§ Mr. MacGregorasked the Chancellor of the Exchequer whether he will estimate what the revenue cost would be by April 1978, assuming a current inflation rate of 10 per cent. of (a) cutting the basic rate of tax from 34 per cent. to 30 per cent., (b) restoring the main personal allowances 231W to their real equivalent value of April 1973, and (c) restoring the higher rate tax bands to their real equivalent values of April 1973; and if he will give these costs in terms of the fiscal years 1977–78 and 1978–79, respectively.
§ Mr. Robert Sheldon,pursuant to his reply—[Official Report, 31st January 1978; Vol. 943, c. 121.]—gave the following information:
At 1977–78 income levels the estimated costs are:
£m (a) 1,950 (b) 2,250 (c) 610* These are the costs of introducing changes (a) to (c) individually if all the changes were introduced simultaneously the total cost would be about £4,450 million. The costs in 1978–79 would depend on income levels in that year.
*The higher rate bands of taxable income were one fewer in 1973–74 than in 1977–78, and the highest rate was 75 per cent. The cost assumes a substitution of the revalorised bands and a top rate of 75 per cent. for 1977–78.