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Income Tax

Volume 990: debated on Thursday 7 August 1980

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asked the Chancellor of the Exchequer if, having regard to the fact that the top rate of income tax in Japan exceeds that in the United Kingdom, as shown in his Department's answer to the hon. Member for Norfolk, North (Mr. Howell) on 30 July, with no apparent effect on its economic performance, he will reconsider his policy of direct tax cuts as incentives.

No. I remain convinced of the desirability of reducing direct taxation. Moreover, a comparison of the top rates of income tax does not by itself give the full picture. The hon. Member may not have appreciated that the top rate of income tax on employment income in Japan applies only at very high levels of income—£174,000 p.a. for a married couple with two children. A similar couple in Japan earning the yen equivalent of £29,895—the United Kingdom threshold for the maximum rate—would be subject to a marginal rate, ignoring local taxes, of about 38 per cent.