§ Mr. RedwoodTo ask the Chancellor of the Exchequer how much revenue would be lost if there were no income tax rate higher than 40 per cent., with the current bands, calculating the full year impact on revenue and allowing for any administrative savings.
§ Mr. Norman LamontThe direct revenue cost of abolishing rates of income tax higher than 40 per cent. would be £1,650 million in a full year at forecast 1988–89 levels of income. The cost assumes indexation of the current income tax bands and allowances to 1988–89 levels as in table 4.1 of the 1987 Autumn Statement. The estimate of revenue cost makes no allowance for possible changes in taxpayers' behaviour. Administrative savings would be negligible.