§ Mr. LawsonTo ask the Chancellor of the Exchequer what is his estimate of(a) the loss of revenue and (b) the increase in administration costs arising from the abolition of the composite rate of tax in the 1990 budget.
§ Mr. Norman LamontIn principle composite rate tax would produce the same yield as the system which is replacing it, but there are behavioural and timing effects which affect receipts. An estimate of the effect on receipts was given in the Financial Statement and Budget Report 1990–91. An updated estimate will be published in this year's Financial Statement and Budget Report.
The estimated increases in the Inland Revenue's administration costs in the current year and the next three years are approximately £55 million in 1990–91, £165 million in 1991–92, £110 million in 1992–93 and £90 million in 1993–94.