§ Mr. MacGregorasked the Chancellor of the Exchequer at what levels each of the various higher rates of tax would now begin in order to produce the same net income for a single man and for a married man with two children under 11 years of age, taking into account the rise in prices, as the broadly equivalent rates did in 1974–75, 1972–73 and 1964–65.
§ Mr. Robert SheldonBecause of structural changes to the tax system it is not possible to make the required comparisons with years before the introduction of the unified tax system in 1973–74. Even for the years since then no exact answer to the Question can be given. No set of equivalent or broadly equivalent higher rate starting points exists which for 1975–76 would give at all income levels the same real after-tax incomes as in 1974–75.
For example, at the start points for the first three of the 1974–75 higher rate bands, taxation entirely at the basic rate would produce a lower after tax income in real terms than for 1974–75. For the 53 per cent. higher rate band in 1974–75, the threshold for a single man was £7,625 and with that level of earned income his 116W income after tax was £5,040. To get the same relationship between income before and after tax at the corresponding level of income with 1975–76 allowances and allowing for the rise in prices would require a basic rate band of about £6,135 and a band of £2,640 at 40 per cent. But the same system would not produce equivalence at the 1975–76 income level corresponding to the 1974–75 threshold for the 58 per cent. rate, and so on.