HC Deb 17 September 2004 vol 424 cc1790-1W
Sir Nicholas Winterton

To ask the Chancellor of the Exchequer what proportion of total income tax in the last year for which figures are available was derived from pensioners; and if he will make a statement on the taxation of pensioners. [189542]

Dawn Primarolo

I refer the hon. Member to table 3.12 'Income and tax for the elderly, by region and country' and 2.4 'Shares of total income tax liability' on the Inland Revenue website http://www.inlandrevenue.gov.uk/stats/ income_distribution/table-312–2001–02.xls and http:// www.inlandrevenue.gov.uk/stats/income_tax/table2–4.xls. From 2004–05, as a result of measures introduced since 1997, including the Pension Credit, the government will be spending around £10 billion more in real terms on pensioners. Around 65 per cent. of pensioners now pay no tax at all or tax at 10 per cent.

Sir Nicholas Winterton

To ask the Chancellor of the Exchequer if he will bring forward proposals to reduce the burden of taxation on pensioners' incomes. [189543]

Mr. Timms

Around 65 per cent. of all pensioners pay no tax or tax at 10 per cent. Age-related personal allowances increased from April 2004 in line with earnings from £6,610 to £6,830 for those between 65 and 74, from £6,720 to £6,950 for those over 75. Since April 2004 no pensioner aged 65 or over will pay tax on income of less than £131 a week. Age-related personal allowances rise in line with the rise in average earnings for the remainder of this Parliament.

Personal tax and benefit changes mean that the average pensioner household is 26 per week better off in 2004–05 than would have been the case under the 1997 system. The poorest third of pensioners are now £33 per week better off.

Sir Nicholas Winterton

To ask the Chancellor of the Exchequer if he will estimate the cost to the Exchequer of exempting the state retirement pension from income tax; and if he will exempt the state retirement pension from income tax. [189544]

Dawn Primarolo

It would cost around £4 billion to exempt state retirement pension from income tax. These estimates are based upon the 2001—02 Survey of Personal Incomes and are consistent with the Budget 2004 forecasts.

Sir Nicholas Winterton

To ask the Chancellor of the Exchequer if he will estimate the cost to the Exchequer of making the first £10,000 of occupational pensions income subject to a taxation rate of 10 per cent.; and if he will make the first £10,000 of occupational income subject to a taxation rate of 10 percent. [189545]

Dawn Primarolo

It would cost around £2 billion to extend the starting rate of income tax to £10,000 for all non-state pensions. It would cost around £19 billion to extend the starting rate of tax to £10,000 for all earned income.

These estimates are based upon the 2001–02 Survey of Personal Incomes and are consistent with the Budget 2004 forecasts.