§ Mrs. DunwoodyTo ask the Chancellor of the Exchequer how much extra a family with two children on half average earnings will pay per week, when value added tax on domestic fuel is increased to 17.5 per cent.
§ Sir John CopeA family with two children on three quarters average earnings would pay about £2.30 per week additional tax, assuming 1993–94 levels of real earnings. Estimates outside the range of 75 to 150 per cent. of average earnings are not available because of the large margins of error associated with small sample sizes and large variations in spending patterns.
§ Ms HarmanTo ask the Chancellor of the Exchequer if he will estimate the increase in annual expenditure due to the introduction of 17.5 per cent. VAT on fuel assuming no behavioural changes for(a) someone on mean earnings, (b) someone on 75 per cent. of mean earnings, (c) someone on 50 per cent. of mean earnings, (d) someone on 150 per cent. of mean earnings, (e) each income decile of the population, (f) each income decile of households and (g) each income decile of families.
§ Sir John Cope[holding answer 1 April 1993]: The available information is given in the tables. The figures make no allowance for changes to expenditure patterns due to the introduction of VAT on domestic fuel and power.
Table 1: increase in expenditure on fuel and power by a single person due to imposition of VAT at 17.5 per cent, in 1993–94 prices Percentage of average earnings £ per week 75 1.75 100 1.90 150 2.30 Notes to table 1:
1. The estimates are based on an equation relating expenditure on fuel and power to total spending derived from the 1991 Family Expenditure Survey and applied to 1993–94 price earnings levels and the 1993–94 income tax and NICs systems on the illustrative assumption that 10 per cent. of disposable income is saved.
2. Average earnings are taken to be average gross weekly earnings of all full time males on adult rates. This is assumed to be £359.80 per week in 1993–94, based on the illustrative earnings growth assumption of 4 per cent. in 1993–94.
3. Estimates are not available outside the earnings range shown due to the large margin of error associated with small sample sizes and large variations in spending patterns.
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Table 2: increase in average household expenditure on fuel and power due to imposition of VAT at 17.5 per cent, in 1993–94 prices Deciles of household income £ per week 1st 2.00 2nd 1.95 3rd 2.10 4th 2.25 5th 2.35
Deciles of household income £ per week 6th 2.40 7th 2.35 8th 2.40 9th 2.45 10th 2.70 Notes to table 2:
1. Figures are based on the last three Family Expenditure Surveys, 1989 to 1991, uprated to 1.993–94 prices in line with the growth in consumers' expenditure.
2. Households have been allocated to deciles on the basis of their net income in the survey period adjusted to take account of differences in family composition.
3. Data on expenditure on fuel and power is only available at the level of the household.
§ Ms HarmanTo ask the Chancellor of the Exchequer if he will estimate the total amount paid into the Treasury in VAT on domestic fuel in 1994–95 and 1995–96 by each income decile of(a) the population as a whole, (b) households and (c) families.
§ Sir John Cope[holding answer 1 April 1993.]: Table 4.1 of the 1993–94 Financial Statement and Budget Report estimates the projected yield in 1994–95 and 1995–96 from applying VAT to domestic fuel and power as £950 million and £2,300 million respectively. These figures take into account changes in expenditure patterns. They are not available at a decile level.