Below is the text of Mr Major's written Parliamentary Answer on Income Tax on 26th July 1990.
Mr. Alison To ask the Chancellor of the Exchequer if he will list the percentage proportion of the total yield of income tax in the year 1989–90, or the latest available year, accounted for by(a) taxpayers at the top rate of 40 per cent., and (b) taxpayers at the standard rate with gross incomes broadly equivalent to half, one, one and half, two and three times average earnings.
Mr. Major It is estimated that in 1990–91 the income tax liability of higher rate taxpayers will represent 35 per cent. of total income tax liability. The percentage of total tax liability resulting from basic rate taxpayers with gross incomes broadly equivalent to half, one, one and a half, two and three times average earnings would depend on the size of the income bands assumed.
Mr. Alison To ask the Chancellor of the Exchequer what would be the yield in a full year under the tax regime applying in the latest available year, if the top tax rate of 40 per cent. had been raised to 100 per cent. on the assumption that those with incomes liable to taxation at 40 per cent. had taken no precautionary or offsetting steps to mitigate the extra impost.
Mr. Major The yield in a full year at 1990–91 levels of income of increasing the top rate of income tax from 40 per cent. to 100 per cent. is estimated to be just under £18 billion.
The estimate takes no account of any behavioural effects that might result from such an increase.