§ Mr. Meacherasked the Chancellor of the Exchequer with reference to the answer of 15 March, Official Report, c. 131–2, if he will disaggregate the gains or losses made by average taxpayers in each of the income categories quoted in each of the Budgets 1979 to 1983, inclusive.
§ Dr. McDonaldasked the Chancellor of the Exchequer if he will up-date to include the 1983 Budget, the information on tax changes provided in his reply of 15 March to the the hon. Member for Oldham, West, (Mr. Meacher) Official Report, c. 131–2; and if he will provide the same information according to (a) the 1 per cent. with
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Changes in income tax yields:* Overall† due to real changes in allowances etc.‡ due to indexation|| Range of total income in 1983–84¶ Number of units paying tax in 1983–84 Amount Average per tax unit Amount Average per tax unit Amount Average per tax unit £ (million) £ million £ £ million £ £ million £ Under 5,000* 6.3 2,360 275 -10 -2 2,370 275 5,000–10,000 9.0 4,500 495 580 65 3,920 430 10,000–15,000 3.6 3,040 835 540 15O 2,500 685 15,000–20,000 1.0 1,670 1,600 300 290 1,370 1,310 20,000–30,000 0.5 1,540 3,165 300 620 1,240 2,545 Over 30,000 0.2 1,540 9,260 640 3,840 900 5,420 20.6 14,650 2,350 12,300 £ Per cent, of tax units £ million £ £ million £ £ million £ Under 11,000• 79.8 7,640 405 700 40 6,940 365 11,000–14,000 9.7 1,730 860 310 155 1,420 705 14,000–30,000 9.5 3,740 1,885 700 350 3,040 1,535 Over 30,000 0.8 1,540 9,260 640 3,840 900 5,420 100 14,650 2,350 12,300 Notes * Figures are calculated on the forecast income tax base for 1983–84 and do not include the effect of any changes in the definition of income included in the tax base between 1978–79 and 1983–84. † These columns show the increase in yield of income tax for 1983–84, if 1978–79 allowances (apart from child tax allowances), thresholds and rates were substituted without indexation for those proposed in the Budget. As child tax allowances were being phased out in 1978–79, and have now been completely replaced by child benefit, they have been left out of account in comparing tax yields for 1983–84. ‡These columns show the increase in yield of income tax for 1983–84, if 1978–79 rates of tax and 1978–79 allowances and thresholds (after indexation to 1983–84 levels in line with the increase in the RPI between December 1977 and December 1982) were substituted for those proposed in the Budget. the highest incomes, (b) the next 9 per cent. (c)the next 10 per cent. and (d) the remaining 80 per cent. of taxpayers.
§ Mr. Ridley[pursuant to his replies, 24 March c. 486, and 28 March, c. 62.The figures in my reply of 15 March were at 1982–83 income levels and did not include the effect of my right hon. Friend's Budget proposals for 1983–84. The tables below take account of the Budget proposals on the level of personal allowances and thresholds. The figures are in terms of 1983–84 income levels, and compare the income tax payable under the proposed 1983–84 income tax regime with that which would be payable if the 1978–79 allowances and thresholds (with and without indexation) and rates were in force.
The available breakdowns do not enable precise indentification of the percentiles of taxpayers specified in the question from the hon. Member for Thurrock. The lower half of the table gives the information by those available ranges of income which most closely correspond and shows the percentage of taxpayers falling in each range.
|| Difference between overall amount and amount clue to real change in allowances. ¶ All information is in terms of tax units—that is, married couples are counted as one and their incomes combined. ● The amounts for this income range in the first pair of columns exclude the yield from those who are not on Revenue records and who would be brought into tax if the 1978–79 allowances were in force for 1983–84. The averages per tax unit are calculated as follows: Columns for overall change and change due to indexation: by reference to all those on record who would be paying tax under the 1978–79 regime; this number is some 2.3 million greater than the estimated numbers liable to pay tax in 1983–84 under the Budget proposals, increasing the number in the income range below £5,000 per year from 6.3 million to 8.6 million.
Columns for real changes in allowances etc: by reference to the estimated numbers who would be liable to pay 335W tax under the indexed 1978–79 regime; this number is some 0.3 million greater than the numbers paying tax in 1983–84 under the Budget proposals, increasing the number in the income range below £5,000 a year from 6.3 million to 6.6 million.
Taxpayers losing if 1978–79 rates of tax and 1978–79 allowances and thresholds, indexed to 1983–84 levels, were substituted for those proposed in the Budget Taxpayers gaining if 1978–79 rates of tax and 1978–79 allowances and thresholds, indexed to 1983–84 levels, were substituted for those proposed in the Budget Number of units Increase in yield Average loss per tax unit Number of units Decrease in yield Average gain per tax unit Million £ million £ Million £ million £ Under 5,000 2.7 60 20 3.9 70 20 5,000–10,000 8.3 590 70 0.7 10 15
§ Dr. McDonaldasked the Chancellor of the Exchequer what is the total annual cost at current prices of changes in (a) capital transfer tax, capital gains tax and investment income surcharge and (b) higher rate income tax thresholds and tax bands made in his last five Budgets apart from the cost of any adjustments to these taxes to maintain this real value in 1978–79.
§ Mr. Nicholas Ridley[pursuant to his reply, 28 March 1983, c. 62]: the figures in a full year and at 1983–84 income levels and capital values are as shown below. They represent the costs over and above the costs if the thresholds referred to had been increased in line with the retail prices index between December 1977 and December 1982 and the relevant tax rates had remained at their 1978–79 levels.
- (a) capital transfer tax, capital gains tax and investment income surharge—£245 million
- (b) higher rate income tax thresholds and bands—£670 million.