§ Dr. McDonaldasked the Chancellor of the Exchequer whether, in the manner of the answer given on 12 February 1985, Official Report, columns 145–46, he will update and publish the table detailing the breakdown costs or yields of reinstating the indexed 1978–79 tax regime, taking the 1985–86 income tax base.
§ Mr. Moore[pursuant to his reply, 20 January 1985, c. 83]: If the 1978–79 income tax allowances and thresholds were indexed to 1985–86 levels by reference to the statutory formula and applied to the 1985–86 income tax base, the direct revenue effect would be an additional yield of about £6.2 billion in a full year.
The levels of the main allowances and thresholds, compared with the actual 1985–86 values, would be: 430W
Personal allowances Indexed 1978–79 regime 1985–86 £ £ Single and wife's earned income allowance 1,875 2,205 Married man's allowance 2,925 3,455 Additional personal allowance 1,050 1,250 Aged single allowance 2,480 2,690 Aged married allowances 3,955 4,255 Aged income limit 7,700 8,800
Rate of tax (percentage) Bands of taxable income Indexed 1978–79 regime 1985–86 £ £ 25 0–1,450 — 30 — 0–16,200 33 1,451–15,300 — 40 15,301–17,300 16,201–19,200 45 17,301–19,300 19,201–24,400 50 19,301–21,300 24,401–32,300 55 21,301–24,200 32,301–40,200 60 24,201–27,100 Over 40,200 65 27,101–31,000 — 70 31,001–35,800 — 75 35,801–46,300 — 83 Over 46,300 —
Investment Income Surcharge: Indexed 1978–79 regime Bands of net investment income Non-aged Aged Rate of surcharge (percentage) £ £ 0–3,250 0–4,800 Exempt 3,251–4,300 4,801–5,800 10 Over 4,300 Over 5,800 15 Investment income surcharge was abolished in 1984–85.
Taking the 1985–86 income tax base as given, the direct revenue effects of reinstating the indexed 1978–79 tax regime can be broken down as follows:
Yield(+) Cost(-) £million Reductions in personal allowances +3,150 Reintroduction of reduced rate band at 25p -1,625 Increase in basic rate of 3p +2,650 Reduction in basic rate limit of £800 +75 Changes in higher rate thresholds up to 60 per cent. +500 Reintroduction of higher rates above 60 per cent. +710 Reintroduction of investment incme surcharge +740 Total 6,200 In the table above, the effect of each change has been calculated on the assumption that each of the changes which precede it has already been made.