§ Mr. J. Nott
asked the Chancellor of the Exchequer what would be the cost to the Exchequer in 1975–76 and 1976–77 of provision for depreciation allowances against corporation tax at replacement rather than historic cost.
§ Mr. Denzil Davies
I regret that this information cannot be provided without a disproportionate expenditure of time and effort.
§ Mr. Tebbit
asked the Chancellor of the Exchequer (1) what would be the loss of revenue to the Exchequer in 1975–76, 1976–77, 1977–78 resulting from a cut in corporation tax of 4 per cent., 5 per cent., 6 per cent., 7 per cent., 8 per cent. 9 per cent. and 10 per cent.;
(2) what would be the gain in revenue to the Exchequer of an increase in corporation tax of 5 per cent. in 1975–76, 1976–77, 1977–78.
§ Mr. Denzil Davies,
pursuant to his replies [Official Report, 30th March 1976; Vol. 908, c. 448–9], gave the following information:
If corporation tax had been charged for the financial year 1974 at the rates shown below and remained so for the 89W financial year 1975 the effects on Exchequer receipts as compared with a rate of 52 per cent. are estimated as follows:
Corporation Tax Rate Per cent. 1975–76 £m 1976–77£m 57 +95 + 200 48 -70 -150 47 -90 -190 46 -105 -220 45 -120 -260 44 -140 -290 43 -150 -330 42 -170 -370
These estimates assume that the small companies rate is 10 percentage points lower in each case and that the consequential marginal relief remains undisturbed.
The estimates do not take into account any changes in payments of advanced corporation tax which might result from consequential changes in companies' dividend policies.
The effects in 1977–78 would depend on the level of profits, stock relief, capital allowances, etc., in 1976.