asked the Chancellor of the Exchequer what is his estimate of the receipts in 1987–88 from the taxation of unemployment benefit and all supplementary benefits; and what is his estimate of the gross and net cost of a 10 per cent. increase in benefit in each case.
[pursuant to his reply, 27 March 1987, c. 307]: Supplementary benefit is only taxable when paid to the unemployed and the families of strikers. Estimates of the yield from taxing these supplementary benefit payments and unemployment benefit are as follows:
1 Unemployment benefits became taxable on 5 July 1982.
These estimates are based on national amounts of benefits paid to the unemployed and information about the individual circumstances of the unemployed respondents to the 1984 and 1985 family expenditure surveys. They may be revised when later information becomes available.
The costs of increasing the benefits by 10 per cent. in 1987–88 are estimated to be as follows:
Gross cost £ million
Net cost after taxation and savings in other benefits £ million
(a) 10 per cent, increase in unemployment benefit
(b) 10 per cent, increase in all supplementary benefit scale rates
(c) 10 per cent, increase in both (a) and (b)
1 There would be a small increase in tax receipts from supplementary benefits, probably of under £10 million.