§ Mr. Meacherasked the Chancellor of the Exchequer what is his estimate of the annual gain or loss for employees earning, respectively, £1,000, £1,500, £2,000, £3,000, £5,000, £10,000 and £20,000 of replacing the present system of two-ninths earned income tax relief by a universal flat-rate relief of £250 per annum; and what is his estimate of the annual gain or loss to the Exchequer of such a change.
§ Mr. Patrick JenkinI understand that the hon. Member wishes to substitute £350 per annum for £250 per annum in his Question. On this basis, if the earned income relief of two-ninths and one-ninth were abolished (but the special surtax earnings allowance of a maximum of £2,000 retained) and replaced by a flat-rate earned income relief of £350, then very roughly there would be no gain or loss to the Revenue. I am circulating with the OFFICIAL REPORT detailed figures for which the hon. Member asks. Following are the figures:
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THE EFFECT ON A MARRIED MAN WITHOUT CHILDREN WHOSE INCOME IS ALL EARNED WOULD BE: Earnings £ p.a. Increase (+) or Decrease (-) in tax £p 1,000 … … … … -49.51 1,500 … … … … -6.46 2,000 … … … … +36.60 3,000 … … … … +122.71 5,000 … … … … +256.09 10,000 … … … … +855.00 20,000 … … … … + 1,065.00
§ Mr. Meacherasked the Chancellor of the Exchequer what is his estimate of the annual saving to the Exchequer of replacing the present system of two-ninths earned income tax relief by a system of one-ninth relief together with a flat-rate relief of £150 available to all employees.
§ Mr. Patrick JenkinIf earned income relief on the first £4,005 of earnings was reduced from two-ninths to one-ninth and a fiat-rate relief of £150 made available as well, the Revenue would very roughly break even.