§ Sir Hal MillerTo ask the Chancellor of the Exchequer what he estimates the loss of revenue in the fiscal year 1989–90 would be if the standard rate of income tax had been reduced to 20 per cent., all other tax rates and thresholds remaining unchanged; and, to make up that loss of revenue, at what income scale the threshold of the 40 per cent. higher rate tax would have to be set.
§ Mr. LilleyThe direct revenue cost in a full year, at 1989–90 income levels, of a 5p reduction in the basic rate of tax would be to reduce income tax receipts by £7.5 billion. This reduction would be approximately revenue-neutral if at the same time the basic rate limit was reduced from £20,700 taxable income to £9,000.
Estimates exclude the effects on capital gains tax and possible behavioural effects. They are based on a projection of the 1986–87 survey of personal incomes and are provisional.