§ Mr. WillettsTo ask the Chancellor of the Exchequer if he will identify the components of the line labelled Tax Credits in table A10 in the Comprehensive Spending Review document, Command Paper 5570; whether it includes all personal tax credit expenditure that is classified as negative taxation; and if he will make a statement on the reduction in the figure between 2002–03 and 2003–04. [74709]
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§ Dawn PrimaroloThe tax credits line in Table A 10 of the 2002 Spending Review white paper (Command Paper 5570) covers spending on tax credits which is classified as expenditure by the Office for National Statistics (ONS) in the National Accounts but as negative taxation on the basis of OECD revenue statistics rules. Spending on tax credits classified as expenditure under both ONS and OECD guidelines is included in Table A2 of the 2002 Spending Review white paper.
The tax credit figure in Table A10 falls between 2002–03 and 2003–04 because of changes in personal tax credits. Working Families Tax Credit (WFTC) is classified partly as expenditure and partly as negative taxation under OECD guidelines but entirely as expenditure in National Accounts, so the Table A10 tax credit figure for 2002–03 includes the proportion of WFTC scored as negative taxation under OECD rules. However from April 2003 WFTC is being replaced by two new tax credits, the Working Tax Credit and the Child Tax Credit, and the ONS have announced that these new tax credits will be classified in line with OECD classification rules in the National Accounts. Therefore no expenditure under these new tax credits scores in the tax credits line in Table A10 for 2003–04 onwards and the total falls considerably from 2002–03.