§ I come now to the taxation of income, where there will be one change. There is a dilemma which has to be squarely faced. Any increase in the basic rate of income tax is bound to hit millions of ordinary people who, through absolutely no fault of their own but entirely as a consequence of the deliberate actions of others abroad and at home, will soon find themselves with thinner pay packets as a result of the three-day working week. So, with one exception, I do not intend to increase the direct taxation of incomes.
§ Those on higher incomes will, in general, obviously be better able to cope with the situation we face. I have decided 963 that in respect of the last year of surtax, 1972–73, there will therefore be a 10 per cent. surcharge on total surtax bills. The surcharge will be payable half on 1st July 1974 and half on 1st January 1975.
§ The surcharge will not apply to anyone over 65 on 5th April 1974. The yield will be £35 million.