§ Mr. Deakinsasked the Chancellor of the Exchequer (1) by how much the value of income tax personal allowances has increased in real terms since 1979; how this amount has been distributed to each band of income taxpayers, both in total and in amount per taxpayer; and if he will make a statement;
(2) which income tax allowances have been increased by more than the rate of inflation since 1979; what were the real increases in each case; and what estimate he has made of the redistributional effects of these changes.
§ Mr. MooreInformation is in the following table: 245W
Percentage increase in real terms* Married man's allowance 21 Single person's and wife's earned income allowance 20 Additional personal allowance 22 Married age allowance 10 Single age allowance 11 Blind person's allowance 7 * Compared with movement in the retail prices index (RPI) between 1978–79 and 1985–86, assuming an increase of 5½ per cent. in the RPI between 1984–85 and 1985–86.
Reductions in income tax in 1985–86 compared with 1978–79 indexed tax regime Range of total income in 1985–86 £ Reduction in tax due to allowance changes £m. Tax units * million Average reduction per tax unit* Reduction as percentage of average income in the range Under 5,000 440 3.9 †95 2.6 5,000–10,000 1,150 8.4 135 1.8 10,000–15,000 840 4.6 180 1.5 15,000–20,000 360 1.8 200 1.2 20,000–30,000 230 1.0 240 1.0 30,000–50,000 80 0.3 275 0.7 Over 50,000 30 0.09 330 0.4 Total 3,130 20.1 150 1.5 * Counting married couples as one. † By reference to the estimated numbers of tax units who would be liable to pay tax under the indexed 1978–79 regime; this number is some 850,000 greater than the numbers paying tax in 1985–86 under the Budget proposals.