HC Deb 05 May 1998 vol 311 cc331-3W
Mr. Malcolm Bruce

To ask the Chancellor of the Exchequer (1) if he will provide estimates of the amounts of(a) income tax, (b) NICs, (c) VAT, (d) other indirect taxes, (e) local taxes (i) paid by typical families in each year since 1995–96, and (ii) forecast to be paid in 1998–99 on a basis consistent with Table 13.7 of the Treasury Tax-Benefit Reference Manual; [35235]

(2) if he will update to include the latest information from 1993–94 to 1998–99 the figures for the burden of direct and indirect taxation in the format used in the answer of 26 February 1996, Official Report, columns 339–51, taking into account (a) changes made in the 17 March Budget and (b) revisions to figures for earlier years, providing separate figures for (i) VAT, (ii) other indirect taxes and (iii) the council tax. [37885]

Dawn Primarolo

[holding answers 23 March and 7 April 1998]The available information, which shows tax payments at multiples of median full-time earnings, is given in the table.

Income Tax, National Insurance, Child Benefit and Family Credit/Working Families Tax Credit at multiples of median full-time earnings
1998–99 50% 75% 100% 150% 200% 300%
Single
Gross income 168.50 252.75 337.00 505.50 674.00 1,011.00
Income tax 17.72 37.10 56.47 95.23 146.25 281.05
NICs 11.73 20.16 28.58 43.38 43.38 43.38
Net income 139.05 195.50 251.95 366.89 484.37 686.57
Percentage of earnings
Income tax 10.5 14.7 16.8 18.8 21.7 27.8
NICs 7.0 8.0 8.5 8.6 6.4 4.3
Income tax and NICs 17.5 22.7 25.3 27.4 28.1 32.1
Net income 82.5 77.3 74.8 72.6 71.9 67.9
Married (no children)
Gross income 168.50 252.75 337.00 505.50 674.00 1,011.00
Income tax 12.24 31.62 50.99 89.75 140.77 275.57
NICs 11.73 20.16 28.58 43.38 43.38 43.38
Net income 144.53 200.98 257.43 372.37 489.85 692.05
Percentage of earnings
Income tax 7.3 12.5 15.1 17.8 20.9 27.3
NICs 7.0 8.0 8.5 8.6 6.4 4.3
Income tax and NICs 14.3 20.5 23.6 26.4 27.3 31.6
Net income 85.8 79.5 76.4 73.7 72.7 68.5
Married (2 children)
Gross income 168.50 252.75 337.00 505.50 674.00 1,011.00
Income tax -55.04 3.86 30.24 69.00 120.02 254.82
NICs 11.73 20.16 28.58 43.38 43.38 43.38
Net income 211.81 228.74 278.18 393.12 510.60 712.80
Percentage of earnings
Income tax -25.7 1.5 9.0 13.6 17.8 25.2
NICs 7.0 8.0 8.5 8.6 6.4 4.3
Income tax and NICs -18.7 9.5 17.5 22.2 24.2 29.5
Net income 125.7 90.5 82.5 77.8 75.8 70.5
Married (2 earners, no children)
Gross income 168.50 252.75 337.00 505.50 674.00 1,011.00
Income tax 0.00 12.80 30.82 68.71 107.47 185.79
NICs 6.61 15.04 23.46 40.31 57.16 78.70
Net income 161.89 224.92 282.72 396.48 509.37 746.51

Changes which will take effect in 1999 will offer significant help to families, particularly low income families. A one earner couple with 2 children with half median earnings (£168.50 per week) will gain £18.68 a week from the introduction of the Working Families Tax Credit. No family with children with earnings less than £220 per week will pay income tax. Child benefit for the eldest child will be increased by £2.50, the largest real increase since 1978. And all employees earning more than the Lower Earnings Limit will gain £1.28 a week from the abolition of the NICs entry fee. Moreover figures in the table do not take account of the additional help with childcare available to working families through the childcare tax credit within the WFTC. A 2 earner couple on median earnings, with 2 children and childcare costs of £80 per week will gain £46 per week towards this cost. Further consideration is being given to whether the information provided is typical of families in the UK. Similarly, estimating the impact of indirect taxes is imprecise as spending patterns vary widely between households with the same composition and income. The level of council tax payments will also vary depending on where families live. Further consideration is being given to whether the conventions, assumptions and sampling methods can be improved in order to provide information which is meaningful and reliable.

