§ Mr. Nigel GriffithsTo ask the Chancellor of the Exchequer if he will publish revenue costs of reducing the rate of advance corporation tax and tax on dividends to(a) 17.5 per cent., (b) 15 per cent., (c) 12.5 per cent. and (d) 10 per cent. in a full year and of reducing the lower rate of tax to the same rates on the first (i) £1,000, (ii) £2,000 and (iii) £3,000 of rateable income, retaining any balance of £3,200 at the 20 per cent. rate. [39101]
§ Mr. JackThe direct revenue effects of reducing the rate of advance corporation tax from 20 per cent. and the income tax charge on dividends from the lower rate of 20 per cent. to the specified levels are shown in the table. Estimates of the variation in revenue effects over the specified range of income tax rates and bands of taxable income are also given. Further information could be supplied only at disproportionate cost. The estimates take no account of possible behavioural effects which could be significant.
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Direct revenue effects (£ billion, cost (-)/yield (+)) at 1996–97 forecast income levels1 ACT rate and tax rate on dividends (Per cent.) Net revenue effect2 17.5 +0.7 15 +1.4
Direct revenue effects (£ billion, cost (-)/yield (+)) at 1996–97 forecast income levels1 ACT rate and tax rate on dividends (Per cent.) Net revenue effect2 12.5 +2.1 10 +2.7 Notes:
1 Based on the 1995 summer economic forecast.
2 Assuming that the fall in ACT yield would be offset by higher payments of mainstream corporation tax.
Income tax lower rate (Per cent.)1 Band of taxable income £1,000 £3,000 17.5 -0.6 -1.8 10 -2.5 -7.0 1 Costs include consequential effects on capital gains tax and exclude the effects of corresponding changes in the rate of ACT and the basic tax rate on individuals.