To ask the Chancellor of the Exchequer if he will make an assessment of the merits of reducing the basic rate of income tax to 16 per cent. (264513)

All taxpayers who pay any income tax at the basic rate would benefit. A reduction in the basic rate would result in a loss of tax revenue which can be approximated from table 1.6 ‘Direct effects of illustrative tax changes’ on the HM Revenue and Customs website at:

http://www.hmrc.gov.uk/stats/tax_expenditures/table1-6.pdf

The figures exclude any estimate of behavioural response.

There would need to be a corresponding reduction in income tax deducted at source on interest.