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Tax Credit

Volume 486: debated on Thursday 22 January 2009

To ask the Chancellor of the Exchequer if he will estimate the effect on public expenditure of removing the second income threshold on tax credits and applying a consistent taper rate of (a) 46 per cent., (b) 45 per cent., (c) 44 per cent. and (d) 43 per cent. in each of the next five years; if he will estimate the number of people who would no longer be eligible for tax credits in each case; and if he will make a statement. (249567)

[holding answer 20 January 2009]:The estimated saving, in 2009-10 to 2013-14, of removing the second income threshold and applying a consistent taper rate at each of the rates requested, is provided in the following table. No account has been taken of possible behavioural effects.

Effect on expenditure

£ million

Taper rate

2009-10

2010-11

2011-12

2012-13

2013-14

46 per cent.

-2,590

-2,670

-2,670

-2,750

-2,810

45 per cent.

-2,380

-2,460

-2,460

-2,520

-2,570

44 per cent.

-2,160

-2,230

-2,230

-2,280

-2,310

43 per cent.

-1,930

-2,000

-1,990

-2,020

-2,040

These changes would not affect the number of claimants eligible for tax credits. However, they would increase the number of claimants with awards reduced to zero.