HC Deb 25 June 1998 vol 314 cc611-2W
32. Mr. Derek Twigg

To ask the Chancellor of the Exchequer if he will make a statement on the impact of the working families tax credit on low-paid families. [46183]

Dawn Primarolo

The Working Families Tax Credit will provide an income guarantee of at least £180 per week for low-income families working full-time, and mean that no family with earnings below £220 a week will pay net Income Tax. Together with the introduction of the National Minimum Wage and reform to National Insurance Contributions, it will make work pay and encourage the move from welfare to work.

Helen Jackson

To ask the Chancellor of the Exchequer what representations he has received with regard to the impact of his working families tax credit on part-time employees. [46156]

Dawn Primarolo

The WFTC has been welcomed by a wide range of individuals and organisations.

Mr. Maude

To ask the Chancellor of the Exchequer how payments made by the Inland Revenue under the working families tax credit scheme will be classified for the purpose of calculating(a) net taxes and social security contributions, (b) total managed expenditure, (c) annual managed expenditure and (d) public sector net cash requirement; and if he will make a statement on the rationale of the proposed system. [47122]

Mr. Darling

The WFTC is to be part of the Income Tax system. It will be paid by the Inland Revenue through the pay packet as an Income Tax Credit. Accordingly, as stated in the FSBR, the Government will treat the whole of the WFTC payments as Income Tax credits in the calculation of Net Taxes and Social Security Contributions.

When the results of the Comprehensive Spending Review are published, the presentation of the provision for Working Families Tax Credit (WFTC) in the expenditure measures will continue to follow established national accounts practice. As set out in the Financial Statement and Budget Report (FSBR March 1998 HC.620 paragraph B.59) some of the WFTC payments will be scored as expenditure in national accounts. Provision for these payments will be found in Total Managed Expenditure and within the Accounting and Other Adjustments in Annually Managed Expenditure.

All payments of WFTC are determinants of Public Sector Net Borrowing and of the Public Sector Net Cash Requirement.

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