§ Mr. Ian Stewartasked the Chancellor of the Exchequer whether he will publish a table in the Official Report showing, for 1973–74 and 1978–79 the effective rate of tax plus social security contributions for a man with two children aged under 11 years having income, all earned, equivalent to the national average earnings, twice the average and three times the average, on a basis comparable with that given in his reply to the hon. Member for Aylesbury (Mr. Raison) in the Official Report, 11th November 1977, column 272, using (a) tax rates and scales as proposed in his April 1978 Budget and (b) tax rates and scales as amended in Committee on 8th May and 10th May 1978.
§ Mr. Robert SheldonThe figures are as follows:
rates of income tax plus national insurance contributions for each of a single person, a married couple, a married couple with two children under 11 years of age, and a married couple with four children, assuming average male earnings 737W in each case, for 1960–61, 1964–65, 1973–74, 1977–78 and for 1978–79, using (a) tax rates and scales as proposed in his April 1978 Budget and (b) tax rates and
TAX AND NATIONAL INSURANCE CONTRIBUTIONS AS A PERCENTAGE OF AVERAGE EARNINGS, PLUS FAMILY ALLOWANCE/CHILD BENEFIT WHERE APPROPRIATE Year Single person Married couple Married couple with 2 children aged under 11 Married couple with 4 children aged under 11 Per cent. Per cent. Per cent. Per cent. 1960–61 … … … 19.0 14.0 6.8 3.2 1964–65 … … … 23.4 18.4 9.7 5.1 1973–74 … … … 28.2 25.8 21.6 18.6 1977–78 … … … 32.2 28.1 24.4 21.1 1978–79 … … … 31.9 27.9 25.0 22.4 (tax rates and scales as proposed in April 1978 Budget) 1978–79 … … … 31.3 27.4 24.6 22.0 (tax rates and scales as amended in Committee) Notes: 1. The figures for 1973–74 and earlier years have been calculated on the same basis as those given in reply to the hon. Member for Norfolk, North (Mr. Howell)—[Official Report, Vol. 940, cols. 461–2]—and the hon. Member for Horsham and Crawley (Mr. Hordern)—[Official Report, Vol. 939, col. 268]. As in the reply to the hon. Member on 17th April, the figures for 1977–78 have now been based on average earnings in October 1977. 2. For 1978–79, average earnings have been notionally estimated as follows. On the basis that in October 1977 a man on average earnings had not yet received an increase in the current pay round, it may be assumed that his earnings will rise by a further 10 per cent. to October 1978 in accordance with the Government's guideline. It is assumed that the retail prices index will rise by 7 per cent. over the same period. The figures of tax, national insurance contributions and child benefit are those for the whole year.
§ Mr. Ian Stewartasked the Chancellor of the Exchequer whether, against the background of the original Budget proposals, he will estimate the cost of moving to an income tax structure involving tax bands as follows: taxable income of 0-£750 at 25 per cent.; £750–£10,000 at 30 per cent.; £10,000–£15,000 at 35 per cent.; £15,000–£20,000 at 40 per cent.; £20,000–£25,000 at 45 per cent.; £25,000–£30,000 at 50 per cent.; £30,000–£35,000 at 55 per cent.; and £35,000 and above at 60 per cent.; whether he will estimate how much of that cost would relate to people with taxable incomes below and above £10,000 a year, respectively; and how many people are involved in each case.
§ Mr. Robert SheldonThe estimated cost would be about £2,450 million.
The allocation cannot be given conveniently in terms of taxable income, but
738W
Weekly tax threshold plus child benefit Family income supplement entitlement level Supplementary benefit plus average allowance for rent and rates £ per week £ per week £ per week Single person … … … … … … 18.94 — 21.75 Married couple … … … … … … 29.52 — 30.80 Married couple with 1 child aged 13 … … … 34.42 43.80 39.20 Married couple with 2 children aged 10 and 13 … 38.64 47.80 44.55 Married couple with 3 children aged 10, 13 and 15 … 43.53 51.80 51.95 scales as amended in Committee on 8th May and 10th May 1978.
§ Mr. Robert SheldonThe figures are as follows:
in terms of total income less deductions such as mortgage interest the division is:
Income Cost £ million Numbers Thousands Below £10,000 1,340 20,300 Above £10,000 1,110 700 Married couples have been counted as one.
