§ Mr. Newtonasked the Chancellor of the Exchequer what was the total revenue collected by the Exchequer for the fiscal year 1973–74 and the estimated amount for the fiscal year 1974–75 in respect of (a) income tax on earned income charged at rates above the basic rate and (b) the total amounts of investment income surcharge accruing and estimated as likely to accrue to the Exchequer for the same fiscal years.
§ Mr. Robert SheldonIncome tax liability depends on an individual's total income from all sources and there is no satisfactory basis for allocating the tax attributable to earned income separately from that on investment income. However, for the estimates given below the arbitrary assumption has been made that earned income forms the lower slice of any mixed income.
Figures for collection of higher rate tax on earned income are not available, but the estimated accruals are as follows:
£ million Year of Income 1973–74 1974–75 Tax on higher rates on earned income† 400 900 Investment income surcharge 130 180* * Assuming the exemption limits in the 1974 autumn Finance Bill. † i.e. the full rate or rates of tax applicable to income above the basic rate band.
§ Mr. Newtonasked the Chancellor of the Exchequer what is his current estimate of the increase or decrease in revenue 513W resulting from a change of 1p in the £ in the basic rate of income tax.
§ Dr. GilbertAt 1974–75 income levels, the change in revenue resulting from a change of 1p in the £ in the basic rate of income tax is estimated at about £300 million in a full year.
§ Mr. Newtonasked the Chancellor of the Exchequer what would be the cost to the Exchequer of a reduction of the maximum marginal rate of income tax on earned income to 50 per cent., 60 per cent., and 70 per cent., respectively, assuming that the rates of tax on investment income remained at their present level.
§ Mr. Robert SheldonOn the arbitrary assumption that earned income forms the lower slice of any mixed income, the estimated costs at 1974–75 income levels are as follows:
Maximum marginal rate of lax on earned income Cost % £ million 50 130 60 60 70 30
§ Mr. Newtonasked the Chancellor of the Exchequer what would be the additional amount which would accrue to the Exchequer if the excess over £7,000 of all net earned income as denned in the Survey of Personal Incomes per person were subject to tax at 100 per cent.
§ Mr. Robert SheldonI assume that the hon. Gentleman means an arrangement in which earned income over £7,000 a year net of deductions but before tax is taxed at a rate of 100 per cent. and earned income up to that level and investment income are taxed under the system and rates for 1974–75. On this basis, and making the arbitrary assumption that earned income forms the lower slice of any taxed income, the estimated additional yield of 1974–75 income level would be about £400 million. This is on the further assumption that the amounts of gross incomes in 1974–75 were unaltered; in practice, however, the introduction of a 100 per cent. rate above any limit could be expected to lead to a reduction of money incomes above that limit.