Income Tax (Hansard, 8 February 1988)

§ Mr. Nicholas Bennett
To ask the Chancellor of the Exchequer if he has any estimate of what a 1p, 2p, 3p, 4p, 5p, 6p and 7p cut in the standard rate of income tax would represent as a percentage pay increase for a man on national average earnings.

Increase in income after tax and national insurance (£ per annum) compared with indexation in 1988–89

Multiple of average male earnings¹

1/2 3/4 1 11/2 2 5

Increased derived from:

(a) 2 pence cut in basic rate

(i) single 77 141 204 331 459 1,222

(ii) married couple wife not earning 48 112 176 303 430 1,194

(iii) married couple wife earning2 82 188 294 505 716 1,985

(b) reduction of all higher rates of income tax to 40 per . cent.

(i) single — — — — 87 5,971

(ii) married couple wife not earning — — — — 15 5,685

(iii) married couple wife earning2 — — — — 87 7,794

¹ Average male earnings assumed to be £244.70 per week; an increase of 6.5 per cent. on 1987–88 in line with the assumptions used by the Government Actuary for reviewing National Insurance contributions (paragraph 3.02 of the Autumn Statement 1987).

² Assuming that the wife's earnings are the same multiple of average earnings as her husband's.

§ Mr. Darling
To ask the Chancellor of the Exchequer (1) what was the estimated income tax forgone in 1986–87
88W

§ Mr. Norman Lamont
The information is in the table:

Reduction in basic rate of income tax

Increase in income after tax as a percentage of gross earnings for a married man on average earnings, 1988–89

Pence Per cent.

1 0.7

2 1.4

3 2.1

4 2.8

5 3.4

6 4.1

7 4.8

It is assumed that the man's earnings are his only source of income. Average earnings are those for men in all occupations paid at adult rates who work a full week and whose pay is unaffected by absence. This figure is projected to 1988–89 in accordance with the assumptions given to the Government Actuary for reviewing national insurance contributions in paragraph 3.02 of the Autumn Statement 1987. The married man's allowance for 1988–89 is calculated by reference to the statutory formula for indexation.

Increase in income after tax and national insurance (£ per annum) compared with indexation in 1988–89
	Multiple of average male earnings¹
	1/2	3/4	1	11/2	2	5
Increased derived from:
(a) 2 pence cut in basic rate
(i) single	77	141	204	331	459	1,222
(ii) married couple wife not earning	48	112	176	303	430	1,194
(iii) married couple wife earning2	82	188	294	505	716	1,985
(b) reduction of all higher rates of income tax to 40 per . cent.
(i) single	—	—	—	—	87	5,971
(ii) married couple wife not earning	—	—	—	—	15	5,685
(iii) married couple wife earning2	—	—	—	—	87	7,794
¹ Average male earnings assumed to be £244.70 per week; an increase of 6.5 per cent. on 1987–88 in line with the assumptions used by the Government Actuary for reviewing National Insurance contributions (paragraph 3.02 of the Autumn Statement 1987).
² Assuming that the wife's earnings are the same multiple of average earnings as her husband's.

Reduction in basic rate of income tax
Increase in income after tax as a percentage of gross earnings for a married man on average earnings, 1988–89
Pence	Per cent.
1	0.7
2	1.4
3	2.1
4	2.8
5	3.4
6	4.1
7	4.8