§ Mr. Ralph Howell
asked the Chancellor of the Exchequer what would be the gain in tax revenue of abolishing the wife's earned income tax allowance; and by how much (i) single person's tax allowance, (ii) married man's tax allowance, and (iii) both allowances could be increased if the amount of revenue gained by the abolition of the wife's earned income allowance were allocated in equal proportion to those other allowances at nil cost to the Exchequer.
§ Mr. Moore
The yield from abolition of the wife's earned income allowance is estimated to be £3.1 billion in a full year at 1984–85 income levels. This assumes that the wife's earned income election would not be available after the change to those couples who do not benefit from it at present. Without this restriction, the yield from abolition of the allowance would be reduced to about £1.9 billion. Both these estimates also assume no change in taxpayers' behaviour.
If the £3.1 billion was devoted to raising the single allowance, it could be increased by 58 per cent. above its 1984–85 level to £3,175 (this is £20 above the level of the married man's allowance). Alternatively, the married man's allowance could be increased by 28 per cent. to £4,045. If both allowances were raised simultaneously, they could each be increased by 18 per cent.—to £2,365 for a single person and £3,725 for a married man. These estimates all assume that the age allowances would be increased by the same percentage as the corresponding non-age allowances.