HC Deb 23 July 1940 vol 363 cc643-4

I have now to say a word about the Surtax. The graduation of the Surtax was increased in the first war Budget so as to produce £8,000,000 in a full year. I propose now a further increase in the scale of charge under which the rate on the first slice of income in excess of £2,000 will be increased from 1s. 3d. to 2s. in the £, and the peak rate of 9s. 6d. in the £ will come into force in respect of income in excess of £20,000 per annum instead of in excess of £30,000 per annum as at present. Details of the scale proposed will be found in the White Paper, and this increase is estimated to produce £11,000,000 in a full year and £8,000,000 in the current year.

As the Committee is aware, the standard rate of Income Tax and the Surtax are the two constituent elements of one tax, namely, the Income Tax, and the effect of the changes is that Income Tax will be graduated to a peak rate of 18s. in the £, so that on the slice of incomes in excess of £20,000 a year the State will take nine-tenths of every £. To take one or two illustrations, a married man with two children and with investment income of £3,000 per annum, will pay in Income Tax and Surtax £1,238 instead of £1,062.

Mr. MacLaren (Burslem)

His wife will seek a divorce.

Sir K. Wood

If his income is £5,000 a year, he will pay £2,463 instead of £2,112; and if his income is £10,000, he will pay £6,113 instead of £5,324. The result of these increases in Income Tax and Surtax will be to raise the yield from them—

Mr. MacLaren

And the death rate.

Sir K. Wood — in a full year to £639,000,000 as compared with the figure of £290,000,000 which they produced only five years ago—more than double.

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