§ Mr. AllenTo ask the Chancellor of the Exchequer what proportion of income was paid in tax, including national insurance and VAT, by a family with two children earning(a) £10,000, (b) £15,000 (c) £20,000 and (d) £45,000 in each of the last five years. [10817]
§ Mr. JackThe table provides figures for the percentage of earnings paid in tax by a one-earner couple with two children earning(a) £10,000, (b) £15,000, (c) £20,000 and (d) £45,000 in cash in each of the years 1991–92 to 1997–98.
Estimates of indirect taxes are very approximate. The margin of error is particularly high outside the central range of earnings so even illustrative estimates cannot be made at the top and bottom of the range.
605W
Proportion of earnings paid in tax by one-earner family with two dependent children Percentage of earnings paid in Annual earnings£ Direct taxes1 VAT Other indirect taxes 1991–92 10,000 11.2 — — 15,000 18.8 5.2 7.7 20,000 22.6 5.6 6.8 45,000 29.4 — — 1992–93 10,000 9.1 — — 15,000 17.4 5.3 7.6 20,000 21.5 5.7 6.7 45,000 29.1 — — 1993–94 10,000 8.4 — — 15,000 16.9 5.1 7.8 20,000 21.2 5.5 6.9 45,000 29.1 — — 1994–95 10,000 9.5 — — 15,000 18.0 5.5 8.8 20,000 22.2 5.5 7.4 45,000 30.3 — — 1995–96 10,000 9.8 — — 15,000 18.2 5.4 9.5 20,000 22.4 5.4 8.0 45,000 30.2 — — 1996–97 10,000 8.0 — — 15,000 16.7 5.6 10.1 20,000 21.0 5.6 8.5 45,000 29.1 — — 1997–98 10,000 6.7 — — 15,000 15.5 5.6 10.8 20,000 19.9 5.7 9.0 45,000 28.1 — — 1 Income tax and NICs. 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. The earner is assumed to pay class 1 national insurance contributions at the contracted-in rate. Child benefit is deducted from income tax.
2. Figures for indirect taxes include estimates of the effects of the main intermediate taxes on households as well as the impact of taxes on final goods and services. Estimates of the impact of taxes on final goods and services assume that these taxes are fully incident on households. Estimates of the impact of intermediate taxes are based on the relation between intermediate production costs and final consumption derived using input—output techniques.
3. Figures for indirect taxes since 1994–95 are estimated from expenditure patterns in the 1994–95 family expenditure survey uprated to later years using forecasts of aggregate tax receipts. For years before 1994–95 the 1985 family expenditure survey was used. All estimates are based on the illustrative assumption that 10 per cent. of disposable income is saved.
4. Estimates of indirect taxes are very approximate, even where figures are shown, because spending patterns vary widely between households with the same composition and income. Because of sampling variation, there can be substantial differences between estimates obtained from family expenditure surveys for different years, so reliable comparisons cannot be made between the estimates for different years.