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Treasury

Answer

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 £100,000 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 +£3.3 billion allowances{1} (d) restrict the value of personal allowance to the basic rate +£1.9 billion (e) apply tax on savings (excluding dividends) at the marginal +£0.2 billion rate of income tax (f) abolish the lower rate of tax, but leave savings and dividends +£2.7 billion rate at 20 per cent. (g) cost of capital gains tax annual exempt amount{2} -£2.5 billion (h) raise non aged and aged personal allowances to £10,000 -£2.9 billion _________________________________________________________________________________________________. {1} This 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.

Secondary information

Type

Written question

Reference

13249; 301 c255-6W

Session

1997-98

Subjects

Capital gains tax Allowances Income tax Personal savings Mortgages Personal taxation Married people Tax allowances Taxation

Contains statistics

Yes