§ Mr. Redwood
To ask the Chancellor of the Exchequer what would be the cost to the Exchequer in(a) 1989-90 and (b) a full year if (i) the starting point for national insurance were raised from £43 a week to £55 a week, (ii) the starting point for the 7 per cent. rate of national insurance were raised from £75 a week to £85 a week, (iii) income tax thresholds were raised by 10 per cent., (iv) the standard rate of income tax were reduced to 24 per cent., (v) each individual's capital gains tax free allowance were doubled, (vi) the threshold for inheritance tax were raised to £300,000, (vii) stamp duty on securities were halved but extended to gilt-edged securities, and (viii) any adult were allowed to save £1,000 free of tax each year.
§ Mr. Norman Lamont
Estimates are as follows:
Direct revenue effect, at 1989–90 levels of income £ million 1989–90 Full year (i) Lower earnings limit for National Insurance Class 1 contributions raised from £43 per week to £55 per week1 +80 +90 (ii) Starting point for 7 per cent, rate of National Insurance Class 1 contributions raised from £75 per week to £85 per week -70 -80 (iii) Income tax thresholds23 raised by 10 per cent. -1,970 -2,540 (iv) Basic rate of income3 tax reduced to 24 per cent -1,400 -1,530 (v) Capital Gains Tax exempt amount doubled for single people and married couples 0 -150 (vi) Inheritance tax threshold raised to £300,000 -350 -800 (vii) Stamp duty on securities halved but extended to gilt edged securities 4 + 200 4 + 200 (viii) Every adult allowed to save £1,000 free of tax each year 5___ 5___ 1 Produces revenue yield because savings on contracted out rebates (which are paid on earnings between the lower earnings limit and the upper earnings limit) are greater than the cost of contributions forgone from those earning between £43 per week and £55 per week. 2 Main personal allowances and the basic rate limit. 3 Estimates are partly based on a projection of the 1986–87 Survey of Personal Incomes. They are provisional and include the consequential effect on capital gains tax. 4 Highly uncertain. 5 Cost would depend on take-up.