§ Mr. DaltonI will come to that. I would like to take it later when I have completed the cycle of changes. The present scale of Surtax is very ragged and uneven, and I have taken this opportunity to smooth it out and make it better looking, as well as to give it a certain elevation, from £2,500 onwards, to a new maximum rate of 10s. 6d., as against the present 9s. 6d., on all incomes in excess of £20,000. The details of this new scale will be found in the Financial Statement which will be available in the Vote Office when I have finished. The Committee will observe, if they study the figures, that the new scale in effect takes back, on slices of income in excess of £12,000 a year, the whole of the relief given by the shilling fall in the standard rate. On slices of income above £2,500,3d. out of the 1s. is taken back; on slices above £5,000 a year, a further 3d., making 6d., is taken back; on slices above £6,000, a further 3d., making 9d.; and on slices above £12,000 the full 1s. is taken back. Be- 1895 tween £6,000 and £15,000 the increases are irregular, owing to the irregularity of the present scale
There are some 125,000 Surtax payers, of whom nearly 100,000 have incomes of £5,000 a year or less. The remaining 25,000 have incomes of £5,000 a year or more. My proposal substantially affects only the bigger people, who are relatively few in number, and, it would not be denied, have an exceptional capacity to pay. This increase of the Surtax scale is linked with the reduction in the standard rate, and so will come into force in the charge for the year 1946–7. The Surtax is an instalment of the Income Tax collected in the year following the year for which it is charged. Surtax falling to be collected in 1946–7 will be the Surtax charged for 1945–6. The increased Surtax which I propose for 1946–7 will be collected in 1947–8. As regards the Surtax for 1945–6, for which the standard rate of Income Tax is still 10s., the existing scale of Surtax continues unincreased.
The total effect of this series of changes in Income Tax and Surtax is shown in the tables in great detail in the Financial Statement. In these Tables the present rates of tax for a number of specimen incomes are compared with the rates proposed. It will be seen, from a study of the Tables of effective rates of tax, that my proposals operate to steepen the slope of graduation. The rates on the lower incomes are reduced more than those on the middle incomes, while rates on the highest incomes are reduced least of all. In other words my proposals make the tax more sharply progressive than before.