§ It is, of course, quite impossible to contemplate freeing all workers from any direct taxation; nor, I am certain, would they ask, in existing circumstances, for any such exemption. What I have been anxious to do is to remove, as far as possible, the disincentive which arises from a high rate of taxation on marginal earnings.
§ Let us remember that, despite the drawbacks of high taxation and high prices, the workers of this country have been doing a good job, as is shown by our present level of production. If, by these reliefs, we can help them to do even better, then certainly the reliefs will be fully justified.
§ Under the proposed arrangements, the position in that respect will be as follows. 77 For the single person earning £6 a week, a tax of 12s. 3d. will be payable in all, compared with 14s. 5d. at present. If an additional £1 is earned for overtime, he would, at present, have to pay 7s. 6d. on that £1; in future, he will pay only 4s. 10d. The married man with two children, earning £10 a week, will, in future, pay only 9s. 6d. in Income Tax, as against 11s. 6d. at present. If he earns £1 on overtime, instead of paying 7s. 6d., as at present, he will pay only 4s. 10d. Below those figures, the payments will, of course, be lower.
§ I believe that these concessions, amounting to over £100 million a year, will be of great importance to our production drive, and I cannot think that anyone will now have a just cause to complain that he is held back from increased effort on the score of the Income Tax burden.
§ The increased reliefs I have put forward will necessitate new P.A.Y.E. tables, and these will be in the hands of employers in time for the new scale to come into operation in the week beginning 6th July. The relief then given will be cumulative relief, as from the beginning of the tax year.
§ The reliefs in Income Tax which I have just announced will carry a step further the process inaugurated by my predecessor in 1945. Already, the reliefs given since that date have amounted to £480 million, a very large part of which benefitted particularly the lower income groups. With the present remissions, which will amount to £101 million in a full year, the total becomes £581 million in relief in a period of less than three years.