HC Deb 17 December 1974 vol 883 cc393-4W
Mr. MacGregor

asked the Chancellor of the Exchequer if he will list the countries in which indexation of the tax system, or something akin to it, in relation to the main allowances and reliefs, including higher tax starting points, already operates; and to which allowances, etc., these apply.

Mr. Robert Sheldon

Following is the information available about the major countries which have made statutory provision for indexation in the personal tax system:

Denmark As from 1975 the personal allowances and tax rate bands will be adjusted each year by reference to the movement in the wages index over the year to the preceding March. Previously a cost of living index was used.

Netherlands The personal allowances and tax rate bands are adjusted each year by reference to the movement in the average of a cost of living index over the year to the preceding June; but the Government have power to reduce increases resulting from this formula by up to 20 per cent., and has recently done so for budgetary reasons.

Canada As from 1974 the federal income tax personal allowances and tax rate bands are to be adjusted each year by reference to the movements in the consumer price index averaged over the year to the preceding September.

Brazil Under a general provision every amount expressed in Brazilian currency in the tax legislation has to be adjusted for each year in which inflation exceeds a certain percentage, by reference to the movement in official indices for either prices or wages at the Government's option. Indexation therefore applies to the personal allowances and tax rate bands.