§ My next proposal is for a change in the structure of the rate schedule. At present we have a very wide basic rate hand of £5,000 taxable income, and the rate of tax then jumps by 10 per cent. to the next band of liability. After this point the successive bands of liability increase by 5 per cent. steps. I propose to reduce the width of the basic rate band, and at the same time to make the progression more smooth by introducing a new band below the first of the higher rate bands. This band of income will be taxed at a rate 5 percentage points above the basic rate and will be £500 wide. In other words, it will start at £4,500 taxable income. This change by itself will bring in £12 million additional revenue in a full year.
§ A second structural change relates to the investment income surcharge. At present, the rate of this is 15 per cent. 324 and it is levied on investment incomes above £2,000. We made it clear when we were in opposition that we thought this starting point unjustifiably high, and I now propose to reduce this to £1,000 investment income. The rate of surcharge on the slice of income from £1,000 to £2,000 will be 10 per cent. The starting point for the elderly—that is, people over 65—will, however, be £1,500; and they will pay surcharge at the rate of 10 per cent. on the slice of income from £1,500 to £2,000. This change will bring in about £40 million in a full year.