§ Mr. David ShawTo ask the Chancellor of the Exchequer (1) if he has any information on the net loss or the net gain in revenue from income tax and other revenue sources that would be achieved by reducing all the higher rates of income tax to the basic rate;
65W(2) what was the gross amount of money raised by the additional margin by which the higher rates of income tax exceed the basic rate in 1978–79, 1983–84 and 1986–87.
§ Mr. Norman LamontThe total tax liability resulting from the difference between the higher rates of income tax and the basic rate is estimated to be:
£ billion 1978–79 0.8 1983–84 1.4 1986–87 2.5 The direct revenue cost of abolishing the higher rates of income tax, and the associated wife's earnings election, would be about £3.8 billion in a full year at forecast levels of income for 1988–89. This estimate assumes indexation of the current income tax allowances and bands for 1988–89, as in table 4.1 of the 1987 Autumn Statement. It does not include an estimate of the effect on total Exchequer receipts of changes in taxpayers' behaviour or other economic effects, resulting from the reduction in rates of income tax.