Taxation (Hansard, 10 March 1994)

§ Sir David Knox
To ask the Chancellor of the Exchequer, pursuant to his answer of 3 February,Official Report, columns 825–26, if he will give the percentages of earnings taken in income tax and national insurance contribution from a single-wage married couple at (a) half, 325W (b) three quarters, (c) average, and (d) twice average male manual earnings, in the years 1990–91, 1992–93 and 1993–94.

§ Mr. Dorrell
The information is in the table:

Income tax and national insurance contributions¹ as a percentage of gross earnings

Multiple of average earnings² 1978–79 1990–91 1992–93 1993–94

Half average earnings 14.1 12.8 11.6 12.1

Three quarters average earnings 22.4 19.9 19.0 19.2

Average earnings 26.7 23.4 22.8 22.9

Twice average earnings 31.2 26.1 26.1 26.4

¹ National insurance contributions are at the standard class 1 rate for employees not contracted-out of the state additional—earnings-related—pension scheme. Tax has been calculated assuming that no allowances or reliefs are available other than the standard allowance.

² Average earnings are taken to be the gross weekly manual earnings of full-time males on adult rates with pay unaffected by absence. These are £244.50 and £272.00 in 1990–91 and 1992–93 respectively. In 1993–94 these are estimated to be £281.50 using an illustrative growth rate of 3.5 per cent.

§ Mr. Redmond
To ask the chancellor of the Exchequer if he publish for each year since 1978 a table showing(a) average earnings and (b) income tax liability on taxable income equal to (i) one quarter average earnings, (ii) one

Income tax liability² on taxable income at multiples of average earnings £ per week

Year ¼ ½ 1 5 10 100

1978–79 6.50 14.16 29.47 248.77 633.89 7,566.05

1979–80 7.48 15.67 32.07 238.72 566.62 6,468.82

1980–81 9.86 19.71 39.42 295.64 689.84 7,785.44

1981–82 10.94 21.89 43.77 339.14 776.84 8,655.44

1982.83 11.81 23.61 47.22 360.08 832.28 9,331.88

1983–84 12.83 25.65 51.30 385.02 898.02 10,132.02

1984–85 13.88 27.75 55.50 419.62 974.62 10,964.62

1985–86 14.89 29.78 59.55 452.71 1,048.21 11,767.21

1986–87 15.50 31.00 62.00 489.53 1,130.93 12,676.13

1987–88 15.77 31.54 63.07 540.38 1,241.18 13,855.58

1988–89 16.02 32.04 64.08 456.93 969.53 10,196.33

1989–90 17.49 34.99 69.98 500.09 1,059.89 11,136.29

1990–91 19.14 38.27 76.55 552.69 1,165.09 12,188.29

1991–92 20.54 41.09 82.18 589.03 1,246.43 13,079.63

1992–93 19.81 41.54 85.00 625.11 1,320.51 13,837.71

1993–94 20.09 42.58 87.57 649.03 1,368.83 14,325.23

Income tax liability as a percentage of taxable income at multiples of average earnings

Year ¼ ½ 1 5 10 100

1978–79 28.0 30.5 31.8 53.6 68.3 81.5

1979–80 27.4 28.7 29.3 43.7 51.8 59.2

1980–81 30.0 30.0 30.0 45.0 52.5 59.2

1981–82 30.0 30.0 30.0 46.5 53.2 59.3

1982–83 30.0 30.0 30.0 45.8 52.9 59.3

1983–84 30.0 30.0 30.0 45.0 52.5 59.3

1984–85 30.0 30.0 30.0 45.4 52.7 59.3

1985–86 30.0 30.0 30.0 45.6 52.8 59.3

1986–87 29.0 29.0 29.0 45.8 52.9 59.3

1987–88 27.0 27.0 27.0 46.3 53.1 59.3

1988–89 25.0 25.0 25.0 35.7 37.8 39.8

1989–90 25.0 25.0 25.0 35.7 37.9 39.8

1990–91 25.0 25.0 25.0 36.1 38.0 39.8

1991–92 25.0 25.0 25.0 35.8 37.9 39.8

1992–93 22.8 23.9 24.4 36.0 38.0 39.8

1993–94 22.3 23.7 24.3 36.1 38.0 39.8

Average earnings are taken to be the average gross weekly earnings of all full-time males on adult rates with pay unaffected by absence. The 326W half average earnings, (iii) average earnings, (iv) five times average earnings, (v) 10 times average earnings and (vi) 100 times average earnings.

§ Mr. Dorrell
The information is in the tables. Because taxable income excludes income covered by allowances, the gross incomes of taxpayers with these levels of taxable income would be significantly higher. The figures show that tax liability as a proportion of taxable income has fallen at all income levels over this period.

