§ Mr. Arthur Lewisasked the Chancellor of the Exchequer whether he will publish in the Official Report the correspondence he has had with the hon. Member for Newham, North-West giving details of the fall in tax allowances due to the continual fall in the purchasing value of the £ sterling arising from inflation.
§ Mr. Robert Sheldon:Yes. On 19th August 1977 I wrote to my hon. Friend as follows:
I am now writing with the information which you asked for in your Question to which 667W I gave an interim reply on 28th July 1977 (Official Report, Vol. 936, Col. 622).'To ask Mr. Chancellor of the Exchequer, taking the £ sterling as having a purchasing value of 100p at 1st October 1974, what has been, to the latest convenient date, the fall in the worth of tax allowances, taking account of the fall in the purchasing value of the £ sterling, adjustments in these allowances and increases in actual taxation; and whether he will quote some examples of taxes paid by specified groups at each date.'The figures for a basic rate taxpayer are as follows:
Weekly Tax 1974 Weekly Tax 1977 Real value of 1977 tax at 1974 prices Decrease Per cent. £ £ £ Single person … … 13.75 21.88 13.49 -1.9 Married couple … … 12.23 18.94 11.68 -4.5 Average earnings at 1st October 1974 have been taken to be the New Earnings Survey estimate of the average earnings at April 1974 of full-time adult male workers in all occupations, manual and non-manual, updated to September 1974 by the monthly index of average earnings. For 1977, the April 1976 New Earnings Survey estimate has been updated to May, the latest month for which an index figure is available.
I am sorry that it was not possible to let you have a full reply before the recess."
§ Mr. Wardasked the Chancellor of the Exchequer whether he proposes to continue next year the exemption from tax of part of the child dependency allowance, so that recipients of taxable dependency allowances will not be worse off as a result of the further reduction in child tax allowances.
§ Mr. Joel Barnett:Yes. As my right hon. Friend said in his statement of 15th July—[c.991]—child tax allowances for children not over 11 will be reduced to £100 for 1978–79, when child benefit is to be increased as the next step of the phasing in. The corresponding child tax allowances for children over 11 but not over 16 will be £135 and for children aged 16 or over, £165. In order to ensure that widows and others in receipt of taxable social security benefits who receive taxable child dependency allowances, and whose child benefit is set off against these allowances, will not be any worse off as the result of the further reduction of child tax allowances, my right hon. Friend proposes to introduce legislation in next year's Finance Bill to exempt £80 of the child dependency allowance in 1978–79. This will take the place of the £52
668W
DECREASE IN REAL VALUE OF ALLOWANCE SINCE OCTOBER 1974 Per cent. Single person's allowance … -14.1 Married allowance … -4.9 The figures take account of the change in the Retail Prices Index between October 1974 and June 1977 and of changes in the tax rates and allowances between those dates.
The amount of tax payable by a single man and a married couple, taking both as having average earnings in October 1974 and in June 1977, has fallen in real terms by 1.9 per cent. and 4.6 per cent. respectively on the same basis. The figures are as follows:—
exemption in 1977–78. No tax adjustment is to be made for war widows, whose dependency allowances are not taxable, but the amount of their dependency allowances will be appropriately adjusted to ensure that those who are liable to tax on other income are not worse off.
§ Mr. Ralph Howellasked the Chancellor of the Exchequer what would be the cost of introducing a new tax allowance, to be called parental tax allowance, to be equal in rate to the single person's tax allowance and wife's earned income allowance, and which could be claimed by all single parents and by all other parents who are dependent on a single wage.
§ Mr. Robert Sheldon:I will write to the hon. Member.