§ Sir Brandon Rhys Williamsasked the Secretary of State for Social Services if he will publish tables showing (a) implied marginal tax rates as a result of income tax, national insurance contribution and withdrawal of housing benefit (or equivalent) in each year since the introduction of rent rebates, and (b) implied marginal tax rates as a result of income tax, national insurance contribution, housing benefit and family income supplement/family credit withdrawal, for each year since introduction of family income supplement; and if he will include estimates for 1988 on the assumption that national insurance contribution and income tax rates will remain as at present.
§ Mr. ScottThe information requested is shown in the table. In practice, the impact of the highest theoretical 459W marginal tax rates may be mitigated by the duration of benefit award (FIS awards run unchanged for a period of one year).
460W461W
Implied marginal tax rates from April 1972 HB taper Based on tax, NI and withdrawal of HB Based on tax, NI and withdrawal of HB and FIS Comments July 1972 (a) 57.64 96.14 (b) 67.64 101.14 October 1972 (a) 57.89 96.39 Change in NI rates (b) 67.89 101.39 April 1973 (a) 57.75 96.25 Change in basic rate of tax (b) 67.75 101.25 October 1973 (a) 58.00 96.50 Change in NI rates (b) 68.00 105.50 April 1974 (a) 61.00 99.50 Change in basic rate of tax (b) 71.00 104.50 August 1974 (a) 61.50 100.00 Change in NI rates (b) 71.50 105.00 April 1975 (a) 63.50 102.00 Change in basic rate of tax (b) 73.50 107.00 April 1976 (a) 63.75 102.25 Change in NI rates (b) 73.75 107.25 April 1977 (a) 62.75 101.25 Change in basic rate of tax (b) 72.75 106.25 April 1978 (a) 54.50 or 62.50 93.00 or 101.00 Different rates correspond to 25 per cent, tax band and basic rate of tax respectively (b) 64.50 or 72.50 98.00 or 106.00 April 1979 (a) 54.50 or 59.50 93.00 or 98.00 Different rates correspond to 25 per cent, tax band and basic rate of tax respectively (b) 64.50 or 69.50 98.00 or 103.00 April 1980 (a) 59.75 98.25 Change in NI rates (b) 69.75 103.25 April 1981 (a) 60.75 99.25 Change in NI rates (b) 70.75 104.25 April 1982 (a) 61.75 100.25 Change in NI rates (b) 71.75 105.25 April 1983 (a) 67.00 103.00 Changes in HB Taper and NI rates (b) 72.00 105.50 April 1984 (a) 74.00 106.50 Change in HB Taper (b) 72.00 105.50 November 1984 (a) 77.00 108.00 Change in HB Taper (b) 72.00 105.50 April 1985 (a) 77.00 108.00 (b) 72.00 105.50 October 1985 (a) 73.00, 75.00 or 77.00 104.00, 106.00 or 108.00 Different rates correspond to NI rates of 5, 7 and 9 per cent, respectively (b) 68.00, 70.00 or 72.00 101.50, 103.50 or 105.50 November 1985 (a) 77.00, 79.00 or 81.00 106.00, 108.00 or 110.00 Different rates correspond to NI rates of 5, 7 and 9 per cent, respectively; Change in HB Taper (b) 68.00, 70.00 or 72.00 101.50, 103.50 or 105.50 April 1986 (a) 76.00, 78.00 or 80.00 105.0, 107.00 or 109.00 Different rates correspond to NI rates of 5, 7 and 9 per cent, respectively; Change in basic tax rate
HB taper Based on tax, NI and withdrawal of HB Based on tax, NI and withdrawal of HB and FIS Comments (b) 67.00, 69.00 or 71.00 100.50, 102.5 or 104.50 April 1987 (a) 78.00, 80.00 or 8200 105.00, 107.00 or 109.00 Different rates corrspond to NI rates of 5, 7 and 9 per cent, respectively; Change in HB Taper; Change in basic tax rate (b) 65.00, 67.00 or 69.00 98.50, 100.50 or 101.50 Key:
(a) Assessable Income above the housing benefit Needs Allowance.
(b) Assessable Income below the housing benefit Needs Allowance.
Implied marginal tax rales for April 1988 Rate of National Insurance Comments 5 per cent. 7 per cent. 9 per cent. Based on current tax and national insurance rates and withdrawal of housing benefit 86.4 86.8 87.2 Assumes a housing benefit taper of 80 per cent. of net income and a family credit taper of 70 per cent, of net income Based on current tax and national insurance rates and withdrawal of housing benefit and family credit 95.92 96.04 96.16 Notes:
1. Implied marginal tax rates are given for private and local authority tenants only.
2. The tables start from July 1972 when the national rent rebate and allowance scheme was introduced.
3. Changes in tax rates, national insurance contributions and housing benefit tapers have been included since July 1972.
4. Precise rates for the reformed social security system have yet to be set. The marginal tax rates for April 1988 are based on the illustrative assumptions included in the Technical Annex accompanying "Reform of Social Security" (Cmnd. 9691).