asked the Chancellor of the Exchequer what is the aggregate value of the increase in tax reliefs and allowances of all kinds since May 1979 accruing to the richest 1 per cent., 5 per cent., 10 per cent., and 20 per cent., of earners; what is the breakdown by kind of relief or allowance; how many persons are in each of these categories; and what has been the average gain per earner in each of these categories.
|Reductions in income tax liabilities in 1987–88 compared with the indexed 1978–79 tax regime|
|Source of income tax reduction (+)/increase (-)|
|Point of the income distribution1 in 1987–88|
|Top 1 per cent.||Top 5 per cent.||Top 10 per cent.||Top 20 per cent.|
|Number of tax units2 in 1987–88—million||0·2||1·1||2·1||4·2|
|Increases in personal allowances|
|Average3 per tax unit—£ per year||450||360||330||290|
|Abolition of reduced rate band of 25p|
|Amount—£ per million||-40||-200||-400||-800|
|Average3 per tax unit—£ per year||-170||-190||-190||-190|
|Decrease in basic rate of 6p|
|Average3 per tax unit—£ per year||1,230||1,150||1,040||850|
|Increase in basic rate limit of £1,200|
The information is available only for income tax personal allowances, thresholds and tax rates (including the investment income surcharge). Information in the table is given for the top 1 per cent, 5 per cent, 10 per cent. and 20 per cent. of taxpaying single people and married couples analysed by total income liable to tax. The table shows the reduction in income tax liabilities in a full year at 1987–88 income levels of the proposed 1987–88 income tax regime compared with the 1978–79 regime indexed to 1987–88 levels by reference to the statutory formula.
Point of the income distribution1 in 1987–88
Top 1 per cent.
Top 5 per cent.
Top 10 per cent.
Top 20 per cent.
|Average3 per tax unit—£ per year||600||320||190||100|
|Changes in higher rate thresholds up to 60 per cent.|
|Average3 per tax unit—£ per year||2,780||750||380||190|
|Abolition of higher rates above 60 per cent.|
|Average3 per tax unit—£ per year||2,780||550||280||140|
|Abolition of investment surcharge|
|Average3 per tax unit—£ per year||1,390||480||290||160|
|Average3 per tax unit—£ per year||9,040||3,430||2,310||1,540|
Note:—In the table, the effect of each change has been calculated on the assumption that each of the previous changes has already been made.
1 Based on 21·2 million single people and married couples expected to pay tax in 1987–88 and excluding a further 950,000 who would pay tax under the revalorised 1978–79 regime.
2 All information is in terms of tax units i.e. married couples are counted as one and their incomes combined.
3 By reference to the numbers paying tax in 1987–88.