§ 4. Miss Fookes
asked the Chancellor of the Exchequer what is the present level of personal income tax allowances; and by how much they would need to be increased to bring them back to their real value as at February 1974.
§ The Minister of State, Treasury (Mr. Denzil Davies)
For 1976–77 the allowance for a single person is £735 and for a married couple £1,085. On the basis of the increase in prices up to January 1977, to maintain their real value at February 1974 would require increases of about £275 and £230, respectively. The corresponding allowances for those aged over 65 are £1,010 and £1,555, and the corresponding increases required for them would be £180 and £140, respectively.
§ Miss Fookes
What would be the total cost to the Exchequer if this concession—as no doubt the hon. Gentleman would call it—were granted?
§ Mrs. Hayman
Is my hon. Friend considering actively the advantage to the Exchequer of abolishing the higher rate of allowance for a married man and looking at the redistribution of the wife's allowance to the children, who surely are more realistically dependants in this day and age?
§ Mr. Davies
I am not sure what my hon. Friend has in mind when she refers to a higher rate of allowance for a married man. A married man has a married man's allowance. If his wife is earning, she has the wife's earned income allowance as well. So a married couple where the wife is earning could be said to have three lots of single person's allowances, because they add up to the same amount.
§ Mr. Hordern
Can the Minister say whether, during the round of discussions that he is having with the trade unions about the social contract and the next phase of the incomes policy, the tax reductions to which he has referred will be in addition to the cost that he gave to my hon. Friend the Member for Plymouth, Drake (Miss Fookes) of simply restoring the allowances to what they were before this Government came into power?
§ Mr. Davies
The figure that I gave was in relation to increasing allowances. If the allowances were increased it would cost £2.2 billion, and that would affect everybody, from the bottom to the top of the tax scale.