§ Mr. Ralph Howellasked the Chancellor of the Exchequer if he will list any countries that have higher starting rates for income tax than the 35 per cent. rate in the United Kingdom and any countries that have a top limit of income tax above the 83 per cent. in the United Kingdom.
§ Mr. Robert SheldonI assume that the hon. Member is referring to rates of tax on earned income. I am not aware of any country with a starting rate higher than 35 per cent. I understand that top marginal rates higher than 83 per cent. apply in the following countries
Algeria, 100 per cent.Egypt, 96.6 per cent.Japan, 83.7 per cent. (inclusive of local income taxes).Portugal, 84 per cent.
§ Mr. Ripponasked the Chancellor of the Exchequer what would be the cost to the Exchequer in the current financial year if the maximum rate of income tax on (a) earned and (b) unearned income 25W were reduced to (i) 70p, (ii) 65p and (iii) 60p in the pound.
§ Mr. Robert SheldonIncome tax is charged on the total taxable income, and there are difficulties in distinguishing the tax on earned income from the tax on investment income. For 1976–77, assuming the conditional as well as the unconditional increases proposed in the allowances, the cost would be as shown in column 1 below, if the maximum rate of income tax on all taxable income were restricted but the investment income surcharge were retained. On the arbitrary assumption that the earned income formed the bottom slice of any mixed income, the cost in relation to earned income only would be as shown in column 2 below. Column 3 shows the difference between these two figures, which is the best estimate that can be made in relation to unearned income, excluding the investment income surcharge.
£ million Col. 1 Cost Col. 2 Col. 3 Maximum rate If applied to all taxable income If applied to earned income If applied to unearned income 70 85 40 45 65 145 75 70 60 220 120 100