To ask the Secretary of State for Social Security what is the marginal tax rate incurred by a combination of income tax, national insurance, housing benefit rent withdrawal taper, and the community charge benefit withdrawal taper in 1990; and what is the contribution of each of these to the total.
The marginal tax-benefit withdrawal rate on additional gross income for someone paying standard rate income tax, and national insurance contributions, and receiving both a rent rebate and community charge benefit is 86–8 per cent., from April 1990, where the earner is not contracted out of the state earnings-related pension scheme; and 86–4 per cent. where the earner is contracted out. These overall withdrawal rates break down as follows:
| Percentage of additional gross income | |
| Per cent. | |
| Contracted In | |
| Income tax | 25 |
| National insurance | 9 |
| Reduced entitlement to income related benefits | |
| Rent rebate taper | 42·9 |
| Community charge benefit taper | 9·9 |
| Contracted Out | |
| Income tax | 25 |
| National insurance | 7 |
| Reduced entitlement to income related benefits | |
| Rent rebate taper | 44·2 |
| Community charge benefit taper | 10·2 |
Note: Rent rebate and community charge benefit entitlement is calculated on the basis of net income, after deduction of tax and national insurance contributions. The withdrawal tapers applied to additional net income are 65 per cent. for rent rebate and 15 per cent. for community charge benefit.