§ 16. Sir B. Rhys Williamsasked the Chancellor of the Exchequer what estimate he has made of the effective increase in purchasing power that would 224 follow from a total abolition of Surtax; and what estimate he has made of the effect on the net yield of taxation within one year and within five years of the change.
§ Mr. Harold LeverI estimate that, once the change was fully operative, the abolition of Surtax at present rates would increase incomes, and therefore purchasing power, by about £280 million. The direct increase in demand would be much less because a high proportion of the additional income would be likely to be saved. I have made no estimate of the effect of abolition on the net yield of taxation, but at present income levels the gross yield would be reduced by about £200 million in the first year after the change and by about £275 million in the fifth year.
§ Sir B. Rhys WilliamsIs it not clear that there is no genuine moral justification for this tax, or even an economic justification for it, and that, in the long run, the entire economy would gain if this vindictive survival from the class war were brought to an end?
§ Mr. LeverThis vindictive survival from the class war survived vindictively throughout Conservative Governments. I am afraid that its total abolition cannot be readily envisaged, but some reconsideration of rates and the replacement of the revenue from similar classes in society might well be envisaged.