HC Deb 29 April 1987 vol 115 cc163-4W
Mr. John Mark Taylor

asked the Chancellor of the Exchequer what recent evidence the Treasury has compiled on the effect on total revenue of marginal reductions in the lower rates of income tax.

Mr. Norman Lamont

Since 1978–79, the basic rate of income tax has been reduced from 33p to 27p and the total

Top rates of income tax (per cent.)
1978–79 1979–80 1980–81 1981–82 1982–83 1983–84 1984–85 1985–86 1986–87
United Kingdom 83 60 60 60 60 60 60 60 60
Ireland 60 60 60 60 60 65 65 60 58

1979 1980 1981 1982 1983 1984 1985 1986
Belgium 76.0 76.0 76.0 76.0 76.0 76.0 76.0 76.0
Denmark 65.0 65.0 65.0 65.5 68.0 68.0 67.5 67.5
France 60.0 75.0 66.0 70.0 70.0 67.0 65.0 58.0
Germany 56.0 56.0 56.0 56.0 56.0 56.0 56.0 56.0
Greece 64.0 64.0 64.0 64.0 64.0 63.0 63.0 63.0
Italy 72.0 72.0 72.0 72.0 65.0 65.0 65.0 62.0
Japan 84.0 84.0 84.0 84.0 84.0 84.0 84.0 84.0
Luxembourg 58.0 58.0 58.0 60.0 62.0 63.0 63.0 61.0
Netherlands 72.0 72.0 72.0 72.0 72.0 72.0 72.0 72.0
Portugal 77.0 77.0 77.0 77.0 77.0 69.0 61.0 60.0
Spain 66.0 66.0 65.0 68.0 65.0 66.0 66.0 66.0
United States of America 55.5 55.5 55.5 55.5 55.5 55.5 55.5 55.5

Notes:

(1) The rates in the table are those applicable to employment income. Higher rates may apply to some or all investment income in Greece, Italy, Japan and Portugal.

(2) The rates are those applicable to a married couple. Higher rates apply to a single person in Portugal.

(3) The figures include local income taxes in Belgium, Denmark, Japan and the United States of America, at the following rates:

Belgium those payable by the majority of

Japan the population

Denmark: Copenhagen rates typical of

United States of America: California the whole country

yield of income tax is expected to be over £1 billion higher in real terms in 1987–88. Tax revenues have therefore remained buoyant over this period when tax rates have been reduced.

Mr. Adley

asked the Chancellor of the Exchequer if he will make a statement on the relationship between levels of income tax and total tax yield.

Mr. Norman Lamont

Income tax is expected to be 25.6 per cent. of total direct and indirect taxes in 1987–88 compared with 26.3 per cent. in 1986–87 and 32.8 per cent. in 1978–79.

Mr. Tim Smith

asked the Chancellor of the Exchequer what information he has for each year from 1979 to 1986 about the top rates of income tax and the basic rates of income tax, in the United States of America, Japan, and, each of the member states of the European Economic Community.

Mr. Norman Lamont

The information requested on the top rates of income tax is given in the table. Amongst the countries concerned, the concept of a basic rate of income tax, as such, exists only in the United Kingdom and Ireland. The basic rates there have been:

United Kingdom

  • 1979–80: 33 per cent.
  • 1979–80 to 1985–86: 30 per cent.
  • 1986–87: 29 per cent.

Ireland

35 per cent. throughout.