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Income Tax

Volume 974: debated on Wednesday 21 November 1979

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asked the Chancellor of the Exchequer (1) consequent upon his statements, Official Report, 12 June, columns 261–2, that as a result of his Budget a married couple with a husband earning £100 a week would be £1·30 a week better off, a couple with a husband earning £60 a week would be 75p better off, and a couple with a husband earning £150 a week would be nearly £2 a week better off, if he will now state the net gain or loss for each of these couples taking into account the factors involved in his original calculation, together with all price rises that have taken place since then, and in addition, the forthcoming increase in mortgage rates, assuming that those couples would each be buying an average two-bedroomed house;(2) consequent upon his statements,

Official Report, 12 June, columns 261–2, that as a result of his Budget a married couple with a husband earning £100 a week would be £1·30 a week better off,

a couple with a husband earning £60 a week would be 75p better off, and a couple with a husband earning £150 a week would be nearly £2 a week better off, if he will now state the net gain or loss for each of these couples taking into account the factors involved in his original calculation, together with all price rises that have taken place since then, and in addition, increase in mortgage rates to 14 per cent., assuming that those couples would each be buying an average two-bedroomed house.

[pursuant to his replies, 16 November 1979, c. 818, and 20 November 1979]: The illustrative figures in my right hon. and learned Friend's Budget Statement showed the effect of the Budget tax measures on the purchasing power of the incomes after tax and NICs of married couples where the husband earns the amount stated. The households remain better off by these amounts than they would otherwise have been even though prices have risen since the Budget. The price rises due to the Budget increases in indirect taxes are already included in the figures in the speech. Other price rises are not a consequence of the Budget, and so it would be inappropriate to offset them against the Budget tax measures. The right hon. Member will also appreciate that it would be inappropriate in any case to take account of price rises since the Budget without also taking account of increases in earnings.As regards the increase in the mortgage rate, no allowance for mortgage interest is assumed in the original figures, so

Full year cost of main Budget changesFull year cost of changes in April Finance ActFull year cost of main Budget changes excluding changes in April Finance Act
Range of total income in 1979–80ValuePer cent.Average per tax unit*ValuePer cent.Average per tax unit*ValuePer cent.Average per tax unit*
£ million££ million££ million£
Below £2,0001002455052450121
£2,000–£4,000630149524024373901158
£4,000–£5,0004601015415014503109104
£5,000–£6,00051011179140134837010131
£6,000–£8,00086019219220215764018162
£8,000–£10,00049011285110106338010222
£10,000–£15,000570124928087249014420
£15,000–£20,0003006952303792708873
Over £20,000690153,850202100670193,750
4,6101002101,040100473,570100163
* Tax units count married couples as one.

again it would be inappropriate to allow for the increase in the mortgage rate. In any case, people buying houses, even identical houses, will be very differently affected according to how many years into their mortgage they are, and whether they choose to pay more each month or extend the term of the mortgage. For these reasons, it is not very meaningful to take account of mortgage interest in this type of sum.