§ Mr. FlynnTo ask the Chancellor of the Exchequer what the cost would be to the Exchequer of increasing the basic state pension to £90 for a single person and £135 for a couple; and what consequent increases there would be in receipts of(a) direct and (b) indirect tax revenue. [149487]
§ Dawn PrimaroloThe information is as follows:
Impact of increasing the basic state pension to £90 for a single person and £135 for a couple £ billion1 Gross cost -7.5 Savings in income-related benefits +1.7 Increased direct tax revenue +0.8 Cost net of IRBs and tax -5.0 1+ve is an Exchequer yield Notes:
1. Costs are rounded to the nearest £100 million. They exclude expenditure on bereavement benefits.
2. Gross costs were supplied by the Government Actuary's Department. Cost net of income-related benefit savings were estimated by DSS using the Policy Simulation Model. Direct tax revenue was estimated by the Inland Revenue from a survey of personal incomes.
3. It is difficult to assess the impact of higher pensions on indirect taxes. This would require detailed behavioural assumptions about changes in consumption patterns and would be unlikely to capture the effects accurately.
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