§ Mr. Ralph Howellasked the Chancellor of the Exchequer if he will revise the figures given in reply to the hon. Member for Birmingham, Perry Barr (Mr. Rooker), Official Report, 26th April 1978, column 592, using either current child benefit levels and current family income supplement levels, or November child benefit levels together with November family income supplement levels.
§ Mr. Robert SheldonThe current figures are as follows:
739WThe figures have been calculated on the same basis as those given in reply to the hon. Member for Birmingham, Perry Barr (Mr. Rooker)—[Official Report, 26th April 1978, Vol. 948, c. 591–2]—except that the rates of child benefit and supplementary benefit used are those currently in force.
The entitlement levels for family income supplement from November 1978 have not yet been announced.
§ Mr. Ralph Howellasked the Chancellor of the Exchequer if he will publish figures showing the level of gross income—converted into £ sterling—at which single-wage married couples start to pay income tax—excluding local income tax—at a marginal rate of 50 per cent. on their total joint income: in each of the EEC member States, and in the United States of America, Canada, Australia, Sweden and Japan.
§ Mr. Robert SheldonThe information requested is given in the table below.
LEVEL OF GROSS INCOME AT WHICH SINGLE-WAGE MARRIED COUPLES START TO PAY INCOME TAX AT A MARGINAL RATE OF 50 PER CENT. IN TOTAL JOINT INCOME £ Notes Belgium 19,235 3, 5 Denmark See notes 6 France 48,200 5, 8 Germany 31,750 4 Ireland 7,790* 3, 8 Italy 68,390 — Luxembourg 19,480 5 Netherlands 10,690 — United Kingdom 10,536* 3, 8 USA 26,540 4 Canada See notes 7 Australia 11,750 5, 8 Sweden 12,310 5 Japan 74,590 5 * Budget proposals. Notes
1. Sterling exchange rates at 18th May were used.
2. It has been assumed that there are no dependent children. Account has been taken of personal reliefs, employment income reliefs, minimum expenses deductions, other flat-rate reliefs and deductible social security contributions.
3. The figures in the table assume the wage is all earned by the husband. If the wage were all earned by the wife, there would be the following changes.
Belgium, 20,190.
Ireland, 8,020.
United Kingdom, 11,521.
4. In the USA and Germany, spouses may elect to be taxed separately or jointly. In the circumstances described above, joint taxation 740W would be more beneficial in both countries, and the computation has been done on this basis.
5. Some countries do not have a marginal rate of exactly 50 per cent. In these cases the starting point for the first rate above 50 per cent. has been given, viz.:
Belgium, 52.5.
France, 54.
Luxembourg, 51.25.
Australia, 51.25.
Sweden, 53.
Japan, 54.
6. In Denmark the top rate of national income tax (39.6 per cent.) is reached at £12,560.
7. In Canada the top rate of federal income tax (43 per cent.) is reached at £48,195.
8. Rates and allowances are those for 1978 except for France (1977), Ireland and United Kingdom (1978–79) and Australia (1977–78).
§ Mr. Ralph Howellasked the Chancellor of the Exchequer how many more people will be liable to income tax in 1978–79 than in 1977–78.
§ Mr. Robert SheldonAbout 900,000, counting earning wives separately, and taking account of the Budget proposals. The numbers in 1977–78 were lower than they otherwise would have been as a result of the increases in personal allowances made last autumn in anticipation of the indexation required for 1978–79 under the Finance Act 1977. The numbers for 1978–79 are about 300,000 less than for 1976–77. This year's main Budget proposal—the lower rate band—benefits large numbers of the lower paid but does not itself alter the number of taxpayers.
§ Mr. Lawsonasked the Chancellor of the Exchequer what would be the cost in a full year of taxing all earned income above the basic rate band at 50 per cent.
§ Mr. Robert Sheldon, pursuant to his reply [Official Report, 8th May 1978; Vol. 949, c. 355], gave the following reply:
There are difficulties in attempting to distinguish tax on specific categories of income, but on the assumption that investment income represents the top slice of a mixed income the cost would be about £315 million at 1978–79 incomes and after taking account of the Budget proposals.