§ Mr. Gordon BrownTo ask the Chancellor of the Exchequer what reduction in projected tax receipts for 1988–89 would result from reducing the income tax rate to 35 per cent. for those at present paying tax at a highest marginal rate of 40 per cent., assuming the 35 per cent. tax rate applied on all taxable income between £18,701 and £21,300.
§ Mr. Norman LamontTaxpayers whose marginal rate would be 40 per cent. under a 1987–88 tax regime indexed to 1988–89 by the statutory formula would gain around £30 million in a full year from the reduction of the 40 per94W cent. rate to 35 per cent. The cost assumes that the reduction does not apply to taxpayers with marginal rates above 40 per cent.
§ Mr. Gordon BrownTo ask the Chancellor of the Exchequer (1) what would be the net change in tax paid by an average taxpayer at present paying tax at a marginal rate of(a) 60 per cent., (b) 55 per cent., (c) 50 per cent., (d) 45 per cent., (e) 40 per cent. and (f) 27 per cent. of the introduction of tax rates of 25 per cent., 35 per cent. and 45 per cent. with the allowances for 1988–89 as set out in the Autumn Statement and with the 25 per cent. rate of tax applied on taxable income up to £18,700, the 35 per cent. rate applied on taxable income in the band of £18,701 to £21,300 and the 45 per. cent. rate on taxable income over £21,300;
(2) what would be the net change in tax paid by an average taxpayer at present paying tax at a marginal rate of (a) 60 per cent., (b) 55 per cent., (c) 50 per cent., (d) 45 per cent., (e) 40 per cent. and (f) 27 per cent. of the introduction of tax rates of 25 per cent. and 40 per cent. with the allowances as set out for 1988–89 in the Autumn Statement and with the 25 per cent. rate of tax applied on taxable income up to £18,700, the 40 per cent. rate on taxable income in excess of £18,701.
§ Mr. Norman LamontThe table shows the average gain to a taxpayer at the mid-point of each marginal rate band and at a taxable income of £50,000 from introducing a 25 per cent. basic rate and(a) a single higher rate of 40 per cent. and (b) two higher rates of 35 per. cent. and 45 per cent. It has been assumed that the first and second higher rate thresholds are £18,700 and £21,300 respectively and that personal allowances under indexation in 1988–89 are as given in table 4.1 of the Autumn Statement 1987. Gains are calculated by comparing tax liabilities under each regime (a) and (b) with those under the 1987–88 regime indexed to 1988–89 levels.
Marginal rate1 Taxable income2 per cent. £ 3 £ per year 4 £ per year 27 9,350 187.00 187.00 40 20,000 374.00 439.00 45 23,900 504.00 504.00 50 30,650 1,049.00 711.50 55 38,950 2,086.50 1,334.00 60 50,000 4,089.00 2,784.00 1 Marginal rate under the indexed 1987–88 regime. 2 Income after reliefs and allowances. 3 Gain from 25 per cent. basic rate, 40 per cent. higher rate. 4 Gain from 25 per cent. basic rate, 35 and 45 per cent. higher rates.
§ Mr. David MartinTo ask the Chancellor of the Exchequer if he will list for each year since 1979(a) the basic rate of income tax, (b) each of the higher rates of income tax and (c) Government revenue from income tax (i) at the basic rate and (ii) at each of the higher rates, adjusted for inflation; and if he will make a statement.
§ Mr. Norman LamontThe available information is in the tables. I regret that further information can be provided only at disproportionate cost. Estimates are based on liability to income tax and not on income tax receipts which cannot be broken down into the different rates of tax. Estimates for the years to 1985–86 are based on the survey of personal incomes for that year; estimates for later years are based on a projection of the 1985–86 survey and are therefore provisional.
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Rates of tax 1978–79 to 1987–88 Per cent. Reduced rate 1978–79 to 1979–80 25 Basic rate 1978–79 33 1979–80 to 1985–86 30 1986–87 29 1987–88 27
Income tax liabilities at each rate of income tax at 1987–88 prices1 £ billion 1978–79 1979–80 1980–81 1981–82 1982–83 1983–84 1984–85 1985–86 21986–87 21987–88 Reduced rate 9.0 7.8 — — — — — — — — Basic rate 28.0 28.2 35.4 35.8 35.7 37.3 35.4 36.0 36.7 36.2 Higher rate: total of which at rate of 3.8 3.5 3.7 4.6 4.5 4.2 4.8 6.2 6.8 7.7 40 0.51 — 0.72 — — — 0.95 — — 1.01 45 0.41 — 0.79 — — — 1.01 — — 1.39 50 0.33 — 0.70 — — — 0.92 — — 1.37 55 0.38 — 0.40 — — — 0.54 — — 0.86 60 0.31 — 1.06 — — — 1.39 — — 3.08 65 0.33 — — — — — — — — — 70 0.31 — — — — — — — — — 75 0.41 — — — — — — — — — 83 0.81 — — — — — — — — — Investment Income Surcharge 0.47 0.41 0.36 0.39 0.36 0.30 — — — — Total Tax Liability 41.2 39.9 39.4 40.8 40.6 41.7 40.2 42.3 43.5 43.9 1 Using the GDP deflator. 2 Provisional. Based on a projection of the 1985–86 Survey of Personal Incomes.
Income tax liabilities1 at 1987–88 prices £ billion 1978–79 1979–80 1980–81 1981–82 1982–83 1983–84 1984–85 11985–86 11986–87 21987–88 Reduced rate 9.0 7.8 — — — — — — — — Basic rate 28.0 28.2 35.4 35.8 35.7 37.3 35.4 36.0 36.8 36.3 Higher rate of which 3.8 3.5 3.7 4.6 4.5 4.2 4.8 5.6 6.0 6.8 40 0.51 — 0.72 — — — 0.95 — — 0.97 45 0.41 — 0.79 — — — 1.01 — — 1.36 50 0.33 — 0.70 — — — 0.92 — — 1.32 55 0.38 — 0.40 — — — 0.54 — — 0.82 60 0.31 — 1.06 — — — 1.39 — — 2.28 65 0.33 — — — — — — — — — 70 0.31 — — — — — — — — — 75 0.41 — — — — — — — — — 83 0.81 — — — — — — — — — Investment Income Surcharge 0.47 0.41 0.36 0.39 0.36 0.30 — — — — Total tax liability 41.2 39.9 39.4 40.8 40.6 41.7 40.2 41.6 42.0 43.1 Source: Survey of Personal Incomes. Note: Provisional figures given to Mr. Martin on 15 March for us in Budget Debate, but not used on 15, 16, 17 March. 1 Estimates are based on income tax payable, not on the amount paid. 2 Provisional. Based on a projection of the 1984–85 Survey of Personal Incomes.