is more than an oppressive burden on all enterprise; it also distorts all the price information about the value of everyoneâs work. As of 4 April, there will be only one income tax rate - 20p in the pound. I acknowledge that this may create massive unemployment among accountants, but they will have to retrain to perform useful services. NI, Lloyd Georgeâs folly imposed in the 1906 Budget, is hereby abolished.
If anyone purports to be "unemployed" after these measures, we will know that they are not trying. My assumption is that the entire commercial life of the UK will rediscover a vitality not seen for generations.
For the past 100 years we have taxed profits and "unearned" income at rates that have been so punitive they only created professional evasion tactics. With no taxes whatsoever on profits, the publicâs patterns of investment and spending will be changed in a manner that none of us can foresee in detail.
My expectation is that the money now at the discretion of our fellow citizens will be far better husbanded than by agencies of the State. Today sees the end of "capital punishment".
Inheritance tax is henceforth abolished. It purports to catch the opulent, but the wealthy take evading action. In fact IHT is merely a levy on the elderly whose asset is their home. IHT is absurdly expensive to collect. Every Â£1 taken costs 50p to collect. The relatives of those expiring will make far better use of the sums than my most diligent public servants.
The effect of these overdue reforms will be to make the tax returns of 99 per cent of the population so simple that they should be no longer than a postcard and take barely a minute to complete.
It is argues that, as a province of the European Union, we are obliged to raise VAT to 20 per cent by 2008. I would welcome having this tested in the courts.
In the meantime, I am reducing VAT from 17.5 per cent on all transactions to a plain 10 per cent. Those items currently excluded from VAT, such as childrenâs clothes and newspapers, will be subject to the uniform rate. The government will ratify no further EU demands for tax "harmonisation". Britain will compete through lower taxes.
I propose to withdraw the cascades of cash we gift to local authorities from the Treasury. In future, municipal b