§ Sir Brandon Rhys Williamsasked the Chancellor of the Exchequer what is his latest estimate of the cost of cutting the top rate of income tax to 50 per cent.
§ Mr. Norman LamontThe direct revenue cost would be about £400 million in a full year at forecast 1987–88 income levels compared with an indexed income tax regime. This estimate does not allow for any possible behavioural effects.
§ Mr. Ralph Howellasked the Chancellor of the Exchequer what was the total amount paid in income tax for the tax year 1985–86 by persons who earned more than two thirds of the national average wage, showing the percentage of the total income tax revenue that his figure represents; and what is the forecast for 1986–87.
§ Mr. Norman LamontIn 1985–86 average earnings were about £10,300 for male employees paid at adult rates with pay unaffected by absence. Taxpaying single people and married couples with gross incomes for income tax purposes about two thirds of this level had income tax liabilities of about £36 billion in 1985–86, approximately 90 per cent. of total income tax liability. In 1986–87 the corresponding estimates are £11,100, £38 billion and 90 per cent. respectively.
§ Mr. Ralph Howellasked the Chancellor of the Exchequer if he will publish a list, in league order, showing such information as he has for each member state of the European Economic Community, United States of America, Canada, Sweden and Japan about (a) the starting rate of income tax and (b) the top rate of income tax, excluding local income tax.
§ Mr. Norman LamontThe information requested is given in the tables:
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Per cent. (a) Starting rates of income tax Portugal 2.5 Sweden 4.0 Canada 6.0 Greece 7.0 Japan 10.5 Luxembourg 11.0 United States of America 11.0 Italy 12.0 Netherlands 16.0 France 19.0 Spain 21.0 Denmark 21.0 Belgium 22.0 Germany 22.0 United Kingdom 29.0 Ireland 35–60.0 (b) Top rates of income tax Canada 38.0 United States of America 38.5 Denmark 40.0 Sweden 50.0 Germany 56.0 France 58.0 Ireland 58.0 United Kingdom 60.0 Portugal 60.0 Luxembourg 61.0 Italy 62.0
Per cent. Greece 63.0 Spain 66.0 Japan 66.5 Belgium 72.0 Netherlands 72.0 Notes:
- 1. The rates used are those current in 1987, where available ie Denmark, Germany, Luxembourg, Netherlands, Spain, United States of America, Ireland (1986–87) and United Kingdom (1986–87). Otherwise the 1986 rates are used, ie Belgium, France, Greece, Italy, Portugal, Canada, Japan and Sweden.
- 2. The figures relate to a married couple without children. The rates are those applicable to employment income. These are the same as those applicable to investment income, except in the case of Japan where the top rate on investment income is 70 per cent. and Portugal where it is 53–65 per cent. (there are different rates for different types of investment income).
- 3. The figures are shown exclusive of local income taxes. Local income taxes can sometimes make a significant difference. In Denmark, for example, the starting rate would be 49 per cent. with the inclusion of local income tax at the Copenhagen rate (a typical one)—the top rate would be 68 per cent. In Sweden inclusion of local income tax at the typical Stockholm rate would make the starting rate 30 per cent. and the top rate 80 per cent. In Japan the inclusive figure for the top rate would be 84 per cent. (using the rate paid by the majority of the population).
- 4. The higher starting rate for a married couple in Ireland (60 per cent.) reflects the marginal relief just above the exemption limit. Where there is no longer any marginal relief, the rate reduces to 35 per cent.