§ Mr. Ralph Howellasked the Chancellor of the Exchequer, in view of the fact that a switch from direct to indirect tax would increase the retail price index without taking into account the extra spending power which would remain, if he will consider establishing a more appropriate basis for the measurement of inflation, one which will provide the general public with a more accurate indicator.
§ Mr. LawsonThe retail prices index is a good measure of changes in the prices of goods and services purchased by most households. A switch from direct to indirect tax will affect not only the level of retail prices—on the indirect tax side—but also the level of personal disposable incomes—on the direct tax side. The CSO publishes a quarterly series of real personal disposable income which takes into account the effect on the purchasing powers of personal incomes of changes 147W both in direct taxes and taxes on expenditure. The question whether the existing statistics should be supplemented by other indicators will be kept under review.