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Capital Expenditure

Volume 205: debated on Monday 9 March 1992

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To ask the Chancellor of the Exchequer what would be the estimated cost of replacing the existing capital expenditure allowance rates by straight line rates of (a) year one-33⅓ per cent., year two-331 per cent., year three-331/3 per cent. and (b) year one-25 per cent., year two-25 per cent., year three-25 per cent., year four-25 per cent., if the levels of capital expenditure and business profits (1) stayed constant, (2) increased by 10 per cent. and (3) increased by 50 per cent.

[holding answer 6 March 1992]: Maximum estimates of the annual Exchequer costs of the proposed rates for new capital expenditure on plant and machinery are:

£ billions
Assumed changed in capital expenditure and profitsStraight line allowance at:
Percentage331/3 per cent.25 per cent.
+ 102·92·2
+ 504·03·0
Estimates are very approximate because the precise costs would depend on the interaction of several factors.