HC Deb 27 June 1972 vol 839 cc1164-5
1. Mr. Hayhoe

asked the Chancellor of the Exchequer what percentage of income is taken in income tax from a man with a wife and two children under 11 years of age earning the present national average; and how this compares with the similar figure for each of the last 10 years.

The Chief Secretary to the Treasury (Mr. Patrick Jenkin)

As the answer contains a number of figures, I will with permission publish it in the OFFICIAL REPORT.

Mr. Hayhoe

Will the Chief Secretary confirm that the slice taken in direct taxation rose steadily throughout the 1960s and must have contributed towards the pressures for inflationary wage demands? Will he confirm that the peak has passed, that on the latest figures the percentage taken in direct taxation is lower and that the rising trend has at last been reversed?

Mr. Jenkin

My hon. Friend is quite right. The figures show that the proportion of this family's income taken in tax increased from under 6 per cent. in 1965–66 to over 14 per cent. in 1970–71 and that, as a result of my right hon. Friend's cuts in income tax, the trend has been reversed.

Mr. Arthur Lewis

Will the Minister confirm that the poor, hard-pressed, underpaid, top civil servants and judges will still do very well even after paying tax on the extra £2,500 they are to receive?

Mr. Jenkin

Assuming the same family with an income all earned, a man on £20,000 will be paying £10,207.29 in tax this year.

Following is the information:

An estimate for 1972–73 is not available. The figures for each of the 10 previous years are:

Year Tax as %of income
1962–63 … … … 4.1
1963–64 … … … 3.0
1964–65 … … … 4.5
1965–66 … … … 5.9
1966–67 … … … 6.5
1967–68 … … … 7.5
1968–69 … … … 10.8
1969–70 … … … 12.5
1970–71 … … … 14.2
1971–72 … … … 13.0

The above figures are based on average earnings at October each year and take account of family allowance in addition to average earnings and the corresponding "clawback", where appropriate.