§ Mr. WillettsTo ask the Chancellor of the Exchequer, pursuant to his answer of 1 May 2002,Official Report, 585W columns 882–83W, on the Budget Red Book, if he will provide comparable marginal deduction rate figures for individuals. [56466]
§ Dawn PrimaroloThe table below shows estimates of the number of individuals facing marginal deduction rates (MDRs) in excess of 40 per cent.
Cumulative number of individuals facing MDRs in excess of 40 per cent. Figures in thousands Marginal Deduction Rate Before Budget 1998 2002–03 system of tax and benefits After the introduction of NTCs Over 100‥ 10 0 0 Over 90‥ 190 90 90 Over 80‥ 450 340 290 Over 70‥ 1,140 390 390 Over 60‥ 1,180 1,140 1,750 Over 50‥ 1,180 1,825 2,000 Over 40‥ 1,240 1,875 2,275 The figures in the table cover the number of individuals in households in receipt of either income-related benefits or the Working Families Tax Credit (WFTC), or new tax credits from April 2003, where at least one person works 16 hours or more. The effects of income tax and National Insurance Contributions, and the withdrawal of Housing Benefit and Council Tax Benefit have also been included.
The effect of tax and benefit changes introduced since Budget 1998, including WFTC, reduced the number of individuals in households facing MDRs in excess of 70 per cent. by around three-quarters of a million. As WFTC is more generous than the Family Credit that it replaced, more individuals in households benefit from it, hence the larger numbers facing MDRs over 40 and 50 per cent. in 2002–03.
Building on the success of WFTC, the Government will be introducing the Child and Working Tax Credits from April 2003. As the new tax credits will be more generous and inclusive than the current system of support, significantly more households will be eligible, and those currently eligible will receive more, hence a greater number will face MDRs over 40 and 50 per cent. from 2003–04.