HC Deb 31 July 1978 vol 955 cc66-71W
Mr. Ralph Howell

asked the Chancellor of the Exchequer, further to the replies to the hon. Member for Norfolk, North, Official Report, 2nd December 1977, columns 454–6 and Official Report, 2nd May, columns 99–100, if he will now publish a table comparing total net annual tax and national insurance liability for the same family groupings in 1977–78 and in 1978–79, assuming earnings equal to 50 per cent., 75 per cent., 100 per cent., 150 per cent., 200 per cent., and 300 per cent. of average male manual earnings and that the taxpayer is contracted into the State pension scheme, taking into

Two single people Married couple Two-wage married couple Married couple with 2 children aged under II Married couple with 4 children aged 16, 14, 12 and 9
A. 1977–78 (MAY)
1. Income tax plus NIC minus child benefits £ £ £ £ £
50 per cent. × Average manual earnings 107.60 249.40 72.50 -50.0 -178.40
75 per cent. × Average manual earnings 473.60 621.50 247.50 367.00 49.50
100 per cent. × Average manual earnings 845.60 993.50 602.00 739.10 421.60
150 per cent. × Average manual earnings 1,589.80 1,728.70 1,311.10 1,474.30 1,156.80
200 per cent, × Average manual earnings 2,333.90 2,367.20 2,020.10 2,110.70 1,793.20
300 per cent. × Average manual earnings 3,804.20 4,131.30 3,599.40 3,800.00 3,386.00
2. Income tax plus NIC minus child benefits as a percentage of earnings Per cent. Per cent. Per cent. Per cent. Per cent.
50 per cent. × Average manual earnings 5.8 13.3 3.9 * *
75 per cent. × Average manual earnings 16.9 22.1 8.8 13.1 1.8
100 per cent. × Average manual earnings 22.6 26.5 16.1 19.7 11.3
150 per cent. × Average manual earnings 28.3 30.8 23.3 26.3 20.6
200 per cent. . Average manual earnings 31.2 31.6 27.0 28.2 23.9
300 per cent. . Average manual earnings 33.9 36.8 32.0 33.8 30.1
B. 1978–79 (MAY)
1. Income tax plus NIC minus child benefits £ £ £ £ £
50 per cent. × Average manual earnings 171.10 279.80 89.50 -38.80 -391.10
75 per cent. × Average manual earnings 502.90 681.60 294.30 347.00 -32.10
100 per cent. × Average manual earnings 894.10 1,097.70 617.80 763.10 383.90
150 per cent. × Average manual earnings 1,726.20 1,924.60 1,402.50 1,590.00 1,210.80
200 per cent. × Average manual earnings 2,558.30 2,619.80 2,187.20 2,285.20 1,906.00
300 per cent. × Average manual earnings 4,212.20 4,393.10 3,931.40 4,019.30 3,583.20
2. Income tax plus NIC minus child benefits as a percentage of earnings Per cent. Per cent. Percent. Per cent. Per cent.
50 per cent. × Average manual earnings 8.1 13.3 4.2 * *
75 per cent. × Average manual earnings 15.9 21.6 9.3 16.5 *
100 per cent. × Average manual earnings 21.2 26.1 14.7 18.1 9.1
150 per cent. × Average manual earnings 27.3 30.5 22.2 25.2 19.2
200 per cent. × Average manual earnings 30.4 31.1 26.0 27.1 22.6
300 per cent. × Average manual earnings 33.3 34.8 31.1 31.8 28.3

account child benefits where appropriate, and itemizing the increase or decrease in net tax liability in every case.

