§ Mr. Ralph Howellasked the Chancellor of the Exchequer what would be the cost to the Exchequer of allowing husband and wife to treat their respective incomes as if shared equally between them for tax purposes: (a) in every case and (b) only where there are dependent children.
§ Mr. Robert Sheldonif the total income of (a) all married couples, (b) married couples with dependent children, including those where the wife has no earned income of her own, were split equally between husband and wife the loss of revenue in 1977–78 would be (a) £600 million and (b) £400 million. The calculations assume that
- 1. Husband and wife are taxed separately whether or not this is beneficial in the individual case, and are each entitled to a full basic rate band;
- 2. Each receives a single personal allowance of £945—or £1,250, where either is 65 or over—plus half of any other allowances due to the couple.
§ Mr. Newtonasked the Chancellor of the Exchequer if he will list the countries 267W having a top level of tax on earned income above the 83 per cent. in the United Kingdom.
§ Mr. Robert SheldonUp-to-date information is not available about every country in the world, but I understand that top marginal rates on earned income higher than 83 per cent. apply in the following countries:
per cent. Algeria … … … 100 Egypt … … … 96.6 Japan … … … 83.7(a) Portugal … … … 84.4 Sweden … … … 848(b) Tanzania … … … 95 (a) includes local income taxes; the top national rate is 67.5 per cent. (a) includes local income taxes; the top national rate is 67.5 per cent.
Earned Income Investment Income Maximum rate Per cent. Income at which maximum rate starts £ Maximum rate Per cent. Income at which maximum rate starts £ Belgium 72(75.6) 65,975 72(75.6) 62,800 Denmark 39.6(63.8) 11,100 39.6(63.8) 10,900 France 54 53,375 60 38,900 Germany 56 65,375 56 64,000 Ireland 60 8,630 60 8,580 Italy 72 374,000 72(76) 346,000 Luxembourg 58.4 28,450 58.4 27,000 Netherlands 72 40.000 72 38,300 United Kingdom 83 22,821 98 22,821 United States of America 50 27,900 70 114,550 United States of America (including California State Tax) 55.5 28,050 73.3 114,550 Japan 67.5(83.7) 204,650 75 (93) 180,150 Australia 65 19,575 65 19,575 Notes:
1. Figures in brackets include local income taxes, for Belgium, Japan and Denmark (Copenhagen residents).
2. The income levels in the table are amounts of gross income, either all from employment or all from investments, before any allowances or reliefs. Some types of investment income enjoy tax privileges in certain overseas countries; the table assumes that all investment income is fully taxable.
3. Where the levels at which the maximum tax rate applies are higher for earned income than investment income this is because of tax reliefs such as expense deductions, earned income reliefs or tax-deductible social security contributions in these countries, which are allowed against earned income only. The maximum rate of Federal income tax on earned income is restricted to 50 per cent. in the United States of America; the figure in the table is that at which the 50 per cent. rate first applies.
4. The rates and income levels apply to income of the 1977 tax year, except for France (1976) and the United Kingdom and Ireland (both 1977–78). The United Kingdom figures take account of the changes in personal allowances in the Chancellor's statement of 26th October.
5. Exchange rates are as at 4th November 1977, except Australia: 7th November 1977.
§ Mr. Hordernasked the Chancellor of the Exchequer if he will give the effective rates of income tax plus social security contributions for a married man with two children under 11 years of age on average male earnings in 1964–65, 1970–71, 1973–74, 1976–77, and at the latest convenient date.
§ Mr. Robert SheldonThe figures are as follows:
268W(b) includes the rate of local income tax—26.8 per cent.—payable by Stockholm residents. The top national rate is 58 per cent. and the average rate of local income payable in the country as a whole is 25.9 per cent., giving a top marginal rate of 83.9 per cent.
§ Mr. Newtonasked the Chancellor of the Exchequer if he will publish, for EEC member States, USA, Japan and Australia, a table showing the maximum rates of tax on earned income and investment income, and the levels at which these rates start.
§ Mr. Robert SheldonThe following is the information requested, for a married couple with two children under 11:
Effective rate of income tax plus national insurance contributions Year … … … Per cent. 1964–65 … … … 9.7 1970–71 … … … 21.3 1973–74 … … … 21.6 1976–77 … … … 26.3 1977–78 … … … 24.1 Average earnings for the financial year are taken as the annual equivalent of the mid-point of the New Earnings Survey 269W estimates for April at the start and finish of each year of the average earnings of full-time adult males, excepting (a) 1964–65, for which the figure is the Department of Employment's estimate of the average earnings in October 1964 of full-time male manual workers; and (b) 1977–78, for which the April 1977 New Earnings Survey figure has been updated to August 1977—the latest available month—by the monthly index of average earnings.
The effective rate is the percentage of total income, including family allowance for years before 1977–78 and child benefit for 1977–78, taken in income tax and national insurance contributions.
For 1977–78 the figures take account of the Chancellor's proposals of 26th October, and for years before 1976–77 it has been assumed that the employee was not contracted out of the graduated pension scheme.
§ Mr. Rookerasked the Chancellor of the Exchequer if he will make a statement about co-operation between the United Kingdom and other member countries of the Organisation for Economic Co-operation and Development, in particular France, West Germany and the United States of America, in ensuring that the proper tax is paid on the income and profits of individuals and companies operating internationally.
§ Mr. Denzil DaviesThe agreements between the United Kingdom and other countries for the relief of double taxation on profits and income provide for the exchange of information, in order to carry out the purposes of the agreements and to prevent fiscal evasion, under rules which protect the confidentiality of information about the affairs of taxpayers. Double taxation agreements between other OECD member countries contain similar provisions.
The growth of international operations by both companies and individuals has made it necessary for the United Kingdom and other countries to make more effective use of these facilities for exchanging information by co-ordinating bilateral exchanges.
Regular meetings therefore take place between senior officials of the tax authorities of the United Kingdom, France, Germany and the United States to 270W improve their Administrations' co-operation in practical ways. These include the study of more effective methods of avoiding double taxation, the simplification of arrangements for the assistance of taxpayers by way of mutual consultation between tax authorities and also the exchange, under the authority of tax treaties, of information needed for ascertaining the liability of taxpayers with interests and activities in the respective countries. Under these arrangements each tax authority separately examines the accounts and returns of the taxpayer within its own jurisdiction but they may meet to coordonate the exchanges of information made under the provisions of the relevant tax treaties.