§ Mr. Gordon Brown
To ask the Chancellor of the Exchequer what would be the cost of reducing the higher tax rate of 60 per cent. to(a) 50 per cent., (b) 45 per cent., and (c) 40 per cent. in 1988–89.
§ Mr. Norman Lamont
The direct revenue costs, in a full year at 1988–89 levels of income, of reducing the higher tax rates to the levels specified are given in the table below:
Top rate of tax Percentage revenue cost £ million 50 530 45 1,000 40 1,650
The estimates are based on projections of the 1984–85 survey of personal incomes in line with the forecasts in the Autumn Statement and are therefore provisional. The costs assume indexation of the current income tax bands and allowances to 1988–89 levels according to the statutory provisions. The estimates assume that the wife's earnings election is made where it is beneficial, but no other allowance is made for possible changes in taxpayers' behaviour.