HC Deb 22 April 1993 vol 223 cc172-8W
Mr. Dewar

To ask the Chancellor of the Exchequer if he will update his answer of 15 December 1992,Official Report, column 120, to provide similar estimates of the burden of direct and indirect taxes for 1993–94.

Mr. Dorrell

The information requested in given in the table.

Income tax, National Insurance contributions and indirect tax payments at multiples of average earnings 1993–94
Amounts, £ per week
Multiples of average earnings
50 75 100 150 200 300 400 500 700 1,000 2,000
Single
Income tax 26.01 48.50 70.98 118.61 190.57 334.49 478.41 622.33 910.17 1,341.93 2,781.12
NICs 12.27 20.37 28.46 33.88 33.88 33.88 33.88 33.88 33.88 33.88 33.88
Income tax and NICs 38.28 68.86 99.45 152.49 224.45 368.37 512.29 656.21 944.05 1,375.81 2,815.01
VAT — 14.64 19.55 30.04 — — — — — — —
Other indirect — 19.84 24.40 34.13 — — — — — — —
Total — 103.35 143.40 216.66 — — — — — — —
Percentage of earnings
Income tax 14.5 18.0 19.7 22.0 26.5 31.0 33.2 34.6 36.1 37.3 38.6
NICs 6.8 7.5 7.9 6.3 4.7 3.1 2.4 1.9 1.3 0.9 0.5
Income tax and NICs 21.3 25.5 27.6 28.3 31.2 34.1 35.6 36.5 37.5 38.2 39.1
VAT — 5.4 5.4 5.6 — — — — — — —
Other indirect — 7.4 6.8 6.3 — — — — — — —
Total — 38.3 39.9 40.1 — — — — — — —
Married, no children
Income tax 17.74 40.23 62.71 107.69 177.34 321.26 465.18 609.10 896.94 1,328.70 2,767.90
NICs 12.27 20.37 28.46 33.88 33.88 33.88 33.88 33.88 33.88 33.88 33.88
Income tax and NICs 30.01 60.59 91.18 141.57 211.22 355.14 499.06 642.98 930.82 1,362.58 2,801.78
VAT — 13.41 18.75 30.41 — — — — — — —
Other indirect — 22.28 26.95 37.13 — — — — — — —
Total — 96.28 136.88 209.11 — — — — — — —
Percentage of earnings
Income tax 9.9 14.9 17.4 20.0 24.6 29.8 32.3 33.9 35.6 36.9 38.5
NICs 6.8 7.5 7.9 6.3 4.7 3.1 2.4 1.9 1.3 0.9 0.5
Income tax and NICs 16.7 22.5 25.3 26.2 29.4 32.9 34.7 35.7 37.0 37.9 38.9
VAT — 5.0 5.2 5.6 — — — — — — —
Other indirect — 8.3 7.5 6.9 — — — — — — —
Total — 35.7 38.0 38.7 — — — — — — —
Married, 2 children
Income tax -0.36 22.13 44.61 89.59 159.24 303.16 447.08 591.00 878.84 1,310.60 2,749.80
NICs 12.27 20.37 28.46 33.88 33.88 33.88 33.88 33.88 33.88 33.88 33.88
Income tax and NICs 11.91 42.49 73.08 123.47 193.12 337.04 480.96 624.88 912.72 1,344.48 2,783.68
VAT — 13.26 19.31 32.51 — — — — — — —
Other indirect — 22.10 25.76 33.76 — — — — — — —
Total — 77.85 118.15 189.74 — — — — — — —
Percentage of earnings
Income tax -0.2 8.2 12.4 16.6 22.1 28.1 31.0 32.8 34.9 36.5 38.0
NICs 6.8 7.5 7.9 6.3 4.7 3.1 2.4 1.9 1.3 0.9 0.5
Income tax and NICs 6.6 15.7 20.3 22.9 26.8 31.2 33.4 34.7 36.2 37.4 38.7
VAT — 4.9 5.4 6.0 — — — — — — —
Other indirect — 8.2 7.2 6.3 — — — — — — —
Total — 28.8 32.8 35.2 — — — — — — —
Married, both working, no children
Income tax 2.86 21.58 43.75 88.72 133.70 237.53 367.91 511.83 799.67 1,231.43 2,670.63
NICs 8.35 16.45 24.54 40.73 55.87 67.76 67.76 67.76 67.76 67.76 67.76
Income tax and NICs 11.22 38.03 68.29 129.46 189.56 305.29 435.67 579.59 867.43 1,299.19 2,738.39
VAT — 15.45 21.28 32.87 — — — — — — —
Other indirect — 25.91 29.92 37.89 — — — — — — —
Total — 79.38 119.48 200.22 — — — — — — —
Percentage of earnings
Income tax 1.6 8.0 12.2 16.4 18.6 22.0 25.6 28.5 31.8 34.2 37.1
NICs 4.6 6.1 6.8 7.5 7.8 6.3 4.7 3.8 2.7 1.9 0.9
Income tax and NICs 6.2 14.1 19.0 24.0 26.3 28.3 30.3 32.2 34.4 36.1 38.1
VAT — 5.7 5.9 6.1 — — — — — — —
Other indirect — 9.6 8.3 7.0 — — — — — — —
Total — 29.4 33.2 37.1 — — — — — — —

