§ Mr. SquireTo ask the Chancellor of the Exchequer what assessment he has made of the cost in the income tax year 1988–89 of amending the withdrawal rate of age allowance for pensioners incomes over £10,600 per annum so as to prevent any pensioner paying(a) more than a 40 per cent. effective tax rate and (b) more than a 25 per cent. effective tax rate.
§ Mr. Norman Lamont[holding answer 28 March 1988]: The full year cost of reducing to 40 per cent. the effective rate on the band of income over which age allowance is withdrawn would be about £1.5 million at 1988–89 levels of income. An effective rate of 25 per cent. Could be achieved only if age allowance was not withdrawn at all, which would cost about £190 million. Both costs are calculated by comparison with the income tax regime for 1988–;89 proposed in the 1988 Budget.