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Income Tax

Volume 927: debated on Wednesday 2 March 1977

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asked the Chancellor of the Exchequer what would be the loss to the revenue if the top rate of income tax were 50 per cent., 45 per cent. and 40 per cent. on earned income alone, and on earned income combined with investment income.

The cost of reducing the top rate of income tax on earned income to 50 per cent., 45 per cent. and 40 per cent. would be about £235 million, £330 million and £460 million respectively at 1976–77 levels of income. The costs if applied to both earned and investment income would be about £430 million, £570 million and £760 million respectively, assuming that the restriction to the maximum rates excludes the investment incomes surcharge. To apply the maximum rate to earned and investment income on the basis that the restriction includes the investment income surcharge would involve complex calculations, and regretfully it has only been possible to provide a figure in respect of a 50 per cent. maximum. The cost on this basis at 1976–77 levels of income would be

clerical employees. Following is the information for August 1976, the latest date for which an industrial analysis of the unemployed is available. This analysis of the unemployment is available. This analysis is normally made quarterly but because of industrial action by some staff in the Department of Employment Group, information for November 1976 is not available.

£630 million. This assumes that investment income is treated as the top slice of a mixed income.