To ask the Chancellor of the Exchequer what would be the tax expenditures cost if (a) the first £500 per person per year and (b) the first £750 per person per year, counting husbands and wives separately, of investment income occupational pension and other personal income other than earned income were free of tax; and what rates of tax on the balance of such income would be necessary in order to make the change revenue neutral.
[holding answer 17 December 1987]: The direct revenue cost at 1988–89 levels of income of making the first £500 and the first £750 of personal income other than earnings tax free would be about £1½ billion and £2 billion respectively. Additional rates of 4 per cent. and 5½ per cent. would have to be charged on the balance of such income to make the proposed changes revenue neutral.