HC Deb 27 July 1971 vol 822 cc191-2
9. Mr. Ralph Howell

asked the Chancellor of the Exchequer what is his latest estimate of the tax revenue to be derived from the taxation of sickness, unemployment and supplementary benefits at present exempt from tax; and what adjustments in the standard rate of income tax will be required to offset the extension of taxation to such benefits.

Mr. Maurice Macmillan

For sickness and unemployment benefit about £175 million, equivalent to about 1p off the standard rate. I cannot make an estimate for supplementary benefits but the yield is unlikely to be large.

Mr. Howell

Is my hon. Friend aware that the present P.A. Y. E. system is grossly unfair and that the way in which it operates causes great resentment among regular workers and old-age pensioners because all their pay ranks for taxation while others are exempt?

Mr. Macmillan

I think that my hon. Friend's arguments make a case in principle for taxing short-term National Insurance benefits. There is great difficulty in finding a method of doing so which does not involve a disproportionately high administrative cost.