§ Dr. McDonaldasked the Chancellor of the Exchequer what would be the cost in the 1987–88 financial year of introducing a reduced rate band of 25p of income tax on (i) the first £750 of taxable income, (ii) the first £1,000 of taxable income and (iii) the first £1,500 of taxable income; and in each case, what would be the impact on the net income of a married man on half average earnings, three quarters average earnings, average earnings, twice average earnings, five times average earnings and 10 times average earnings.
§ Mr. Norman Lamont[pursuant to his reply, 29 January 1987, c. 384–85]: The direct revenue costs are estimated to 182W be about £700 million, £900 million and £1,300 million respectively, in a full year at 1987–88 levels of income, compared with the tax regime resulting from 3.7 per cent. statutory indexation of 1986–87 allowances and thresholds. At each of the levels of gross income specified the gain in net income from introduction of the reduced rate bands would be (i) 58p (ii) 77p and (iii)£1.15 per week respectively. The estimates of revenue cost assume that a separate lower rate band would also be available to a married couple against the wife's earned income; and that the thresholds for higher rates of tax would be unaffected by the introduction of the lower rate band.
§ Dr. McDonaldasked the Chancellor of the Exchequer if he will report the number of taxpayers and total income tax due from each range of £1,000 between £2,000 and£13,000 and for the following ranges: £12,000 to £16,000, £16,000 to £20,000, £20,000 to £30,000 and £30,000 plus for the latest year available.
§ Mr. Norman Lamont[pursuant to his reply, 29 January 1987, c. 385]: Estimates for 1986–87 are given in the table. The analysis is of single people and married couples liable to income tax. The figures are based on a projection from the 1984–85 "Survey of Personal Incomes" and are therefore provisional.
Number of tax units liable to income tax and tax liability by range of total income, 1986–87 Total income (lower limit) (£ per annum) Number of units1 paying tax (thousands) Income tax liability (£ million) 2,000 850 70 3,000 1,350 360 4,000 1,650 800 5,000 1,850 1,320 6,000 1,700 1,620 7,000 1,650 1,980 8,000 1,500 2,120 9,000 1,500 2,560 10,000 1,150 2,170 11,000 1,050 2,260 12,000 3,100 8,120 16,000 1,500 5,430 20,000 1,200 6,280 30,000 550 7,920 1 ie counting married couples as one and combining their incomes.
§ Dr. McDonaldasked the Chancellor of the Exchequer if, in the manner of his reply of 17 February 1986, Official Report, column 54, he will publish and update the tax relief figures for 1986–87.
§ Mr. Norman Lamont[pursuant to his reply, 29 January 1987, c. 386]: The direct revenue cost of income tax relief at rates in excess of the basic rate in 1986–87 is estimated to be about £270 million for mortgage interest relief and about £260 million for relief on employees' and self-employed pension contributions. The direct revenue cost of these reliefs taken in combination is estimated at about £550 million. The corresponding estimates for 1985–86 have been revised and are: mortgage interest relief £250 million, pension contributions £220 million, both reliefs in combination £500 million.
Mr. TonyBanks asked the Chancellor of the Exchequer what was the total cost of the report on the incentive of tax cuts commissioned by his Department from Professor C. V. Brown.
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§ Mr. Norman Lamont[pursuant to his reply, 6 February 1987] This study was initiated in 1978 and consisted of a survey of households followed by analysis of the data and econometric modelling by the University of Stirling.
The survey work was carried out by the Office of Population Censuses and Surveys and cost some £400,000. The data—with full documentation—have been placed in the E.S.R.C. data archive and are available to other researchers.
The analytical work at Stirling cost some £200,000 and was funded by the Treasury. Twenty two technical working papers have been published. The report is in the Library of the House.
§ Dr. McDonaldasked the Chancellor of the Exchequer if he will publish in the Official Report the number of children under 18 years who are beneficiaries of covenants made by their grandparents and the cost of the tax relief in terms of revenue figures to the Exchequer in 1985–86, and the estimate for 1986–87.
§ Mr. Norman Lamont[pursuant to his reply, 9 February 1987]: The total number of deeds of covenant to minor children operative in 1985–86 and 1986–87 is estimated to be 170,000 and 210,000 respectively. Deeds made by grandparents in favour of their grandchildren are estimated to account for about 70 per cent. of the total (ie 120.000 and 150,000 respectively) and the costs of tax relief on such deeds are £60 million in 1985–86 and £80 million in 1986–87.
§ Dr. McDonaldasked the Chancellor of the Exchequer if he will publish in the Official Report the number of young people aged over 18 years who had covenants made by their parents and the cost of such tax relief in terms of revenue forgone in 1985–86 and the estimated figures and costs for 1986–87.
§ Mr. Norman Lamont[pursuant to his reply, 9 February 1987]: The number of people aged over 18 years benefiting from covenants made by their parents is estimated to be 250,000 in both 1985–86 and 1986–87. The cost of tax relief on these covenants is estimated at approximately £100 million annually.