Notes:

1. Income tax payments are calculated on the assumption that the households receive no tax reliefs other than the standard allowances and only have income from employment All earners, including wives, are assumed to pay Class I National Insurance contributions at the contracted-in rate.

2. Since 1990–91, husbands and wives have been taxed independently. Previously the tax liability of couples depended on their joint income. To permit comparisons with earlier years, the table therefore shows income tax and National Insurance Contributions paid by a married couple as a proportion of their joint income, assuming, as in the earlier years, that where both partners are earners, the husband and wife share the relevant multiple of earnings in the ratio 60:40.

3. In order to provide comparability with 1978–79, when support for children was given partly through child tax allowance, child benefit is treated as a negative income tax for the married couple with two children.

4. Average earnings are taken to be the average gross weekly earnings of all full-time males on adult rates with pay unaffected by absence. 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.

5. The estimates of indirect taxes apart from the Community Charge are based on equations derived from the 1985 Family Expenditure Survey, uprated to later years using forecasts of aggregate tax receipts. They are based on the illustrative assumption that 10 per cent. of disposable income is saved. There are wide variations in spending patterns between households with the same composition and similar incomes

Income tax, National Insurance contributions and indirect tax payments at multiples of average earnings
Amounts, £ per week
Multiples of average earnings
50 75 100 150 200 300 400 500 700 1,000 2,000
Single
Income tax 25.53 48.02 70.50 118.13 190.09 334.01 477.93 621.85 909.69 1,341.45 2,780.65
NICs 13.51 22.51 31.50 37.52 37.52 37.52 27.52 37.52 37.52 37.52 37.52
Income tax and NICs 39.04 70.52 102.00 155.65 227.61 371.53 515.45 657.37 947.21 1,378.97 2,818.17
VAT — 15.21 20.10 30.65 — — — — — — —
Other indirect — 19.86 24.40 34.21 — — — — — — —
Total — 105.59 146.50 220.51 — — — — — — —
Percentage of earnings
Income tax 14.2 17.8 19.6 21.9 26.4 30.9 33.2 34.6 36.1 37.3 38.6
NICs 7.5 8.3 8.8 7.0 5.2 3.5 2.6 2.1 1.5 1.0 0.5
Income tax and NICs 21.7 26.1 28.3 28.9 31.6 34.4 35.8 36.7 37.6 38.3 39.1
VAT — 5.6 5.6 5.7 — — — — — — —
Other indirect — 7.4 6.8 6.3 — — — — — — —
