HC Deb 09 July 1975 vol 895 cc195-200W
Mr. Ralph Howell

asked the Chancellor of the Exchequer (1) what would be the net loss of revenue—after taking into account savings in tax rebates to mortgagors and to recipients of short-term social security benefits, and in tax deductions for life insurance, retirement annuities, etc—if the threshold for the standard rate band of income tax on taxable income were raised from £0 to £1,000, with corresponding changes of £1,000 in each of the higher bands; and what percentage increase in the standard rate of VAT would be necessary to offset this loss:

(2) what would be the net loss of revenue—after taking into account savings in tax rebates to mortgagors and to recipients of short-term social security benefits, and in tax deductions for life insurance, retirement annuities, etc.—if the threshold for the standard rate band of income tax on taxable income were raised from £0 to £2,000, with corresponding changes of £2,000 in each of the higher bands; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(3) what would be the net loss of revenue—after taking into account savings in tax rebates to mortgagors and to recipients of short-term social security benefits, and in tax deductions for life insurance, retirement annuities, etc.—if the threshold for the standard rate band of income tax on taxable income were raised from £0 to £3,000, with corresponding changes of £3,000 in each of the higher bands; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(4) what would be the net loss to revenue—after taking into account savings in tax rebates to mortgagors and recipients of short-term social security benefits, and of tax deductions on life insurance, retirement annuities, etc.—if the income tax threshold were raised to £1,000; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(5) what would be the net loss to revenue—after taking into account savings in tax rebates to mortgagors and recipients of short-term social security benefits, and of tax deductions on life insurance, retirement annuities, etc.—if the income tax threshold were to be raised to £3,000; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(6) what would be the net loss to revenue—after taking into account savings in tax rebates to mortgagors and recipients of short-term social security benefits, and of tax deductions on life insurance, retirement annuities, etc.—if the income tax threshold were to be raised to £2,000; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(7) what would be the net loss to revenue, after taking into account savings in tax rebates to mortgagors and to recipients of short-term social security benefits, and in tax deductions for life insurance, retirement annuities, etc., if the threshold for the standard rate band of income tax on taxable income were to be raised from £0 to £6,000, with corresponding changes of £6,000 in each of the higher bands; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(8) what would be the net loss to revenue, after taking into account savings in tax rebates to mortgagors and recipients of short-term social security benefits, and of tax deductions on life insurance, retirement annuities, etc., if the income tax threshold were to be raised to £6,000; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(9) what would be the net loss to revenue, after taking into account savings in tax rebates to mortgagors and to recipients of short-term social security benefits, and in tax deductions for life insurance, retirement annuities, etc., if the threshold for the standard rate band of income tax on taxable income were to be raised from £0 to £4,000, with corresponding changes of £1,000 in each of the higher bands; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(10) what would be the net loss to revenue, after taking into account savings in tax rebates to mortgagors and recipients of short-term social security benefits, and of tax deductions on life insurance, retirement annuities, etc., if the income tax threshold were to be raised to £4,000; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(11) what would be the net loss to revenue, after taking into account savings in tax rebates to mortgagors and recipients of short-term social security benefits, and of tax deductions on life insurance, retirement annuities, etc., if the income tax threshold were to be raised to £5,000; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(12) what would be the net loss to revenue, after taking into account savings in tax rebates to mortgagors and to recipients of short-term social security benefits, and in tax deductions for life insurance, retirement annuities, etc., if the threshold for the standard rate band of income tax on taxable income were to be raised from £0 to £5,000, with corresponding changes of £5,000 in each of the higher bands; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(13) what would be the net loss to revenue, after taking into account savings in tax rebates to mortgagors and recipients of short-term social security benefits, and of tax deductions on life insurance, retirement annuities, etc., if the income tax threshold were to be raised to £7,000; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(14) what would be the net loss to revenue, after taking into account savings in tax rebates to mortgagors and recipients of short-term social security benefits, and of tax deductions on life insurance, retirement annuities, etc., if the income tax threshold were to be raised to £9,000; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(15) what would be the net loss to revenue, after taking into account savings in tax rebates to mortgagors and recipients of short-term social security benefits, and of tax deductions on life insurance, retirement annuities, etc., if the income tax threshold were to be raised to £8,000; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(16) what would be the net loss to revenue, after taking into account savings in tax rebates to mortgagors and to recipients of short-term social security benefits, and in tax deductions for life insurance, retirement annuities, etc., if the threshold for the standard rate band of income tax on taxable income were to be raised from £0 to £7,000, with corresponding changes of £7,000 in each of the higher bands; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(17) what would be the net loss to revenue, after taking into account savings in tax rebates to mortgagors and to recipients of short-term social security benefits, and in tax deductions for life insurance, retirement annuities, etc., if the threshold for the standard rate band of income tax on taxable income were to be raised from £0 to £8,000, with corresponding changes of £8,000 in each of the higher bands; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(18) what would be the net loss to revenue, after taking into account savings in tax rebates to mortgagors and to recipients of short-term social security benefits, and in tax deductions for life insurance, retirement annuities, etc., if the threshold for the standard rate band of income tax on taxable income were to be raised from £0 to £9,000, with corresponding changes of £9,000 in each of the higher bands; and what percentage increase in the standard rate of VAT would be necessary to offset this loss;

(19) what would be the net loss to revenue, after taking into account savings in tax rebates to mortgagors and to recipients of short-term social security benefits, and in tax deductions for life insurance, retirement annuities, &c., if the threshold for the standard rate band of income tax on taxable income were to be raised from £0 to £10,000, with corresponding changes of £10,000 in each of the higher bands; and what percentage increase in the standard rate of VAT would be necessary to offset this loss.

Mr. Robert Sheldon

The figures for 1975–76 are as follows:

Increase in the starting points of the basic rate and each of the higher rate bands Reduction in income tax yield Approximate increase required in standard rate of VAT
(£ taxable income) (£m.) (percentage points)
1,000 … … 6,750 25*
2,000 … … 10,650 40
3,000 … … 12,300 45
4,000 … … 13,000 50
5,000 … … 13,400 50
6,000 … … 13,650 50

Increase in the starting point of the basic rate band only† Reduction in income tax yield Approximate increase required in standard rate of VAT
(£ taxable income) £m.) (percentage points)
1,000 … … 6,600 25
2,000 … … 10,400 40
3,000 … … 11,950 45
4,000 … … 12,600 45
5,000 … … 12,950 50
6,000 … … 13,250 50
* i.e. the rate would need to be increased from 8 to about 33 per cent.
† With the higher rate bands where possible remaining as proposed for 1975–76.

The estimated increases in the standard rate of VAT make use of current assumptions about the effect that price increases may have on purchasing patterns and the consequential impact on tax revenue. However, the changes proposed are sufficiently great, especially at the higher levels, for the figures to be subject to substantial errors of estimation. For this reason they have been rounded. Given these roundings, the effects of increasing the thresholds by more than £6,000 do not greatly differ from the effects of £6,000 increases.