(Limerick East) asked the Minister for Finance the cost in the tax year 1988-89 of (a) increasing the single person's tax-free allowance by (i) £500 and (ii) £1,000; (b) increasing the married person's tax-free allowance by (i) £1,000 and (ii) £2,000; (c) reducing the 35 per cent rate of income tax to (i) 30 per cent and (ii) 25 per cent; (d) reducing the 48 per cent rate of income tax to (i) 45 per cent and (ii) 40 per cent; and (e) reducing the 58 per cent rate of income tax to (i) 55 per cent and (ii) 50 per cent.
Written Answers. - Income Tax.
37.
Assuming the enactment of this year's budget proposals the full year costs, estimated by reference to the income tax year 1988-89, arising from the changes referred to in the question are as follows:
|
Proposed change |
Full year cost to the Exchequer |
|
£m |
|
|
Personal Allowance |
|
|
— Single allowance increase of £500 |
236 |
|
— Married allowance increase of £1,000 |
|
|
— Single allowance increase of £1,000 |
462 |
|
— Married allowance increase of £2,000 |
|
|
35% rate of income tax |
|
|
— reduce to 30% |
224.5 |
|
— reduce to 25% |
449 |
|
48% rate of income tax |
|
|
— reduce to 45% |
26 |
|
— reduce to 40% |
68 |
|
58% rate of income tax |
|
|
— reduce to 55% |
24 |
|
— reduce to 50% |
64 |
Notes:
1. It is assumed that any increase in the single allowance must be combined with double that increase in the allowance for married persons assessed to tax on the aggregate basis.
2. The estimated cost of the increase in the personal allowances for single and married taxpayers includes the revenue effect of the associated increases in the widowed person's allowance, the widowed parent allowance and the single parent allowance.
3. The figures given for costs are additional to the costs associated with the implementation of this year's budget.
38.
(Limerick East) asked the Minister for finance the increase in tax revenue which would accrue (a) in the 1988-89 tax year and (b) in a full tax year, from a halving of accelerated capital allowances against corporation profits tax liability.
If the change referred to in the question were to affect investment from 1 April 1988 onwards it is estimated that the yield in 1988-89 would be negligible. In 1989-90 and for some years thereafter there would be a yield to the Exchequer in terms of increased corporation tax revenue. This is tentatively estimated for 1989-90 to be of the order of £56 million. This additional yield would diminish in each subsequent year because the initial reduction in accelerated capital allowances would be balanced by an increasing total of annual allowances.