§ Mr. FormanTo ask the Chancellor of the Exchequer if he will estimate the cost to the Exchequer in 1997–98 of moving to a single 20 per cent. rate of income tax, assuming the abolition of all reliefs, allowances and exemptions, except for a personal allowance of £5,000 transferable between spouses. [13012]
§ Mr. JackThe estimated full-year cost of introducing a single 20 per cent. rate of income tax at 1997–98 income levels would be about £11 billion. This assumes a personal allowance of £5,000 transferable between spouses and the abolition of all other income tax allowances, and mortgage interest relief, tax relief on employee's contributions to occupational pensions and personal pension schemes, reliefs for tax-exempt special savings accounts, personal equity plans and 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.
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§ Mr. Malcolm BruceTo ask the Chancellor of the Exchequer if he will estimate the(a) first-year and (b) full-year costs per person of raising the basic rate of income tax by 1p in the pound for (i) each adult in the United Kingdom and (ii) each income taxpayer in the United Kingdom. [12748]
§ Mr. Jack[holding answer 27 January 1997]: The average tax increases at 1997–98 income levels of increasing the basic rate of income tax by 1p is about £28 in the first year and £38 in a full year for each adult—aged 18 and over—and about £49 in the first year and £66 in a full year for every income taxpayer in the United Kingdom.