§ Mr. Matthew TaylorTo ask the Chancellor of the Exchequer if he will estimate the reduction in tax paid per year in cash terms, and as a percentage of total gross annual income, for each income decile group, resulting from a 1p reduction in the basic rate of income tax. [114179]
§ Dawn Primarolo[holding answer 14 March 2000]:This Government have introduced a range of measures designed to make work pay and to increase support for families with children, including the 10p starting rate of tax, the national minimum wage and the working families tax credit. The cut in the basic rate is another of those measures.
For taxpayers in 2000–01, the estimates for the reduction in tax paid and reduction as a percentage of total gross annual income for each income decile group resulting from a 1p reduction in the basic rate of income tax are given in the table.
Decile Reduction in tax paid from 1p cut in basic rate in 2000–01 (£ million) Reduction as a percentage of total gross income Lowest 1— 1— 2nd 25 0.12 3rd 70 0.27 4th 125 0.39 5th 180 0.49 6th 250 0.56 7th 330 0.62 8th 420 0.66 9th 580 0.71 Highest 720 0.41 1 Negligible Note:
The estimates exclude an offsetting effect from the working families tax credit because this is allocated at family level and not at individual level.
The estimates are based on the 1997–98 Survey of Personal Incomes and are consistent with the November 1999 pre-Budget Report.
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§ Mrs. Anne CampbellTo ask the Chancellor of the Exchequer how much revenue would have been raised by one penny on the basic rate of income tax in (i) May 1997, (ii) May 1998 and (iii) May 1999; and if he will estimate the amount for May 2000. [112746]
§ Dawn PrimaroloIn the March 1999 Budget material the tax ready reckoner was published on a pre-Budget regime basis. This showed a figure for changing the basic rate by 1p in 1999–2000 of £1.85 billion compared with the estimate based on the current regime of £2.5 billion.
In the 1997 edition of Inland Revenue Statistics a figure of £1.8 billion was published for the full-year effect of a change in the basic rate of 1p in 1998–99.
In the 1996 edition of Inland Revenue Statistics a receipts figure of £1.3 billion was published for the in-year effect for changing the basic rate by 1p in 1997–98. We would expect this to be much lower than the current full-year figure of £1.65 billion, because only around 88 per cent. of the full year would be received in year.