HC Deb 25 November 1977 vol 939 cc950-2W
Mr. Knox

asked the Chancellor of the Exchequer if he will publish in the Official Report a table showing for each year since 1945 the percentage of average male national earnings represented by the tax threshold for a single person, a married couple and a married couple with two children, respectively.

Mr. Robert Sheldon

The figures are as follows:

Year Single person percentage Married couple percentage Married couple with 2 children aged under 11 percentage
1971–72 … … … … 25.8 37.0 58.3
1972–73 … … … … 32.1 41.9 60.5
1973–74 … … … … 28.0 36.5 52.5
1974–75 … … … … 24.2 33.5 50.1
1975–76 … … … … 21.5 30.4 44.0
1976–77 … … … … 20.7 30.5 46.0
1977–78 … … … … 24.9 38.3 47.9

B: TAX THRESHOLD AS A PERCENTAGE OF AVERAGE EARNINGS IN ALL OCCUPATIONS
Year Single person percentage Married couple percentage Married couple with2 children aged under11 percentage
1970–71 … … … … 25.7 36.7 51.6
1971–72 … … … … 23.1 33.0 52.1
1972–73 … … … … 29.0 37.8 54.6
1973–74 … … … … 25.5 33.3 47.9
1974–75 … … … … 22.2 30.7 45.8
1975–76 … … … … 19.6 27.7 40.1
1976–77 … … … … 18.8 27.7 41.8
1977–78 … … … … 22.6 34.8 46.7

Table A uses the earnings of manual workers, since these are the only figures available for the whole of the period. For years up to and including 1969–70 the estimates are based on the Department of Employment's estimates of the average earnings of full-time adult male manual workers in October of each year, except for 1945–46 where the figures relate to July 1945. For the years 1970–71 to 1976–77 the figures used are the averages of the New Earnings Survey estimates of the earnings of full-time adult male manual workers for April at the start and finish of each income tax year. To give an estimated figure for 1977–78 the April 1977 NES figure has been updated to September 1977 by the monthly index of average earnings.

Table B uses the same sources for the years from 1970–71, except that the NES estimates relate to workers in all occupations, manual and non-manual.

In both tables, the tax thresholds used take account of the family allowance deduction—"clawback"—and represent the amount of earnings which could be received in each year, as a proportion of average earnings, before incurring liability to tax.

For years up to and including 1972–73 the tax threshold takes account of the effects of earned income relief.

Mr. Ron Thomas

asked the Chancellor of the Exchequer, in assessing the employ ment creation effects of the recently announced reduction in personal taxation, what adjustments were made to take account of the marginal propensity to save of net income receivers (a) up to £5,000, (b) £5,001 to £10,000, (c) £10,001 to £20,000 and (d) above £20,000.

Mr. Denzil Davies

The estimates of the employment effects of the tax changes announced on 26th October were produced with the aid of the Treasury economic model. The consumption function in the model distinguishes between three different sources of income—wages and salaries, current grants, and other personal income such as self-employment income and dividends—and not different sizes of income. The short-run marginal propensity to consume is different for each source of income since source and size of income are assumed to be related. Information on the average income per head affected by different tax changes is used, however, to makead hoc adjustments to the marginal propensities to consume.