HC Deb 28 November 1974 vol 882 c204W
Mr. Grist

asked the Chancellor of the Exchequer what are the total gross wage and salary payments needed if the employed population of the United Kingdom at the latest convenient date is to maintain the real income under 15, 20 and 25 per cent. rises in the cost of living.

Mr. Robert Sheldon

Income tax liabiliity depends on an individual's total income from all sources and there is no fully satisfactory basis for allocating the tax attributable to, for example, income from employment in order to estimate post-tax wages and salaries. On the arbitrary method of allocation employed in Table 49 of the 1974 National Income Blue Book, however, it is estimated that commencing from current income levels and with 1974–75 tax rates and allowances the percentage increases in gross wages and salaries required to maintain the real value of aggregate post tax-wages and salaries under rises of 15 per cent., 20 per cent. and 25 per cent. in the cost of living are approximately 17 per cent., 23 per cent. and 30 per cent. respectively. These figures do not take account of changes in national insurance contributions.

These estimates assume that pre-tax wages and salaries all increase in the same proportion.

While the aggregate of post-tax employment incomes would thus be maintained in real terms, their distribution as between individuals would not remain unchanged.

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