§ Mr. Newtonasked the Chancellor of the Exchequer, for the EEC member States, Sweden, USA and Japan and for 404W a married couple with two children under 11 years of age, at what levels of income income tax commences to be payable: and at what initial percentage rate.
§ Mr. Robert SheldonOn the assumption that the hon. Member is referring to earned income, the information is as follows:
Income tax threshold £ Initial rate (Percentage) United Kingdom 1,821 34 Belgium 2,150 11.2(11.9) Denmark 2,450 14.4(38.6) France 3,475 3.6 Germany 2,350 22 Ireland 1,630 20 Italy 1,300 10 Luxembourg 5,025 18.45 Netherlands 3,000 19.2 Sweden 4,350 25 (51.8) USA 4,175 25 Japan 4,700 7 (10.5) Notes:
Thresholds and rates are for income of the 1977 tax year, except for the United Kingdom and Ireland—1977–78—and France—1976. For the United Kingdom the effective raising of the threshold in the recent autumn Budget has been taken into account.
All income is assumed to be income of the husband. The thresholds and rates apply to income from employment where this is treated more generously than earned income from self-employment. The thresholds take account of personal reliefs and allowances, minimum expense deductions, earned income reliefs or tax deductible social security contributions.
Figures in brackets include local income tax as at representative rates. In Belgium and Denmark, the threshold for local income tax is the same as that for national income tax.
United States of America. Certain low-income taxpayers — householders with dependent children—are entitled to a tax credit, which is payable in cash to the extent that it exceeds tax liability. The tax threshold has been taken to be the income level where tax liability exceeds the credit. The nominal rate of tax at this point is 15 per cent.; but since the tax credit is being withdrawn at this point, the effective marginal rate of tax deduction against gross income is 25 per cent. There is no liability for California State income tax—the State tax normally adopted for comparative purposes—at this income level.
405WSweden. Married couples with only one earner are entitled to a tax credit against national income tax, or local income tax to the extent that the credit exceeds national tax liability. The national income tax threshold has been taken to be the income level where national tax liability exceeds the credit. The nominal rate of national tax is 15 per cent. at this point; but since the tax credit is being withdrawn at this point, the marginal rate of tax deduction against gross income is 25 per cent. The threshold and rate for national income tax given in the reply to the Member for Norfolk, North (Mr. Howell) on 24th January 1977—[Vol. 924, c. 408]—took no account of this tax credit and to that extent were potentially misleading.
Foreign currencies are converted into sterling at the exchange rates for 4th November.
§ Mr. Knoxasked the Chancellor of the Exchequer if he will publish in the Official Report a table showing each change in the standard rate of income tax since the war and indicate for each change the rate before and after the change.
§ Mr. Robert SheldonThe standard or basic rate of tax for each year since 1945 has been as follows:
STANDARD RATE 1945–46 … 50% (10/- in the £) 1946–47 to 1950–51 … 45% (9/-in the£) 1951–52 and 1952–53 … 47.5% (9/6 in the £) 1953–54 and 1954–55 … 45%(9/- in the £) 1955–56 to 1958–59 … 42.5% (8/6 in the £) 1959–60 to 1964–65 … 38.75% (7/9 in the £) 1965–66 to 1970–71 … 41.25% (8/3 in the £) 1971–72 and 1972–73 … 38.75% BASIC RATE 1973–74 … 30% 1974–75 … 33% 1975–76 and 1976–77 … 35% 1977–78 … 34% Basic rate from 1973 to 1974 is not comparable with standard rate owing to the operation of earned income relief, for earlier years, and investment income surcharge, from 1973–74.