§ Mr. Newtonasked the Chancellor of the Exchequer what the principal personal income tax allowances would have to be in April 1977 to restore their real value to that of April 1973 and April 1976, respectively, assuming (a) an inflation rate of 17 per cent. in the year to April 1977, and (b) an inflation rate of 20 per cent. in the year to April 1977; and if he will state the cost of the appropriate changes in each case.
§ Mr. Robert Sheldon, pursuant to his reply [Official Report, 24th March 1977; Vol. 928, c. 646], gave the following answer:
The information is as follows:
Assumption (a) (Inflation rate of 17 per cent. for year to April 1977):
Allowance Equivalent for real value at April 1976 April 1973 £ £ Single and earning wife's allowance 860 1,160 Married allowance 1,269 1,511 Age allowance: Single 1,182 1,364* Married 1,819 1,949* * Equivalent for the age exemption levels in 1973–74. Assuming only these changes, for 1977–78 the estimated full year cost of increasing the allowances to these levels would be about £1,450 million and £3,730 million, respectively.
Assumption (b) (Inflation rate of 20 per cent. for the year to April 1977):
Allowance Equivalent for real value at April 1976 April 1973 £ £ Single and earning wife's allowance 882 1,190 Married allowance 1,302 1,550 Age allowance: Single 1,212 1,400 Married 1,866 1,999 Assuming only these changes, for 1977–78 the estimated full-year cost of increasing the allowances to these levels would be about £1,690 million and £4,010 million, respectively.
351W
§ Mr. Newtonasked the Chancellor of the Exchequer what the various bands of income for tax purposes would have to be in April 1977 in order to cover the same real income as in April 1973 and April 1976, respectively, assuming (a) an inflation rate of 17 per cent. in the year to April 1977, and (b) an inflation rate of 20 per cent. in the year to April 1977;
Assumption (a) (17 per cent. inflation rate for year to April 1977):
Present band (taxable income) Revalorised from April 1976 Revalorised from April 1973 £ £ £ 0–5,000 0–5,850 0–9,745* 5,000–5,500 5,850–6,435 9,745–11,695* 5,500–6,500 6,435–7,605 11,695–13,645 6,500–7,500 7,605–8,775 13,645–15,595 7,500–8,500 8,775–9,945 15,595–19,495 8,500–10,000 9,945–11,700 19,495–23,395 10,000–12,000 11,700–14,040 23,395–29,245 12,000–15,000 14,040–17,550 29,245–38,990 15,000–20,000 17,550–23,400 over 38,990 over 20,000 over 23,400 Assuming only these changes for 1977–78, the estimated full year cost of raising the higher rate bands to these levels would be about £255 million and £710 million, respectively. * In 1973–74 the number of bands was one less than 1976–77.
Assumption (b) (20 per cent. Inflation rate for year to April 1977): Present band Revalorised from April 1976 Revalorised from April 1973 £ £ £ 0–5,000 0–6,000 0–10,000* 5,000–5,500 6,000–6,600 10,000–12,000* 5,500–6,500 6,600–7,800 12,000–14,000 6,500–7,500 7,800–9,000 14,000–16,000 7,500–8,500 9,000–10,200 16,000–20,000 8,500–10,000 10,200–12,000 20,000–24,000 10,000–12,000 12,000–14,400 24,000–30,000 12,000–15,000 14,400–18,000 30,000–40,000 15,000–20,000 18,000–24,000 over 40,000 over 20,000 over 24,000 Assuming only these changes for 1977–78, the estimated full year cost of raising the higher rate bands to these levels would be about £290 million and £760 million, respectively. * In 1973–74 the number of bands was one less than 1976–77.