HC Deb 02 April 1979 vol 965 cc448-9W
Mr. Ian Stewart

asked the Chancellor of the Exchequer whether he will estimate the revenue cost of indexing the threshold and bands of higher rates of income tax by the same amount as is required for the personal allowances under section 22 of the Finance Act 1977, (a) on the basis of 1978–79 earnings, and (b) on an assumption that 1979–80 earnings exceed those of 1978–79 by 15 per cent.

Mr. Robert Sheldon,

pursuant to his reply[Official Report, 26 March 1979; Vol. 965, c. 52], gave the following answer:

The increase in prices in 1978 was 8.86 per cent. To revalorise the threshold and bands of higher rates at 1978–79 income levels by this amount would cost about £130 million in a full year. The cost for 1979–80 would depend on the increase in total income, including investment income.

Mr. Ian Stewart

asked the Chancellor of the Exchequer whether he will estimate the likely revenue cost in 1979–80 of complying with the indexation provisions of section 22 of the Finance Act 1977, in his forthcoming Budget (a) on the basis of 1978–79 earnings and (b) on an assumption that 1979–80 earnings exceed those of 1978–79 by 15 per cent.; and if he will state the basis of indexation as provided by the retail price index and the levels to which the allowances would have to be raised.

Mr. Robert Sheldon

, pursuant to his reply [Official Report, 26 March 1979; Vol. 965, c. 52], gave the following answer:

The increase in prices in 1978 was 8.86 per cent. This is measured by the increase in the general retail price index between December 1977/January 1978 and December 1978/January 1979.

The levels to which the allowances would have to be raised are as follows:

Allowance Revalorised amount

£
Single person and wife's earned income allowance 1,073
Married person 1,672
Additional personal allowance 599
Age allowance—single person 1,416
Age allowance—married person 2,259
Age allowance income limit 4,355

At 1978–79 income levels the estimated full year cost of this change would be about £960 million. The cost at 1979–80 income levels would depend on the increase in total income, including investment income for that year.