§ Mr. Squire
asked the Chancellor of the Exchequer if he will publish in the Official Report a table which sets out for a two-child family on (a) half average earnings, (b) three quarters average earnings, (c) average earnings, (d) one and a half average earnings, (e) twice average earnings, (f) five times average earnings and (g) 10 times average earnings the increase in net income to be derived from (i) a 1p cut in the standard rate of income tax in the 1987–88 financial year, (ii) an increase in personal allowances, over and above indexation, which incurred the same cost as a 1p cut in standard rate income tax, (iii) an increase in child benefit which incurred the same cost as a 1p cut in standard rate income tax, both assuming and not assuming similar increases in the supplementary benefit children's rates, (iv) the introduction of a reduced rate tax band of 25 per cent. at the same cost as a 1 p cut
Increase in net income after tax (£ per week) compared with indexation in 1987–88 for married man with two children Multiple of average earnings1 ½ ¾ 1 1½ 2 5 10 Increase derived from: (i) 1p cut in basic rate 0.41 0.98 1.55 2.68 3.42 3.42 3.42 (ii) 6 per cent. increase in personal allowances 1.23 1.23 1.23 1.23 1.69 2.54 2.54 (iii) increase in child benefit £2.00 per week2 4.00 4.00 4.00 4.00 4.00 4.00 4.00 £2.60 per week3 5.20 5.20 5.20 5.20 5.20 5.20 5.20 (iv) 25 per cent. lower rate band on £1,480 of taxable income 1.14 1.14 1.14 1.14 1.14 1.14 1.14 (v) 20 per cent. lower rate band on £620 of taxable income 1.07 1.07 1.07 1.07 1.07 1.07 1.07
in standard rate income tax, showing what band of income the reduced rate would cover and (v) the introduction of a reduced rate tax band of 20 per cent. at the same cost as a 1p cut in standard rate income tax, showing what band of income the reduced rate would cover.
§ Mr. Norman Lamont
Information based on full year direct revenue or expenditure costs at forecast 1987–88 levels is in the table. The income tax calculations assume that all the main personal allowances would be increased by the same percentage. Each of the measures would have a cost of about £1,300 million in a full year at 1987–88 income levels. The income tax changes have been made on top of the illustrative income tax regime resulting from 3.25 per cent. indexation as in "Autumn Statement 1986" (Cmnd. 14). It has also been assumed that the only income tax allowance or relief available to the married couple is the married man's allowance and that the wife has no earnings.497W
1 Average earnings assumed to be £227.3 per week, an increase of 6.5 per cent. on 1986–87.
2 Assuming a corresponding change in supplementary benefit rates.
3 Assuming no change in supplementary benefit rates.