Taxation Changes (Hansard, 20 November 1997)

§ Mr. Malcolm Bruce
To ask the Chancellor of the Exchequer what is his estimate of the total net revenue cost to the Exchequer in 1998–99 of(a) introducing a new rate of income tax of 50 per cent. on taxable income of over f100,000 per annum, (b) abolishing mortgage interest tax relief, (c) abolishing the married couple's tax allowance, (d) restricting the value of the personal tax allowance to the basic rate of income tax, (e) applying tax on savings at the marginal rate of income tax, (f) abolishing the lower rate of income tax, (g) abolishing the capital gains tax annual exempt amount and (h) raising the value of the personal income tax allowance to £10,000 per annum.[13249]

§ Dawn Primarolo
[holding answer 5 November 1997]The latest available information is for 1997–98. Separate costs or yields for each of the individual measures are given in the table. The combined cost of all of the measures may differ significantly from the sum of the figures for the individual measures. The estimates do not allow for any behavioural changes.

Full year cost (-)/yield (+) at 1997–98 income levels

(a) 50 per cent, of taxable income above £100,000 +£1.4 billion

(b) abolish mortgage interest tax relief +£2.6 billion

(c) abolish the married couple's allowance and related allowances¹ +£3.3 billion

(d) restrict the value of personal allowance to the basic rate +£1.9 billion

(e) apply tax on savings (excluding dividends) at the marginal rate of income tax +£0.2 billion

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Full year cost (-)/yield (+) at 1997–98 income levels

(f) abolish the lower rate of tax, but leave savings and dividends rate at 20 per cent. +£2.7 billion

(g) cost of capital gains tax annual exempt amount² -£2.5 billion

(h) raise non aged and aged personal allowances to £10,000 -£2.9 billion

¹This figure includes the cost of abolishing the additional personal allowance of £220 million and the cost of abolishing the widow's bereavement allowance of £25 million.

² This figure allows for windfall gains arising from the disposal of shares issued in connection with building society and insurance company de-mutualisations. It is particularly uncertain due to the exceptional level of de-mutualisation activity during this year. This estimate represents the reduction in tax liabilities from the existence of the relief and cannot generally be interpreted as the yield from withdrawing it. In practice, withdrawing a relief would often result in significant changes to taxpayers' behaviour and might require changes to other reliefs.

§ Mr. Malcolm Bruce
To ask the Chancellor of the Exchequer whether he will estimate the percentage change in after-tax income per income decile as a consequence of announced changes to direct and indirect taxation over the period 1998–99 to 2000–01; and if he will make a statement.[13280]

§ Dawn Primarolo
[holding answer 6 November 1997]I refer the hon. Member to the answer I gave to the right hon. member for Wells (Mr. Heathcoat-Amory) on 11 July, Official Report, column 167–68.
Estimates of the impact on after-tax per income decile in 1998–99 will depend on measures announced in the spring Budget.

	Full year cost (-)/yield (+) at 1997–98 income levels
(a) 50 per cent, of taxable income above £100,000	+£1.4 billion
(b) abolish mortgage interest tax relief	+£2.6 billion
(c) abolish the married couple's allowance and related allowances¹	+£3.3 billion
(d) restrict the value of personal allowance to the basic rate	+£1.9 billion
(e) apply tax on savings (excluding dividends) at the marginal rate of income tax	+£0.2 billion

	Full year cost (-)/yield (+) at 1997–98 income levels
(f) abolish the lower rate of tax, but leave savings and dividends rate at 20 per cent.	+£2.7 billion
(g) cost of capital gains tax annual exempt amount²	-£2.5 billion
(h) raise non aged and aged personal allowances to £10,000	-£2.9 billion
¹This figure includes the cost of abolishing the additional personal allowance of £220 million and the cost of abolishing the widow's bereavement allowance of £25 million.
² This figure allows for windfall gains arising from the disposal of shares issued in connection with building society and insurance company de-mutualisations. It is particularly uncertain due to the exceptional level of de-mutualisation activity during this year. This estimate represents the reduction in tax liabilities from the existence of the relief and cannot generally be interpreted as the yield from withdrawing it. In practice, withdrawing a relief would often result in significant changes to taxpayers' behaviour and might require changes to other reliefs.