Income 'Tax (Hansard, 4 July 1988)

§ Mr. Gordon Brown
To ask the Chancellor of the Exchequer what has been the reduction in income tax 469W liability for each year since 1979 of the (a) top 1 per cent., (b) top 5 per cent.,(c) top 10 per cent., (d) bottom 70 per cent., (e) bottom 60 per cent., (f) bottom 50 per cent., (g) bottom 30 per cent. and (h) bottom 10 per cent. of taxpayers.

§ Mr. Norman Lamont
The latest estimates are given in the table. For each financial year shown in the table, the yield from the tax regime in that year is compared with the

Reductions (+)/increases (-) in income lax compared with 1978–79 indexed regime (£ billion)

Point of income distribution in 1988–89¹ Number of units paying lax in 1988–89² (millions) 1979–80 1980–81 1981–82 1982–83 1983–84 1984–85 1985–86 1986–87 1987–88 1988–89

Top 1 per cent. 0.21 2.40 2.20 1.90 2.00 2.10 2.70 2.70 2.70 2.80 4.70

Top 5 per cent. 1.05 3.90 3.50 2.60 2.70 3.20 4.10 4.20 4.40 4.80 7.50

Top 10 per cent. 2.10 4.70 4.20 2.90 3.00 3.80 4.90 5.10 5.40 6.20 9.30

Bottom 70 per cent.³ 14.70 2.60 1.60 -0.40 -0.20 1.00 1.80 2.50 3.20 4.50 6.20

Bottom 60 per cent.³ 12.60 2.00 1.20 -0.50 -0.30 0.70 1.30 1.90 2.40 3.40 4.70

Bottom 50 per cent.³ 10.50 1.40 0.80 -0.60 -0.40 0.40 0.90 1.40 1.70 2.40 3.40

Bottom 30 per cent.³ 6.30 0.60 0.30 -0.50 -0.40 0.03 0.30 0.60 0.70 1.00 1.50

Bottom 10 per cent.³ 2.10 0.20 0.07 -0.30 -0.20 -0.03 0.10 0.20 0.20 0.30 0.40

All 20.90 9.00 7.20 3.00 3.50 5.90 8.20 9.50 11.00 13.90 20.00

¹ Based on 20,900,000 single people and married couples expected to pay tax in 1988–89 and excluding 1,100,000 who would pay tax under the revalorised 1978–79 regime.

² All information is in terms of tax units, i.e. married couples are counted as one and their incomes combined.

³Including reductions and/or increases for those paying tax in 1988–89 and reductions for other units who would pay tax under the revalorised regime for the year specified or 1978–79.

§ Mr. Gordon Brown
To ask the Chancellor of the Exchequer if he will give(a) the number and proportion of people of pensionable age who are liable for income tax, (b) the total tax yield from people of pensionable age, (c)the average income of people of pensionable age before and after tax and (d) the average percentage of income paid in tax by people of pensionable age.

§ Mr. Norman Lamont
Provisional estimates for 1988–89 are given in the table. They refer to married couples in which at least one partner is aged 65 or over and single people aged 65 and over. All figures are based on a projection of the 1985–86 survey of personal incomes.

Tax liability of aged married couples and single people, 1988–89

Amount

Aged taxpayers liable to income tax ¹2,350,000

Aggregate tax liability £4.8 billion

Average income before tax² £11,560

Average income after tax² £9,530

Percentage of income paid in tax² 17.5 per cent.

¹About one third of the total number of aged married couples and single people.

² By reference to those liable to income tax.

§ Mr. Gordon Brown
To ask the Chancellor of the Exchequer how many people eligible for, or in receipt of, age allowances are(a) on high marginal tax rates, (b) on basic rate tax or (c) pay no income tax.

§ Mr. Norman Lamont
Provisional estimates for 1988–89 are as follows:

Married Couples and Single People Eligible for Age Allowance

thousands

Liable at higher rate of tax 170

Liable at basic rate of tax only 2,180

Not liable 4,500

§ Mr. Gordon Brown
To ask the Chancellor of the Exchequer if he will give the reduction in income tax liability on unearned income that will result from the Budget measures for(a) the top 1 per cent., (b) the top 5
470W
yield under the 1978–79 tax regime. All estimates are based on a provisional 1988–89 income base projected from the 1985–86 survey of personal incomes and all tax regimes are indexed to 1988–89 levels according to the statutory formula. The comparison therefore allows for budgetary changes in income tax since 1978–79 but not for changes in definition or any other factors which might affect the income base.
per cent., (c) the top 20 per cent., (d) the bottom 70 per cent. and (e) the bottom 50 per cent. of taxpayers in 1988–89.

