§ Mr. Joel Barnett
asked the Chancellor of the Exchequer if he will provide his current estimate of the effect on the retail price index of increasing the yield by £500 million from (a) duties on tobacco, (b) beer and alcoholic beverages and (c) petrol and derv, respectively.
§ Sir Geoffery Howe
[pursuant to his reply 13 February, c. 693]: The impact effect on the RPI would be about:
(a) 1.0 per cent., (b) 0.9 per cent. And (c) 0.3 per cent. respectively. These calculations are, however, made on the assumption that other things remain equal. In practice they do not remain equal. This Government would take only such measures in the context of their monetary and fiscal policies which are designed to bring about a substantial reduction in inflation. The effect on prices over a period would thus be very different from the apparent individual "impact" effects. By helping to contain the borrowing requirement they could contribute to a lower rate of increase in prices in general.
§ Mr. Marlow
asked the Chancellor of the Exchequer what would be the effect on the retail price index and the product price of raising £500 million in extra taxation through each one of the following: beer, cigarettes, wine and spirits.379W
§ Mr. Peter Rees
[pursuant to his reply 13 February, cc. 693–4]: The information for beer and tobacco is as follows:
… … … … … … Retail price index Typical price … … … … … … Per cent. Beer … … … … … … +0.7 + 5 pence per pint Tobacco … … … … … … +1.0 +14 pence on 20 King size tipped
It is not possible to be certain that an additional £500 million revenue could be raised through wine and spirits alone, still less what increases might be needed to achieve this.
These calculations are made on the assumption that other things remain equal. For comment on this, please refer to the answer given today by my right hon. and learned Friend the Chancellor to the right hon. Member for Heywood and Royton (Mr. Barnett).
TAX THRESHOLD AS A PERCENTAGE OF THE SUM OF MALE AND FEMALE AVERAGE MANUAL EARNINGS PLUS CHILD BENEFIT Two wage married couple Two wage married couple with 1 child Two wage married couple with 2 children Two wage married couple with 3 children Two wage married couple with 4 children per cent. per cent. per cent. per cent. per cent. 1977–78 37.6 41.2 45.0 48.8 52.9 1978–79 34.8 37.4 40.3 43.1 46.2 1979–80 35.5 37.0 38.5 40.0 41.3
The earlier reply gave figures for a two wage married couple without children, though in that the combined threshold was compared with male earnings only, as in the remainder of the answer. On this same basis the figures above became:
TAX THRESHOLD AS A PERCENTAGE OF AVERAGE MALE MANUAL EARNINGS PLUS CHILD BENEFIT Single person Married couple Two wage married couple Two wage married couple with 1 child under 11 Two wage married couple with 2 children aged 12 and 8 Two wage married couple with 3 children aged 14 12 and 8 Two wage married couple with 4 children aged 16, 14, 12 and 8 per cent. per cent. per cent. per cent. per cent. per cent. per cent. 1977–78 23.9 36.8 60.7 66.1 71.7 77.2 83.1 1978–79 21.8 34.0 55.8 59.2 63.2 66.9 71.1 1979–80 22.1 34.5 56.6 58.2 59.8 61.2 62.5
These figures represent the proportion of family income of a couple or of a man on average earnings which can be received before tax becomes payable.
I regret that to produce the figures requested for all the earlier years would require the expenditure of excessive time and resources.