Mr. Robert Sheldon

The figures are as follows:

Two single people Married couple Two-wage married couple Married couple with 2 children aged under 11 Married couple with 4 children aged 16, 14, 12 and 9
C. CHANGE IN NET TAX LIABILITY BETWEEN 1977–78 AND 1978–79†
1. Increase in pounds £ £ £ £ £
50 per cent. × Average manual earnings 63.40 30.40 17.00 -33.80 -212.80
75 per cent. × Average manual earnings 29.30 60.10 46.80 -20.00 -81.70
100 per cent. × Average manual earnings 48.50 104.10 15.80 24.00 -37.70
150 per cent. × Average manual earnings 136.50 195.90 91.50 115.70 54.10
200 percent. × Average manual earnings 224.50 252.60 167.20 174.40 112.80
300 per cent. × Average manual earnings 408.00 261.80 331.90 219.30 197.30
2. Change in the percentage of earnings represented by net tax liability† Per cent. Per cent. Per cent. Per cent. Per cent.
50 per cent. × Average manual earnings +2.3 No change +0.3
75 per cent. × Average manual earnings -1.0 -0.5 +0.5 -3.4
100 per cent. × Average manual earnings -1.4 -0.4 -1.4 -1.6 -2.2
150 per cent. × Average manual earnings -1.0 -0.3 -1.1 -1.1 -1.4
200 per cent. × Average manual earnings -0.8 -0.5 -1.0 -1.1 .1.3
300 per cent. × Average manual earnings -0.6 -2.0 -0.9 -2.0 -1.8
* Negative figure.
† i.e. income tax plus national insurance contributions minus child benefits.

Average manual earnings for 1977–78 are the annual equivalent of the new earnings survey estimate of the average weekly earnings of full-time adult male manual workers in April 1977, updated to May 1977 by the monthly index of average earnings. For 1978–79 the May 1977 figure has been updated by the increase in the new series of the monthly index of average earnings between May 1977 and May 1978—an increase of approximately 12.5 per cent.

The figures for two single people and for the two-wage married couple are based on the assumption that each person earns one-half of the joint income.

In the case of the two-wage married couple it has also been assumed that the wife has elected to pay national insurance contributions at the reduced rate of 2 per cent.

For the married couples with children the amount of child benefits for 1978–79 included in the calculations includes the appropriate proportion of the increase payable from November 1978.

The tax liabilities for 1978–79 are based on the proposals contained in the Finance Bill as approved by the House.

Mr. Knox

asked the Chancellor of the Exchequer how many persons aged under 18 years have been assessed independently of their parents for income tax purposes in each of the past five years.

Mr. Robert Sheldon

I regret that the information is not available.

Mr. Trotter

asked the Chancellor of the Exchequer whether he will give examples of countries which have higher top rates of income tax than Great Britain in respect of (a) earned and (b) unearned incomes.

Mr. Robert Sheldon

Of the countries for which information is available, the following have top rates of income tax on earned income higher than the United Kingdom (83 per cent.):

Percentage rate
Egypt 96.6*
Tanzania 95.0
Sweden 85.0
Portugal 84.0†
Japan 83.7‡
*The rates given are those for 1978 except Egypt (1977).
† Including local income taxes at the Stockholm rate.
‡ Including local income taxes at the usual rates.

I am not aware of any country with a higher top rate of tax on unearned income than the United Kingdom (98 per cent.)

January 1974 January 1978
Tax threshold FIS entitlement level Supplementary benefit level Tax threshold FIS entitlement level Supplementary benefit level
£ £ £ £ £ £
per week per week per week per week per week per week
Single person … … 11.44 — 11.11 18.17 — 21.05
Married couple … … 14.90 — 15.61 27.98 — 30.10
Married couple with 1 child … … 18.75 21.50 18.29 32.75 44.80 35.05
Married couple with 2 children … … 21.44 24.00 20.90 37.52 50.30 40.40
Married couple with 3 children … … 24.81 26.50 23.90 42.96 55.80 46.50
Married couple with 4 children … … 28.17 29.00 28.45 48.40 61.30 54.90

Notes:

1. It has been assumed that the children are aged 4; 4 and 8; 4, 8 and 11; and 4, 8, 11 and 15 respectively.

2. The tax thresholds for January 1978 include the value of tax-free child benefits.

3. As child benefits, since April 1977, are not included as an item of income for the purposes of assessing FIS payable, these too have been included in the January 1978 FIS levels shown above.

4. The figures for supplementary benefit include an addition for rent and rates based on the average amount paid by local authority tenants.