§ Mr. Ron Thomasasked the Chancellor of the Exchequer what would be the estimated cost for an average income family composed of two adults and four children if the indirect taxation proportion of total taxation revenue were increased from 29 per cent., 1977–78 estimate, to 40 per cent.
§ Mr. Robert SheldonTo increase the revenue from Government taxes on expenditure to a level such that they contributed 40 per cent. of total revenue from taxation in 1977–78 would mean an increase of £5,500 million. The raising of these taxes, which cover VAT, the specific duties and the national insurance surcharge, would affect the family of two adults plus two children and four children respectively in the form of higher152W prices. Since the magnitude of the illustrative change is so large it is extremely difficult to predict the final impact. Further, the result will depend on which particular taxes were changed. The rise in the share of indirect taxes implies a fall in the share of direct taxes, but again how this will affect the family depends on the composition of the changes in direct taxes. If the change is in income tax for example, through the raising of the allowances, the illustrative families could be as well off after the shift in the total burden as they were before.