§ Mr. David Shaw
To ask the Chancellor of the Exchequer what is the current estimate of tax revenue expected to be raised by the higher rate of income tax in 1988–89; and what were the comparable amounts raised by the higher rates in respect of the years 1987–88, 1982–83, 1978–79, 1974–75 and 1970–71.
§ Mr Norman Lamont
[holding answer 23 January 1989]: Information is given in the table.
Tax liability at the higher rate income tax Year Tax liability at higher rate £ billion Tax liability at excess over basic rate £ billion 1970–71 — 10.3 1974–75 1.5 0.6 1978–79 1.8 0.8 1982–83 3.4 1.4 1987–882 8.2 3.9 1988–892 38.8 33–2 1Between 1928–29 and 1972–73 Surtax, a deferred instalment of income tax charged at rates additional to the standard rate, was payable.
2Estimates are based partly on a projection of the 1986–87 Survey of Personal Incomes and are provisional. 3Includes estimated liability to Capital Gains Tax.
§ Mr. David Shaw
To ask the Chancellor of the Exchequer what is his latest estimate of the cost of reducing the higher rate of income tax from 40 per cent to(a) 35 per cent., (b) 30 per cent. and (c) 25 per cent. in 1989–90 and 1990–91.
§ Mr. Norman Lamont
[holding answer 23 January 1989]: Available information is given in the table. Estimates include the consequential effect on capital gains tax. They are partly based on a projection of the 1986–87 survey of personal incomes and are provisional. The base for the comparison is the tax regime for 1988–89 indexed to 1989–90 by 6.8 per cent., the increase in the retail prices index for the year to December 1988. Receipts of tax in 1989–90 would be reduced by about half of the full year cost. Further information could be provided only at disproportionate cost.
Full year cost at 1989–90 levels of income and gains of reducing higher rate of tax. Higher rate of tax reduced to £ million (a) 35 per cent. 1,200 (b) 30 per cent. 2,400 (c) 25 per cent. 3,600