§ Mr. BayleyTo ask the Chancellor of the Exchequer if he will estimate the impact on the retail prices index of(a) raising insurance premium tax to 5 per cent., (b) giving a £50 rebate to each electricity customer and (c) raising fuel and tobacco duties by (i) 5 per cent. (ii) 3 per cent. in real terms. [40768]
§ Mr. Heathcoat-Amory[holding answer 31 October 1995]: The estimated RPI effects are:
Per cent. RPI RPI Ex MIPs Raising insurance premium tax: to 5 per cent. 0.03 0.03 £50 rebate to each electricity customer1 Raising fuel duties: by 5 per cent. real (8.9 per cent, nominal) 0.22 0.23 by 3 per cent. real (6.9 per cent, nominal) 0.17 0.18 Raising tobacco duties: by 5 per cent. real (8.9 per cent, nominal) 0.24 0.25 by 3 per cent. real (6.9 per cent, nominal) 0.18 0.19 1 The size and timing of any effect of a rebate to electricity customers depends on how the rebate is effected. Assuming the rebate qualified as a price reduction for RPI purposes and that the full rebate was made to all households in the same quarter, then the effect of a £50 rebate to all domestic electricity consumers in the United Kingdom would be to reduce the all items RPI by between 1 and 1½ per cent, by the end of the quarter. A one-off rebate would have a temporary effect only; if there were no other changes the index would return to its previous level by the end of the following quarter.