Income Tax, National Insurance, Child Benefit and Family Credit/Working Families Tax Credit at multiples of median full-time earnings
1998–99 50% 75% 100% 150% 200% 300%
Percentage of earnings
Income tax 0.0 5.1 9.1 13.6 15.9 18.4
NICs 3.9 5.9 7.0 8.0 8.5 7.8
Income tax and NICs 3.9 11.0 16.1 21.6 24.4 26.2
Net income 96.1 89.0 83.9 78.4 75.6 73.8

Including 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, increase in Child Benefit)
1998–99 50% 75% 100% 150% 200% 300%
Single
Gross income 168.50 252.75 337.00 505.50 674.00 1,011.00
Income tax 17.72 37.10 56.47 95.23 146.25 281.05
NICs 10.45 18.88 27.30 42.10 42.10 42.10
Net income 140.33 196.78 253.23 368.17 485.65 687.85
Percentage of earnings
Income tax 10.5 14.7 16.8 18.8 21.7 27.8
NICs 6.2 7.5 8.1 8.3 6.2 4.2
Income tax and NICs 16.7 22.2 24.9 27.1 27.9 32.0
Net income 83.3 77.9 75.1 72.8 72.1 68.0
Married (no children)
Gross income 168.50 252.75 337.00 505.50 674.00 1,011.00
Income tax 14.07 33.44 52.82 91.58 142.60 277.40
NICs 10.45 18.88 27.30 42.10 42.10 42.10
Net income 143.98 200.43 256.88 371.82 489.30 691.50
Percentage of earnings
Income tax 8.3 13.2 15.7 18.1 21.2 27.4
NICs 6.2 7.5 8.1 8.3 6.2 4.2
Income tax and NICs 14.5 20.7 23.8 26.4 27.4 31.6
Net income 85.5 79.3 76.2 73.6 72.6 68.4
Married (2 children)
Gross income 168.50 252.75 337.00 505.50 674.00 1,011.00
Income tax -74.39 -23.97 26.45 68.33 119.35 254.15
NICs 10.45 18.88 27.30 42.10 42.10 42.10
Net income 232.44 257.84 283.25 395.07 512.55 714.75
Percentage of earnings
Income tax -44.2 -9.5 7.8 13.5 17.7 25.1
NICs 6.2 7.5 8.1 8.3 6.2 4.2
Income tax and NICs -38.0 -2.0 15.9 21.8 23.9 29.3
Net income 137.9 102.0 84.1 78.2 76.0 70.7
Married (2 earners, no children)
Gross income 168.50 252.75 337.00 505.50 674.00 1,011.00
Income tax 0.43 14.63 32.64 70.54 109.30 187.62
NICs 4.05 12.48 20.90 37.75 54.60 76.14
Net income 164.02 225.65 283.46 397.21 510.11 747.24
Percentage of earnings
Income tax 0.3 5.8 9.7 14.0 16.2 18.6
NICs 2.4 4.9 6.2 7.5 8.1 7.5
Income tax and NICs 2.7 10.7 15.9 21.5 24.3 26.1
Net income 97.3 89.3 84.1 78.6 75.7 73.9

Notes:

  1. 1. Income tax payments are calculated on the basis that the households receive no tax reliefs other than the standard allowances and have income only from employment. All earners including wives, are assumed to pay Class 1 national insurance contributions at the contracted-in rate.
  2. 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 1998–9 is based on a stylised assumption in line with the actual outturn for earnings growth in the year to January 1998.
  3. 3. A family with 2 children is assumed to have one child aged under 11 and the other between 11 and 15.
  4. 4. In line with the convention in the Tax Benefit Reference Manual, child benefit is treated as negative income tax. Following the introduction of the Working Families Tax Credit, Family Credit, although it is not part of the tax system, has been treated in the same way so as to provide comparability with the tax system following the introduction of the WFTC.