§ Sir Hal MillerTo ask the Chancellor of the Exchequer (1) how much income tax receipts would be reduced in a full year, at 1989–90 income levels, with a 5p reduction in the basic rate of tax, assuming the basic rate limit was reduced from £20,700 taxable income to £12,000;
(2) how much income tax receipts would be reduced in a full year, at 1989–90 income levels, with a 5p reduction in the basic rate of tax, assuming the basic rate limit was reduced from £20,700 taxable income to £15,000.
§ Mr. LilleyThe direct revenue cost in a full year, at 1989–90 income levels, of a 5p reduction in the basic rate of tax and, at the same time, a reduction in the basic rate limit from £20,700 taxable income to £12,000 is estimated to be £3 billion. If the basic rate of tax was reduced by 5p and the basic rate limit reduced to £15,000, the cost is estimated to be £5.5 billion.
The estimates include the change in receipts of advance corporation tax and on consequent liability to mainstream corporation tax, but exclude the effects on capital gains tax and possible behavioural effects. They are based on a projection of the 1987–88 survey of personal incomes and are provisional.