§ With this proposal for an improved Income Tax child allowance I associate another reform. This is in the field of Surtax and also stems from a recommendation of the Royal Commission. It, too, is based upon the proposition that the responsibilities of marriage can be costly. The Royal Commission recommended that the starting point for Surtax should vary as between single persons, married couples and married couples with children. They suggested reducing the starting point for the single person to £1,500, leaving the married couple to start at £2,000, and increasing the starting point of £2,000 by £160 for each qualifying child.
§ I do not propose to reduce the Surtax starting point—which is still where it was in 1920—for anybody, and I shall leave the single person at £2,000. I think, however, that there is a good case for some variation for the others. I propose, therefore, that the ordinary Income Tax personal allowances other than the single allowance—that is, the married allowance, the child allowance and the housekeeper and dependent relative allowance —shall run for Surtax as well as for Income Tax.
§ Thus, the Surtax starting point for a married couple will become £2,100. For couples with children it will, of course, in accordance with the proposal that I have just made on the child allowances, vary with the children's ages. For example, in a family with two children, one aged 10 and the other 14, the starting point for Surtax under the new arrangements will be £2,325. But that will apply as from 1957–58, the year now starting, the Surtax for which is payable on 1st January, 1959. I propose, however, that the change shall apply to the Surtax payable on 1st January, 1958, in respect of 1956–57. Since that year is already past, the child allowance to be taken into account will, of course, be the present flat 999 rate of £100. This change will cost £6 million this year and £9¾ million in a full year.