§ Mr. Austin Mitchellasked the Chancellor of the Exchequer (1) what would be the saving from abolishing all income tax allowances and reliefs in 1983–84 apart from the single and married allowances;
(2) whether he will publish in the Official Report a table showing by how much (i) the standard rate of tax could be reduced or (ii) the married, single and age allowances could be increased if all other allowances were abolished.
§ Mr. RidleyI regret that it is not possible to estimate the combined yield of withdrawing all reliefs and allowances; in particular, the effect of withdrawing relief for pension schemes cannot be estimated in conjunction with the effect of other changes. However, the yield from abolishing three main reliefs—those for mortgage interest, retirement annuities and life assurance premiums—combined with abolishing the minor personal allowances and the excess of the age allowances over their ordinary equivalents is of the order of £4¼ billion in a full year at 1983–84 income levels. (The only remaining personal allowances would be the single and wife's earned income allowance of £1,785 and the married man's allowance of £2,795.)
The hon. Member's second question envisages that the age allowances would be retained. The yield in this case would be lower, approximately £3⅓ billion; this would finance
- (i) a reduction of a little under 4p in the basic rate of income tax;
- or (ii) an increase of around 22 per cent. in the married, single and wife's earned income, and age allowance.