Domestic Rates

HC Deb 10 July 1979 vol 970 cc149-50W

Mr. Michael Spicer

asked the Secretary of State for the Environment what would be the increase necessary in the standard rate of income tax if domestic rates were abolished and local revenue raised through the introduction of a local income tax, assuming tax allowances and local government expenditure plans were unchanged.

Mr. King

On the assumptions given in the question, to replace domestic rates with a local income tax would require an average increase in the basic rate of income tax of 6p in the pound, though there would be local variations if the rates of tax were set locally.

Mr. Michael Spicer

asked the Secretary of State for the Environment what would be the increase necessary in the rate of value added tax if domestic rates were abolished and local revenue raised through value added tax, assuming local government expenditure plans were unchanged.

Mr. King

On the assumptions given in the question, to replace domestic rates with value added tax would require an average increase in VAT of five percentage points, though there would be local variations if the rate of tax were set locally.