asked the Chancellor of the Exchequer what the principal personal income tax allowances would have to be in April 1977 to restore their real value to that of April 1973 and April 1976, respectively, assuming (a) an inflation rate of 17 per cent. in the year to April 1977, and (b) an inflation rate of 20 per cent. in the year to April 1977; and if he will state the cost of the appropriate changes in each case.
, pursuant to his reply [Official Report, 24th March 1977; Vol. 928, c. 646], gave the following answer:The information is as follows:
Assumption ( a) (Inflation rate of 17 per cent. for year to April 1977):
Allowance
| Equivalent for real value at
| |
April 1976
| April 1973
| |
| £ | £ | |
| Single and earning wife's allowance | 860 | 1,160 |
| Married allowance | 1,269 | 1,511 |
| Age allowance: | ||
| Single | 1,182 | 1,364* |
| Married | 1,819 | 1,949* |
* Equivalent for the age exemption levels in 1973–74. | ||
Assuming only these changes, for 1977–78 the estimated full year cost of increasing the allowances to these levels would be about £1,450 million and £3,730 million, respectively.
Assumption ( b) (Inflation rate of 20 per cent. for the year to April 1977):
Allowance
| Equivalent for real value at
| |
April 1976
| April 1973
| |
| £ | £ | |
| Single and earning wife's allowance | 882 | 1,190 |
| Married allowance | 1,302 | 1,550 |
| Age allowance: | ||
| Single | 1,212 | 1,400 |
| Married | 1,866 | 1,999 |
Assuming only these changes, for 1977–78 the estimated full-year cost of increasing the allowances to these levels would be about £1,690 million and £4,010 million, respectively.
asked the Chancellor of the Exchequer what the various bands of income for tax purposes would have to be in April 1977 in order to cover the same real income as in April 1973 and April 1976, respectively, assuming (a) an inflation rate of 17 per cent. in the year to April 1977, and (b) an inflation rate of 20 per cent. in the year to April 1977;
Assumption ( a) (17 per cent. inflation rate for year to April 1977):
Present band (taxable income) | Revalorised from April 1976
| Revalorised from April 1973
|
£
| £
| £
|
| 0–5,000 | 0–5,850 | 0–9,745* |
| 5,000–5,500 | 5,850–6,435 | 9,745–11,695* |
| 5,500–6,500 | 6,435–7,605 | 11,695–13,645 |
| 6,500–7,500 | 7,605–8,775 | 13,645–15,595 |
| 7,500–8,500 | 8,775–9,945 | 15,595–19,495 |
| 8,500–10,000 | 9,945–11,700 | 19,495–23,395 |
| 10,000–12,000 | 11,700–14,040 | 23,395–29,245 |
| 12,000–15,000 | 14,040–17,550 | 29,245–38,990 |
| 15,000–20,000 | 17,550–23,400 | over 38,990 |
| over 20,000 | over 23,400 | |
| Assuming only these changes for 1977–78, the estimated full year cost of raising the higher rate bands to these levels would be about £255 million and £710 million, respectively. | ||
* In 1973–74 the number of bands was one less than 1976–77. | ||
Assumption (b) (20 per cent. Inflation rate for year to April 1977): | ||
Present band
| Revalorised from April 1976
| Revalorised from April 1973
|
£
| £
| £
|
| 0–5,000 | 0–6,000 | 0–10,000* |
| 5,000–5,500 | 6,000–6,600 | 10,000–12,000* |
| 5,500–6,500 | 6,600–7,800 | 12,000–14,000 |
| 6,500–7,500 | 7,800–9,000 | 14,000–16,000 |
| 7,500–8,500 | 9,000–10,200 | 16,000–20,000 |
| 8,500–10,000 | 10,200–12,000 | 20,000–24,000 |
| 10,000–12,000 | 12,000–14,400 | 24,000–30,000 |
| 12,000–15,000 | 14,400–18,000 | 30,000–40,000 |
| 15,000–20,000 | 18,000–24,000 | over 40,000 |
| over 20,000 | over 24,000 | |
| Assuming only these changes for 1977–78, the estimated full year cost of raising the higher rate bands to these levels would be about £290 million and £760 million, respectively. | ||
* In 1973–74 the number of bands was one less than 1976–77. | ||