Below are extracts from Mr Major’s speech made to the Conservative Party Central Council meeting at Buxton on 18 March 1988. The extracts were published by Conservative Central Office as document 107/88.
Labour have accused us of producing a budget for the “super-rich”. The best-off in society. They say that they are the only beneficiaries of abolishing the higher rates.
They are wrong. The whole economy benefits from lower tax rates. Because high tax rates stifle enterprise and dynamism. They remove the incentive to invest, expand and take risks. And without such incentives we have fewer jobs and lower living standards. For everyone.
They are wrong for another reason. For almost 2/3rds of those who benefit from the abolition of higher rates earn less than £40,000 a year. People like many surgeons, scientists, senior managers, the headmaster of a large comprehensive school, the university professor. Not the privileged elite but the talented people whose skills we need here.
And they are the very people we would lose if we stuck to tax rates well above those in other countries. For around the world Governments have recognised that high taxation deters effort and enterprise. We could ignore the worldwide trend to lower taxes – but only at the price of seeing these people take their skills abroad – to the US with a top tax rate of 28 cents in the dollar, to Canada with a top tax rate of 29 cents in the dollar; even to Socialist Australia and New Zealand. Is that really in the country’s interest?
But not only do Labour oppose the higher rate cuts. On Wednesday I asked John Smith to deny that he would reverse the cuts in basic rate tax of the past two budgets and take it back to 29p. Not one word of denial.
But Labour would not stop at that. For it is now clear that they stand by their commitment to abolish the ceiling on National Insurance Contributions. A commitment we uncovered to their dismay during the election. That means they want to slap an extra 9p in the pound in tax on all those earning over £15,860 – on the senior registrar, the middle manager, the deputy headmaster, the university lecturer. I gave Mr. Smith the chance to deny that too. Not one word of denial.
So now we know, Labour believe in high taxes. Not just for the super-rich. But for every taxpayer in the country. And we are the only party of low taxation. The only party that believes people know best how to spend their own money, on their own behalf, on their own families. And that is why we have set a new target: a basic rate of 20p in the pound as soon as we prudently and sensibly can.
But not recklessly. For we are also the party of prudence. To increase public expenditure while reducing taxes would be noteworthy in itself. It would have been easy to do that by putting it on tick. To do so while decreasing debt is a great achievement. Nigel Lawson deserves great credit for balancing the Budget. Through his efforts we are no longer day to day debtors.