§ Mr. Matthew TaylorTo ask the Chancellor of the Exchequer (1) what estimate he has made of the cost of reducing the upper rate of income tax from 40 per cent. to 30 per cent.; and if he will make a statement; [127501]
(2) what estimate he has made of the cost of abolishing the 10p tax band and extending the personal income tax allowance over this range of income; [127621]
(3) if he will estimate the yield from introducing a 50 per cent. rate of income tax on taxable income of over £100,000 per annum, for each of the next five years; [127604]
(4) if he will estimate the resulting level of the personal income tax allowance if the lop tax band were abolished on a revenue-neutral basis. [127622]
§ Dawn Primarolo[holding answer 27 June 2000]: The full year revenue effects for making changes to income tax rates or allowances in 2000–01 are given in the table:
£ billion Revenue effect Reducing the top rates of income tax by 10 percentage points1 -7.5 Introducing a 50 per cent. rate of income tax on taxable income of over £100,0001, 2, 3 +2.9 Abolishing the l0p tax band and extending the personalincome tax allowances over this range of income4, 5 -4.6 1 Including tax on dividends 2 Taxable income has been defined as income after deducting the personal allowance 3 For later years this figure will increase by on average £200 million per year 4 The revenue effect provided has not taken account of any consequential effects on the level of National Insurance contributions 5 This option would benefit most higher rate taxpayers by £456, most basic rate taxpayers by £182 and starting rate taxpayers by up to £152 If the starting rate band of income tax was abolished and all income tax personal allowances were increased by £740, the changes would be revenue neutral.
All the figures shown are the estimated direct effects of tax changes on tax revenues. In practice, tax changes will themselves effect economic variables, which in turn will have further effects on tax revenues.
1012WThese estimates are based on the Survey of Personal Incomes and are consistent with the March 2000 Budget.
§ Mr. Matthew TaylorTo ask the Chancellor of the Exchequer if he will estimate the extra revenue for the next five financial years that would be raised by restricting the rate of tax relief on(a) employee pension contributions and (b) employer pension contributions to the standard rate of income tax; and if he will make a statement. [129827]
§ Miss Melanie Johnson[holding answer 10 July 2000]: I will write to the hon. Member and place a copy of my letter in the library of the House.