16.
asked the Chancellor of the Exchequer what tax a married man paid when his income was £220 in the financial year 1938–39.
None, if the income was all earned, and £3 6s, 8d., if the income was all from investments.
If that be true when they had an income of £220, does not the Financial Secretary think that the basis for non-payment of tax should be raised in accordance with the standard of living?
If I may say so, that arises more out of the figures involved in the hon. Gentleman's next Question. I could not accept it as a general principle, but I would ask him to put his next Question, when I can answer him
17.
asked the Chancellor of the Exchequer what has been the rise in the cost of living since 1938; what would be the equivalent now of a £220 wage in 1938 if it had only risen to the extent of the cost of living since 1938; and what amount of income tax would be paid by a married man in this case.
The cost of living in May, 1961, was 191 per cent. above the 1938 level. On this basis a wage of £220 in 1938 is equivalent to £641 in 1961. On such earnings a married man without dependants would pay £52 Income Tax in 1961–62.
As I understand the position, the cost of living has gone up by 190 per cent. If so, why is the wage earner today paying taxation at such a high rate? Is it not time that the low basis of taxation for the married man was raised in accordance with the cost of living?
That is a perfectly fair question and I can give the hon. Gentleman two brief answers. Firstly, to exempt the married man from Income Tax, on an earned income of £640, would require a married personal allowance of £500 in place of the present £240. To raise the married personal allowance to £500 and to raise the single allowance correspondingly from £140 to £300 would cost together about £900 million in a single year, and the hon. Gentleman will realise that this is an enormous figure. Secondly, the hon. Gentleman should reflect that social income—the value of the social services enjoyed by the average working man with that salary—is infinitely greater than before the war, apart from other benefits, such as that of full employment.