HC Deb 06 November 1986 vol 103 cc518-9W
28. Mr. Yeo

asked the Chancellor of the Exchequer what study his Department has conducted on the effect of reducing top marginal rates of income tax on tax yield.

Mr. Norman Lamont

Cutting marginal tax rates undoubtedly gives a stimulus to enterprise and effort, but I know of no recent studies into the effect of reducing top marginal rates in the United Kingdom.

37. Mr. Penhaligon

asked the Chancellor of the Exchequer if he will indicate what would be the effect on Treasury revenues of reintroducing the 1979 higher rate income tax scales.

Mr. Norman Lamont

The 1979 tax structure for the basic rate limit and higher rates and thresholds, if indexed to 1986–87 and applied to current levels of income, would yield about £1.7 billion more than the present tax regime. This makes no allowance for any possible change to income levels from introducing the proposed tax structure.

46. Mr. Nicholls

asked the Chancellor of the Exchequer what effect the reduction in higher rate tax bands has had on the proportion of the income tax yield that is provided by higher rate taxpayers.

Mr. Norman Lamont

In 1978–79 when higher rates of income tax were 40 per cent. to 83 per cent., about 31/2 per cent. of taxpayers (counting a married couple as one) paid tax at higher rates. They contributed 20 per cent. of the total income tax yield. Since then, higher rates of tax have been reduced to 40 per cent. to 60 per cent., the threshold for higher rates has been increased in real terms, the basic rate has been reduced, and incomes of higher rate taxpayers have increased more quickly than for other taxpayers. In 1986–87, about 5 per cent. of taxpayers pay at higher rates and they contribute 27 per cent. of the yield.

Sir Peter Hordern

asked the Chancellor of the Exchequer how many people had incomes below the level which makes them liable to the standard rate of income tax in 1956, 1960, 1970, 1975, 1980, and the latest date for which figures are available.

Mr. Norman Lamont

I shall let my hon. Friend have a reply as soon as possible.