Total — 39.1 40.7 40.9 — — — — — — —
Married, no children
Income tax 18.91 41.40 63.89 111.51 183.47 327.39 471.31 615.23 903.07 1,334.83 2,774.03
NICs 13.51 22.51 31.50 37.52 37.52 37.52 37.52 37.52 37.52 37.52 37.52
Income tax and NICs 32.42 63.91 95.39 149.03 220.99 364.91 508.83 652.75 940.59 1,372.35 2,811.55
VAT — 14.11 19.42 30.90 — — — — — — —
Other indirect — 22.17 26.81 36.83 — — — — — — —
Total — 100.19 141.62 216.76 — — — — — — —
Percentage of earnings
Income tax 10.5 15.3 17.8 20.7 25.5 30.3 32.7 34.2 35.9 37.1 38.5
NICs 7.5 8.3 8.8 7.0 5.2 3.5 2.6 2.1 1.5 1.0 0.5
Income tax and NICs 18.0 23.7 26.5 27.6 30.7 33.8 35.4 36.3 37.4 38.1 39.0
VAT — 5.2 5.4 5.7 — — — — — — —
Other indirect — 8.2 7.5 6.8 — — — — — — —
Total — 37.1 39.4 40.1 — — — — — — —
Married, 2 children
Income tax 0.81 23.30 45.79 93.41 165.37 309.29 453.21 597.13 884.97 1,316.73 2,755.93
NICs 13.51 22.51 31.50 37.52 37.52 37.52 37.52 37.52 37.52 37.52 37.52
Income tax and NICs 14.32 45.81 77.29 130.93 202.89 346.81 490.73 634.65 922.49 1,354.25 2,793.45
VAT — 13.92 19.94 32.92 — — — — — — —
Other indirect — 22.03 25.69 33.60 — — — — — — —
Total — 81.76 122.92 197.45 — — — — — — —
Percentage of earnings
Income tax 0.5 8.6 12.7 17.3 23.0 28.7 31.5 33.2 35.1 36.6 38.3
NICs 7.5 8.3 8.8 7.0 5.2 3.5 2.6 2.1 1.5 1.0 0.5
Income tax and NICs 8.0 16.9 21.5 24.3 28.2 32.2 34.1 35.3 36.6 37.6 38.8
VAT — 5.2 5.5 6.1 — — — — — — —

and estimated payments of VAT and other indirect taxes are therefore approximate, even within the income range for which figures are shown. Outside this range, the margin of error is even higher and reliable estimates cannot be made. Because of sampling variation, there can be substantial differences between estimates obtained from Family Expenditure Surveys for different years.

Mr. Dewar

To ask the Chancellor of the Exchequer if he will update his answer of 15 December 1992,Official Report, column 120, to provide similar estimates of the burden of direct and indirect taxes for 1994–95, based on the assumptions contained in the Financial Statement and Budget Report 1993–94.

Mr. Dorrell

Figures illustrating the hypothetical tax burdens that would take effect in 1993–94 if the tax rates announced for 1994–95 applied in 1993–94 are given in the table. The actual burden of tax in 1994–95 will depend on decisions taken on tax rates, allowances and thresholds in the November 1993 Budget as well as on changes in prices and earnings levels.

