§ Mr. Ieuan Wyn JonesTo ask the Chancellor of the Exchequer if he will publish his Department's estimates of the distributional impact of changes made in the Budget(a) by household income decile and (b) by region. [7267]
§ Mr. Jack[holding answer 10 December 1996]: Estimates of the impact of some of the main Budget tax measures on household income deciles are in the table. Estimates of the effects of other Budget measures and of the distributional impact by region are not available.
The figures show the direct impact of the measures on households. They do not allow for the lasting prosperity, combining steady growth with low inflation, that has been secured by the Budget and is ensuring that living standards go on rising. A family on average earnings should be £370 better off next year than this, after earnings growth, tax and inflation, and over £1,100 a year better off than in 1991–92.
Average impact (- loss/+ gain) of main Budget tax measures in 1997– 981 (as a percentage of net income) Household income decile2 Tobacco Other measures Bottom -0.3 -0.2 2nd -0.2 0.0 3rd -0.2 0.1 4th -0.2 0.3 5th -0.1 0.4 6th -0.1 0.6 7th -0.1 0.7 8th -0.1 0.7 9th -0.1 0.8 Top 0.0 0.8 1 Estimates based on 992–93 to 1994–95 Family Expenditure Survey data, uprated to 1997–98 price and earnings levels. Because of the limitations of the Survey data the estimates are only approximate, particularly at the top and bottom of the distribution. The figures include the main tax measures directly affecting households—real rises of £200 in personal allowances; real rise of £100 in lower rate band; lp reduction in the basic rate of income tax; freeze on beer, wine and cider duties; 4 per cent, cut in spirits duty; 5 per cent, real rise in tobacco duty; 3 per cent, real rise in road fuel duties and the increase in insurance premium tax of 1.5 per cent. The figures show the effects relative to indexed tax allowances and duty rates. 2 Household incomes are adjusted for differences in composition before allocating households to deciles.