§ Mr. Meacherasked the Chancellor of the Exchequer if he will provide a table illustrating the distributional effect between husbands and working wives of a change to independent taxation proposed in the Green Paper on taxation of husbands and wives in terms of the numbers gaining or losing under schemes 1 to 4.
§ Mr. Peter Rees[pursuant to his reply, 2 June 1981, c. 311]: The information is given in the table below. Only husbands whose wives have earnings are included. Elderly couples—those where one or both partners are over 65—are not included as there are comparatively few working wives among this group, and analysis of their tax position is complicated by the age allowance.
Husbands and wives are described as gaining, losing or experiencing no change according to the effect on their individual tax bills. The net effect on those couples where one partner gains and the other losses depends on the relative size of the gain and loss, this information is contained in the second background paper for the Green Paper "Distributional Effects of a Change to Mandatory Independent Taxation", copies of which are available in the Library.
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income—and, in the case of the elderly, any national insurance retirement pension she receives on account of her husband's contribution—would be taxed as part of her income rather than as her husband's as at present. This switch has been ignored for the above analysis, which shows whether a person would pay more or less tax on the income which is currently attributed to them for taxation purposes. Under Schmes 1 and 4—non transferable allowances—the effect on an individual is independent of the income of his or her partner and the gain or loss is determined solely by the level of income in relation to the old and new allowances. Under Schemes 2 and 3—fully and partially transferable allowances—the gain or loss can be dependent on the partner's income. In cases where both partners pay tax under the present system and also under the new scheme, the husband will lose as the present married allowance is replaced by the lower new allowance; the wife will experience little change under scheme 2, as the new allowance level is virtually identical to the present wife's earned income allowance; and she will gain from the higher allowance under scheme 3.