Income Tax

HC Deb 30 March 1979 vol 965 cc374-5W

Mr. Hordern

asked the Chancellor of the Exchequer if he will publish a table showing the average rate of tax on pretax income for the following quantile groups: top 1 per cent., next 9 per cent., next 40 per cent., lower 50 per cent., and bottom 20 per cent. in the years 1952, 1964, 1970, 1974 and 1978.

Mr. Robert Sheldon

Information for 1978 is not available. The figures relating to 1952, 1964, 1970–71 and 1974–75 are given below.

Mr. David Mitchell

asked the Chancellor of the Exchequer when the average family on the average wage last did not pay income tax; and how much the average family on the average wage pay in income tax in the current year, or the most recent year for which figures are available.

Mr. Robert Sheldon

I shall let the hon. Member have a reply as soon as possible.

Mr. Rippon

asked the Chancellor of the Exchequer what would be the cost in a full financial year if the maximum rate of income tax on (a) earned and (b) unearned income had been reduced to 70p, 65p, 60p, 55p and 50p in the pound.

Mr. Robert Sheldon,

pursuant to his reply [Official Report, 8 March 1979; Vol. 963, c. 775], gave the following information:

Income tax is charged on total taxable income regardless of the source, and there are difficulties in distinguishing the proportion of tax relating to income from any one source. If it is assumed that earned income represents the bottom slice of taxable income, the estimated costs in a full year at 1978–79 income levels would be of the following order:

£ million
	Loss of Revenue
Maximum rate	Earned Income	Unearned Income
70p	50	55 to 195
65p	80	90 to 255
60p	120	125 to 310
55p	175	165 to 380
50p	250	200 to 430

The lower figures quoted for the loss of revenue on unearned income assume no reduction in the yield from the investment income surcharge. The information available does not readily produce an estimate of the amount of surcharge payable as a component of any particular marginal rate of tax. The higher figures quoted includes estimates of the investment income surcharge paid by all those affected by the reduction in the maximum rate of tax, including that paid on slices on income taxed at rates below the maximum rate.

The true loss of revenue therefore lies between the lower and upper figures.