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Personal Taxation

Volume 35: debated on Thursday 27 January 1983

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asked the Chancellor of the Exchequer what has been the percentage increase in taxation of a married man with two children and a wife not working who is earning 50 per cent. of the national average wage between 1978 and the latest available figure.

The increase in income tax and national insurance contributions for the household in question since 1978–79 has been 164 per cent. in nominal terms and 64 per cent. in real terms. Estimates of indirect tax payments are not generally reliable for households at this level of earnings.It should be remembered that income tax paid in 1978–79 is not strictly comparable with income tax paid in later years because of the replacement of child tax allowances by increases in child benefit in April 1979. Moreover, this particular household would have been entitled to family income supplement which has been generously uprated over the period.

asked the Chancellor of the Exchequer whether he will publish in the Official Report a table showing the estimated cost to the Exchequer in 1983–84 of a change in taxation to (a) increase the married and personal allowance to £3,500 and £1,800, respectively, (b) introduce two reduced rate bands of £1,000 each at 10 per cent. and 20 per cent., respectively, (c) reduce the standard rate band to £5,000, and (d) re-arrange the higher rate bands to provide 5 per cent. steps in three bands of £4,000 followed by four bands of £5,000.

[pursuant to his reply, 25 January 1983, c. 393]: The structure of the tax regime after the changes (a) to (d) would be as follows:

Single/wife's earned income allowance: £1,800 Married man's allowance £3,500
Rate, per cent.Band of taxable income, £
100– 1,000
201,001– 2,000
302,001– 7,000
70Over 39,000
The age allowances have been increased by the same percentage as the corresponding ordinary personal allowances to £2,380 single and £4,705 married.In a full year at 1983–84 income levels the direct revenue cost would be of the order of £8½ billion. This is calculated in comparison to a tax structure with allowances and thresholds for 1983–84 indexed by 5·4 per cent. from 1982–83 levels in accordance with the statutory formula; and therefore does not include the cost of indexation. Nor does it include the extra costs to the Inland Revenue in collecting tax under this more complex structure.