§ Mr. FormanTo ask the Chancellor of the Exchequer what would the single positive rate of income tax need to be in 1996–97, assuming a personal allowance of £5,000 and the abolition of all other tax expenditures, exemptions and reliefs now allowable against income tax, in order to introduce it on a revenue rental basis. [16078]
§ Mr. JackIt is estimated that a single rate of about 23 per cent. would be needed in 1996–97 to achieve revenue neutrality. This assumes a personal allowance of £5,000 and the abolition of all other income tax352W allowances, and mortgage interest relief, tax relief on employees contributions to occupational and personal pension schemes, reliefs for TESSAs, PEPs, profit-related pay, national savings certificates, employee share schemes and charitable giving.
This estimate does not take into account the substantial behavioural effects which might result from the introduction of such a change nor do they allow for any subsequent changes to the tax system, such as changes to tax relief on employer's contributions to pension schemes or relief for investment income in pension funds.
§ Mr. FormanTo ask the Chancellor of the Exchequer what would be the estimated full year cost in 1996–97 of making the 20 per cent. rate the only positive rate of tax for all income tax payers. [16079]
§ Mr. JackThe estimated full year cost of introducing a single 20 per cent. rate of income tax at 1996–97 income levels would be about £16 billion. These estimates do not take account of any behavioural effects that might result from the introduction of the new regime.