Year Average earnings¹ £ per week

1978–79 92.8

1979–80 109.3

1980–81 131.4

1981–82 145.9

1982–83 157.4

1983–84 171.0

1984–85 185.0

1985–86 198.5

1986.87 213.8

1987–88 233.6

1988.89 256.3

1989–90 279.9

1990–91 306.2

1991–92 328.7

1992–93 347.7

1993–94 359.9

figure for 1993–94 is based on an illustrative assumption of 3.5 per cent. growth over 1992–93.
² Assuming all income is earned and that taxable income—income for income tax purposes less allowances and reliefs available at the taxpayer's marginal rate—is equal to the multiple of average earnings shown.

§ Mr. Hoon
To ask the Chancellor of the Exchequer what would be the cost of a 20 per cent. basic rate of income tax in(a) 1993–94, (b) 1994–95 and (c) 1995–96.

§ Mr. Dorrell
Estimates based on a projection of the 1991–92 survey of personal incomes are given.

Revenue cost compared with a basic rate of 25 per cent, in a full year

£ billion

1993–94 7.8

1994–95 9.2

1995–96 9.7

327W

Income tax and national insurance contributions¹ as a percentage of gross earnings
Multiple of average earnings²	1978–79	1990–91	1992–93	1993–94
Half average earnings	14.1	12.8	11.6	12.1
Three quarters average earnings	22.4	19.9	19.0	19.2
Average earnings	26.7	23.4	22.8	22.9
Twice average earnings	31.2	26.1	26.1	26.4
¹ National insurance contributions are at the standard class 1 rate for employees not contracted-out of the state additional—earnings-related—pension scheme. Tax has been calculated assuming that no allowances or reliefs are available other than the standard allowance.
² Average earnings are taken to be the gross weekly manual earnings of full-time males on adult rates with pay unaffected by absence. These are £244.50 and £272.00 in 1990–91 and 1992–93 respectively. In 1993–94 these are estimated to be £281.50 using an illustrative growth rate of 3.5 per cent.

Income tax liability² on taxable income at multiples of average earnings £ per week
Year	¼	½	1	5	10	100
1978–79	6.50	14.16	29.47	248.77	633.89	7,566.05
1979–80	7.48	15.67	32.07	238.72	566.62	6,468.82
1980–81	9.86	19.71	39.42	295.64	689.84	7,785.44
1981–82	10.94	21.89	43.77	339.14	776.84	8,655.44
1982.83	11.81	23.61	47.22	360.08	832.28	9,331.88
1983–84	12.83	25.65	51.30	385.02	898.02	10,132.02
1984–85	13.88	27.75	55.50	419.62	974.62	10,964.62
1985–86	14.89	29.78	59.55	452.71	1,048.21	11,767.21
1986–87	15.50	31.00	62.00	489.53	1,130.93	12,676.13
1987–88	15.77	31.54	63.07	540.38	1,241.18	13,855.58
1988–89	16.02	32.04	64.08	456.93	969.53	10,196.33
1989–90	17.49	34.99	69.98	500.09	1,059.89	11,136.29
1990–91	19.14	38.27	76.55	552.69	1,165.09	12,188.29
1991–92	20.54	41.09	82.18	589.03	1,246.43	13,079.63
1992–93	19.81	41.54	85.00	625.11	1,320.51	13,837.71
1993–94	20.09	42.58	87.57	649.03	1,368.83	14,325.23

Income tax liability as a percentage of taxable income at multiples of average earnings
Year	¼	½	1	5	10	100
1978–79	28.0	30.5	31.8	53.6	68.3	81.5
1979–80	27.4	28.7	29.3	43.7	51.8	59.2
1980–81	30.0	30.0	30.0	45.0	52.5	59.2
1981–82	30.0	30.0	30.0	46.5	53.2	59.3
1982–83	30.0	30.0	30.0	45.8	52.9	59.3
1983–84	30.0	30.0	30.0	45.0	52.5	59.3
1984–85	30.0	30.0	30.0	45.4	52.7	59.3
1985–86	30.0	30.0	30.0	45.6	52.8	59.3
1986–87	29.0	29.0	29.0	45.8	52.9	59.3
1987–88	27.0	27.0	27.0	46.3	53.1	59.3
1988–89	25.0	25.0	25.0	35.7	37.8	39.8
1989–90	25.0	25.0	25.0	35.7	37.9	39.8
1990–91	25.0	25.0	25.0	36.1	38.0	39.8
1991–92	25.0	25.0	25.0	35.8	37.9	39.8
1992–93	22.8	23.9	24.4	36.0	38.0	39.8
1993–94	22.3	23.7	24.3	36.1	38.0	39.8

Year	Average earnings¹ £ per week
1978–79	92.8
1979–80	109.3
1980–81	131.4
1981–82	145.9
1982–83	157.4
1983–84	171.0
1984–85	185.0
1985–86	198.5
1986.87	213.8
1987–88	233.6
1988.89	256.3
1989–90	279.9
1990–91	306.2
1991–92	328.7
1992–93	347.7
1993–94	359.9

Revenue cost compared with a basic rate of 25 per cent, in a full year
	£ billion
1993–94	7.8
1994–95	9.2
1995–96	9.7