§ Mr. Chris SmithTo ask the Chancellor of the Exchequer what would be the cost of enabling married couples who wish to share the benefits of married couples allowance equally between them from 1990 to do so; and what would be the income distribution of those couples who would financially gain.
§ Mr. LilleyThe costs to the Exchequer of allowing married couples who wish to share the married couple's allowance equally between them are uncertain, but they might be up to £20 million per annum. In addition there would be a substantial cost of extra staff required by Inland Revenue. About 50,000 couples where the wife pays tax at the higher rate and the husband at the basic rate would benefit, as would some other couples where the husband receives income subject to composite rate tax. Estimates are based on a projection of the 1987–88 survey of personal incomes and are provisional. I regret that further information is not available.
§ Mr. Chris SmithTo ask the Chancellor of the Exchequer if he will make it his policy to revise the estimate of direct costs of abolishing income tax rates966W above 40 per cent. in the 1988 Financial Statement and Budget Report, in the light of the Exchequer's receipts since then.
§ Mr. LilleyNo. Updating the estimates of the direct costs of the higher rate tax cuts on the basis of later information on incomes or tax receipts would be misleading as increases resulting from the incentive effects of lower marginal tax rates would inflate the calculated costs.
It is not possible to isolate the incentive effects of the 1988 Budget measures on income and employment. However, the buoyancy of income tax receipts in 1988–89 and 1989–90 suggests that the tax yield from the improvements to the supply side of the economy have helped to offset the direct costs of the reductions in the basic and higher rates of income tax.