§ Lord Tebbitasked Her Majesty's Government:
Whether the burden of tax upon the poorest families has risen since 1 May 1997; and [HL2089]
Whether the burden of tax upon average families has risen since 1 May 1997. [HL2090]
§ Lord McIntosh of HaringeyThe available information, which shows tax payments for a couple with two children with earnings at multiples of median full-time earnings is given below.
The introduction of the Working Families Tax Credit in 1999 will be a significant help to low income families. For example, a one-earner couple with two children with half median earnings (£168.50 per week) will gain £18.68 a week from the introduction of the WFTC (11 per cent. of gross earnings).
The childcare tax credit within the WFTC will also provide substantial help for working families. A two-earner couple on median earnings, with two children and childcare costs of £80 per week will gain £46 per week towards this cost. No family with earnings less than £220 per week will pay income tax.
Income Tax, National Insurance, Child Benefit and Family Credit/Working Families Tax Credit for multiples of median full-time earnings.
32WA
Married couple with one earner and two children under 11 50% 75% 100% 1997–98 Gross Income 161.50 242.25 323.00 Income Tax (net of Child Benefit and Family Credit) -47.65 8.79 28.70 NICs 11.19 19.27 27.34 Net Income 197.96 214.19 266.96 Percentage of earnings Income tax -29.51 3.63 8.89 NICs 6.93 7.95 8.46 Income tax and NICs -22.58 11.58 17.35 Net Income 122.58 88.42 82.65 1998–99
Married couple with one earner and two children under 11 50% 75% 100% Gross Income 168.50 252.75 337.00 Income Tax (net of Child Benefit and Family Credit) -55.04 3.86 30.24 NICs 11.73 20.16 28.58 Net Income 211.81 228.74 278.18 Percentage of earnings Income Tax -32.7 1.5 9.0 NICs 7.0 8.0 8.5 Net Income 125.70 90.50 82.54 1998–99 Assuming tax and benefit measures announced in the Budget and due to be introduced in 1999 (MCA at 10%, abolition of employee NI entry fee, introduction of WFTC) Gross Income 168.50 252.75 337.00 Income Tax (net of Child Benefit and WFTC) -74.99 -24.57 25.85 NICs 10.45 18.88 27.30 Net Income 232.44 257.84 283.25 Percentage of earnings Income Tax -44.5 -9.7 7.67 NICs 6.2 7.5 8.10 Net Income 137.9 102.0 84.1 Notes:
1. Income tax payments are calculated on the basis that the households receive no tax reliefs other than the standard allowances and only have income from employment. All earners are assumed to pay Class 1 national insurance contributions at the contracted-in rate.
2. Earnings are taken to be the median gross weekly earnings of all full-time employees on adult rates with pay unaffected by absence. (Median earnings are more representative of the population as a whole than mean male full-time earnings.) The level of earnings in 1998–99 is based on a stylised assumption in line with the actual outturn for the year to January 1998.
3. Income tax includes Child Benefit, Family Credit and Working Family Tax Credit.