HC Deb 31 January 1985 vol 72 cc320-1W
Mr. Best

asked the Chancellor of the Exchequer how many people presently pay no income tax; and how many of these are (i) employed, (ii) unemployed and (iii) self-employed.

Mr. Moore

It is estimated that, in 1984–85, about 10 million married couples or single people aged 16 or over will not be liable to income tax. Of these, about 1¼ million will have spent the major part of the financial year in employment, 400,000 in self-employment and 1 million in unemployment. The remainder are retired or otherwise not economically active.

Mr. Ralph Howell

asked the Chancellor of the Exchequer what is his estimate of the reduction of the number of persons paying income tax if the income tax revenue was reduced by £1 billion, £2 billion, £3 billion, £4 billion, £5 billion, £7.5 billion and £10 billion, respectively, estimated as a result of raising tax thresholds.

Mr. Moore

Over the stated range of costs of direct revenue changes above indexation, each £1 billion reduction in the yield of income tax in a full year at 1985–86 levels of income would lead to a reduction of about 450,000 in the number of taxpayers. This assumes that uniform percentage increases are applied to the main personal allowances (including age allowance) and counts earning wives separately from their husbands.

Sir Brandon Rhys Williams

asked the Chancellor of the Exchequer what currently would be the loss of revenue resulting from a reduction in the higher rates of income tax to a maximum of 50 and 40 per cent. respectively.

Mr. Moore

The latest estimates are as follows:

Maximum rate of income tax per cent. Direct revenue cost in a full year at 1985–86 levels of income
£ million
50 320
40 970

These estimates are in relation to the yield assuming indexation of 1984–85 allowances and thresholds by 4.6 per cent. under the rules set out in the Finance Act 1980. It is also assumed that the thresholds for each remaining tax rate would remain at their indexed levels.

Dr. McDonald

asked the Chancellor of the Exchequer (1) if he will estimate for each financial year since 1979–80, the costs of raising (a) the tax threshold and (b) the tax bands above the rate of inflation;

(2) if he will estimate the loss to the Exchequer in each year since 1979–80 resulting from the abolition of the higher rate bands for income tax;

(3) if he will estimate the costs to the Exchequer each year since 1979–80 of the reduction in the basic rate of taxation from 33 per cent. to 30 per cent.

Mr. Moore

I shall let the hon. Member have a reply as soon as possible.