§ Mr. Mandelson
To ask the Chancellor of the Exchequer if he will estimate the direct revenue yield in a full year at 1993–94 levels of income from restricting(a) personal allowances, (b) relief from pension contributions and (c) other reliefs to relief at (i) 25p and (ii) 20p giving, in each case, the numbers of people affected.
§ Mr. Dorrell
Estimated full-year yields at 1993–94 income levels based on a projection of the 1991–92 survey of personal incomes and other survey data are given in the table. The figures do not take account of any behavioural effects which might result from the introduction of such changes, and show the yield from restructuring each allowance or relief separately. If two or more were restricted the total yield would be greater than the sum of the individual figures.
Restriction to Basic rate 20p Effect of restricting Yield £ million Numbers affected Millions Yield £ million Numbers affected Millions (a) Personal allowances1 1,600 2.9 6,500 25.7 (b) Relief for pension 530 1.4 1,100 10.5 (c) other reliefs 200 0.6 2n/a n/a 1 Including the married couples' and related allowances. 2 Information on reliefs given at source is not available from the Survey of Personal Incomes so it is not possible to estimate the effect of restricting other reliefs to 20 per cent.
§ Mr. Dorrell
The table shows the direct revenue costs in a full year compared with reintroduced tax rates of 45, 50, 55 and 60 per cent. The band widths for the tax rate schedule have been calculated by uprating the corresponding parts of the 1987–88 regime by movements in retail prices index as in the statutory indexation formula. The estimates take account of the introduction of independent taxation from 1990–91 and the restriction of mortgage interest relief to the basic rate from 1991–92.
Estimated change in tax revenue at rates in excess of 40 per cent. Year At current prices £ billion At 1993–94 prices £ billion 1988–89 2.6 3.4 1989–90 3.2 3.9 1990–91 3.7 4.1 1991–92 4.3 4.5 11992–93 4.4 4.5 11993–94 4.6 4.6 1 Provisional estimates.
The estimates do not allow for any behavioural effect that might have resulted had the tax rates above 40 per cent. been retained and do not include capital gains tax.