Multiples of average earnings
50 75 100 150 200 300 400 500 700 1,000 2,000
Other indirect — 8.2 7.1 6.2 — — — — — — —
Total — 30.3 34.1 36.6 — — — — — — —
Married, both working, no children
Income tax 2.86 22.75 44.44 89.41 134.39 243.18 373.56 517.48 805.32 1,237.08 2,676.28
NICs 9.3 18.3 27.2 45.1 61.82 75.04 75.04 75.04 75.04 75.04 75.04
Income tax and NICs 11.89 40.78 71.46 134.42 196.21 318.22 448.60 592.52 880.36 1,312.12 2,751.32
VAT — 16.15 21.99 33.51 — — — — — — —
Other indirect — 25.91 29.93 37.87 — — — — — — —
Total — 82.84 123.38 205.80 — — — — — — —
Percentage of earnings
Income tax 1.6 8.4 12.4 16.6 18.7 22.5 26.0 28.8 32.0 34.4 37.2
NICs 5.0 6.7 7.5 8.3 8.6 7.0 5.2 4.2 3.0 2.1 1.0
Income tax and NICs 6.6 15.1 19.9 24.9 27.3 29.5 31.2 33.0 35.0 36.5 38.2
VAT — 6.0 6.1 6.2 — — — — — — —
Other indirect — 9.6 8.3 7.0 — — — — — — —
Total — 30.7 34.3 38.1 — — — — — — —

Notes:

1. Income tax payments are calculated on the assumption that the households receive no tax reliefs other than the standard allowances and only have income from employment. All earners, including wives, are assumed to pay Class 1 NI contributions at the contracted-in rate.

2. Since 1990–91, husbands and wives have been taxed independently. Previously the tax liability of couples depended on their joint income. To permit comparisons with earlier years, the table therefore shows income tax and National Insurance Contributions paid by a married couple as a proportion of their joint income, assuming, as in the earlier years, that where both partners are earners, the husband and wife share the relevant multiple of earnings in the ratio 60:40.

3. In order to provide comparability with 1978–79, when support for children was given partly through child tax allowance, child benefit is treated as a negative income tax for the married couple with two children.

4. Estimates have been provided on the illustrative basis that measures for 1994–95 announced in the Budget—the extension of the 20p income tax band to £3,000, an increase of 1 per cent. in employee NICs, restricting the rate of relief for married couples' allowance to 20 per cent., the introduction of VAT at 8 per cent. on domestic fuel and power and a real increase in fuel duties of 3 per cent.—are implemented in 1993–94, on the basis of 1993–94 levels of earnings and prices and with tax allowances, thresholds etc at their 1993–94 levels.

5. Average earnings are taken to be the average gross weekly earnings of all full-time males on adult rates with pay unaffected by absence and are assumed to be £359.80 per week, based on the illustrative earnings growth assumption of 4 per cent. in 1993–94.

6. The estimates of indirect taxes apart from VAT on fuel and power are based on equations derived from the 1985 Family Expenditure Survey, uprated using forecasts of aggregate tax receipts. Estimates of VAT on fuel and power are based on an equation relating expenditure on fuel and power to total expenditure derived from the 1991 Family Expenditure Survey, uprated using forecasts of receipts of VAT on domestic fuel and power. The estimates of tax burdens do not include an estimate of the burden of the Council Tax. The estimates are based on the illustrative assumption that 10 per cent. of disposable income is saved.

7. There are wide variations in spending patterns between households with the same composition and similar incomes and estimated payments of VAT and other indirect taxes are therefore approximate, even within the income range for which figures are shown. Outside this range, the margin of error is even higher and reliable estimates cannot be made. Because of sampling variation, there can be substantial difference between estimates obtained from Family Expenditure Surveys for different years.

Mrs. Dunwoody

To ask the Chancellor of the Exchequer how much extra a married couple with one earner will have to pay in tax from April 1994, if they earn(a) £14,000, (b) £19,000 and (c) £28,000; and if he will make a statement.

Mr. Dorrell

A one-earner married couple with no children, aged under 65, claiming the personal allowance and married couple's allowance would pay about £3.90 more per week in direct and indirect tax with earnings of £14,000 per annum; about £4.80 per week more in tax with earnings of £19,000 per annum and about £7.50 per week more in tax with earnings of £28,000 per annum. These estimates are on the standard specimen household basis, assuming households have no other income besides earnings and receive no tax reliefs other than standard allowances. The estimates are at 1993–94 prices and are based on the hypothetical assumption that the measures announced in the Budget for 1994–95 take effect in 1993–94.