Taxation (Hansard, 4 February 1994)

§ Mr. Nigel Griffiths
To ask the Chancellor of the Exchequer if he will publish a table showing the direct and indirect tax burden in 1978–79 and in 1994–95 as a proportion of gross earnings for (i) a single person, (ii) a married couple both working, (iii) a married couple with one partner working, (iv) a married couple with two children, one partner working and (v) a married couple with two children, both working at 50 per cent., 100 per cent., 150 per cent., 200 per cent., 500 per cent. and 1,000 per cent. of average earnings.

Percentage of combined male and female gross earnings paid in income tax and national insurance contributions in 1978–79 and 1994–95 Married couple, both working with two children¹

Multiples of average earnings²

½ 1 1½ 2 5 10

1978–79

Income tax³ 1.1 16.8 22.2 24.9 44.8 62.5

NICs 6.5 6.5 6.0 5.1 2.0 1.0

Income tax and NICs 7.6 23.3 28.1 30.0 46.9 63.5

1994–95

Income tax³ 4.7 14.9 18.9 22.6 33.0 36.5

NICs 7.1 8.6 7.6 6.1 2.4 1.2

Income tax and NICs 11.8 23.4 26.5 28.7 35.4 37.7

¹ Assuming that the husband earns the relevant multiple of average male earnings and the wife earns the relevant multiple of average female earnings.

² The earnings levels used are those for full-time workers on adult rates of pay, whose pay is unaffected by absence. Average earnings for males are assumed to be £92.80 per week in 1978–79 and £374.30 per week in 1994–95. Average female earnings are assumed to be £59.60 per week in 1978–79 and £256.40 per week in 1994–95.

³ Income tax is shown net of child benefit in order to provide comparability with 1978–79 when support for children was partly given through child tax allowances. Both children are assumed to be under 11 years old. Households are assumed to receive no reliefs besides the standard allowances and only to have income from employment.

§ Ms Harman
To ask the Chancellor of the Exchequer how many more income tax payers in 1994–95 will be paying tax at the margin(a) at the basic rather than the lower rate as a result of his proposal to freeze personal allowances, other things being equal, (b) at the basic rather than the lower rate, in addition to those under (a), as a result of his proposal to freeze the married couples allowance and related allowances, and (c) at the lower rather than the basic rate as a result of his proposal to widen the lower rate band.

§ Mr. Dorrell
[holding answer 27 January 1994]: Excluding the effect of changing the width of the lower rate band and other tax changes in 1994–95, there would be about 120,000 more people paying tax at the basic rather than the lower rate in 1994–95 than there would have been if the personal allowance had been increased in line with statutory indexation. Nobody will pay tax at the basic rather than the lower rate because of the freezing of the married couple's and related allowances. About 800,000 more people will have the lower rate of tax as their marginal rate through widening the lower rate band by £500.

Percentage of combined male and female gross earnings paid in income tax and national insurance contributions in 1978–79 and 1994–95 Married couple, both working with two children¹
	Multiples of average earnings²
	½	1	1½	2	5	10
1978–79
Income tax³	1.1	16.8	22.2	24.9	44.8	62.5
NICs	6.5	6.5	6.0	5.1	2.0	1.0
Income tax and NICs	7.6	23.3	28.1	30.0	46.9	63.5
1994–95
Income tax³	4.7	14.9	18.9	22.6	33.0	36.5
NICs	7.1	8.6	7.6	6.1	2.4	1.2
Income tax and NICs	11.8	23.4	26.5	28.7	35.4	37.7
¹ Assuming that the husband earns the relevant multiple of average male earnings and the wife earns the relevant multiple of average female earnings.
² The earnings levels used are those for full-time workers on adult rates of pay, whose pay is unaffected by absence. Average earnings for males are assumed to be £92.80 per week in 1978–79 and £374.30 per week in 1994–95. Average female earnings are assumed to be £59.60 per week in 1978–79 and £256.40 per week in 1994–95.
³ Income tax is shown net of child benefit in order to provide comparability with 1978–79 when support for children was partly given through child tax allowances. Both children are assumed to be under 11 years old. Households are assumed to receive no reliefs besides the standard allowances and only to have income from employment.