§ Mr. Norman Lamont
[holding answer 10 June 1988]: Provisional estimates are given in the table. All estimates are uncertain because they are based on a projection of the 1985–86 survey of personal incomes. Also, the data on investment income from the survey have been adjusted to allow for investment income not reflected in the survey in some cases where basic rate liability is satisfied by deduction of tax at source. Figures for the top 20 per cent. and bottom 70 per cent. and 50 per cent. are particularly tentative.

Reduction in income tax liability on investment¹ income compared with the indexed 1987–88 tax regime

Range of quantiles² of the income tax distribution Reduction in tax on investment income (£ billion)

Top 1 per cent. 0.7

Top 5 per cent. 0.9

Top 20 per cent. 1.0

Bottom 70 per cent.³ 0.2

Bottom 50 per cent.³ 0.1

All taxpayers 1.2

¹ Investment income has been treated as the top slice of income and all investment income taxed as though it were received gross and subject to the individual's appropriate marginal rate of tax.

² Based on the distribution of income tax under the proposed 1988–89 tax regime.

³ Includes 240,000 single people and married couples taken out of tax by increases in allowances over indexation.

Reductions (+)/increases (-) in income lax compared with 1978–79 indexed regime (£ billion)
Point of income distribution in 1988–89¹	Number of units paying lax in 1988–89² (millions)	1979–80	1980–81	1981–82	1982–83	1983–84	1984–85	1985–86	1986–87	1987–88	1988–89
Top 1 per cent.	0.21	2.40	2.20	1.90	2.00	2.10	2.70	2.70	2.70	2.80	4.70
Top 5 per cent.	1.05	3.90	3.50	2.60	2.70	3.20	4.10	4.20	4.40	4.80	7.50
Top 10 per cent.	2.10	4.70	4.20	2.90	3.00	3.80	4.90	5.10	5.40	6.20	9.30
Bottom 70 per cent.³	14.70	2.60	1.60	-0.40	-0.20	1.00	1.80	2.50	3.20	4.50	6.20
Bottom 60 per cent.³	12.60	2.00	1.20	-0.50	-0.30	0.70	1.30	1.90	2.40	3.40	4.70
Bottom 50 per cent.³	10.50	1.40	0.80	-0.60	-0.40	0.40	0.90	1.40	1.70	2.40	3.40
Bottom 30 per cent.³	6.30	0.60	0.30	-0.50	-0.40	0.03	0.30	0.60	0.70	1.00	1.50
Bottom 10 per cent.³	2.10	0.20	0.07	-0.30	-0.20	-0.03	0.10	0.20	0.20	0.30	0.40
All	20.90	9.00	7.20	3.00	3.50	5.90	8.20	9.50	11.00	13.90	20.00
¹ Based on 20,900,000 single people and married couples expected to pay tax in 1988–89 and excluding 1,100,000 who would pay tax under the revalorised 1978–79 regime.
² All information is in terms of tax units, i.e. married couples are counted as one and their incomes combined.
³Including reductions and/or increases for those paying tax in 1988–89 and reductions for other units who would pay tax under the revalorised regime for the year specified or 1978–79.

Tax liability of aged married couples and single people, 1988–89
	Amount
Aged taxpayers liable to income tax	¹2,350,000
Aggregate tax liability	£4.8 billion
Average income before tax²	£11,560
Average income after tax²	£9,530
Percentage of income paid in tax²	17.5 per cent.
¹About one third of the total number of aged married couples and single people.
² By reference to those liable to income tax.

Married Couples and Single People Eligible for Age Allowance
	thousands
Liable at higher rate of tax	170
Liable at basic rate of tax only	2,180
Not liable	4,500

Reduction in income tax liability on investment¹ income compared with the indexed 1987–88 tax regime
Range of quantiles² of the income tax distribution	Reduction in tax on investment income (£ billion)
Top 1 per cent.	0.7
Top 5 per cent.	0.9
Top 20 per cent.	1.0
Bottom 70 per cent.³	0.2
Bottom 50 per cent.³	0.1
All taxpayers	1.2
¹ Investment income has been treated as the top slice of income and all investment income taxed as though it were received gross and subject to the individual's appropriate marginal rate of tax.
² Based on the distribution of income tax under the proposed 1988–89 tax regime.
³ Includes 240,000 single people and married couples taken out of tax by increases in allowances over indexation.