§ Mr. Ralph Howell
asked the Chancellor of the Exchequer what would be the cost in terms of lost revenue if tax thresholds, after taking into account the value of tax-free child benefits where appropriate, were restored to their 1949–50 ratio with average male manual earnings; and what would be the value of income tax thresholds for each, of a single person, a married couple, and married couples with each of one, two, three and four dependent children.
§ Mr. Robert Sheldon
In order to include the effect of the Budget proposals, a notional estimation of earnings in 1978–79 has been made as follows: on the basis that a man on average earnings in October 1977 had not yet received an increase in the current pay round, it has been assumed that his earnings will rise by a further 10 per cent. in October 1978 in accordance with the Government's guideline.
On this basis the income tax thresholds required in 1978–79 to maintain the ratio between tax thresholds in 1949–50 and average earnings of full-time male manual workers in October 1949 would be as follows:
TAX THRESHOLD REQUIRED TO RESTORE 1949–50 RATIO BETWEEN THRESHOLD AND AVERAGE MANUAL EARNINGS £ Single person 1,662 Married couple without children 2,671 Married couple with 1 child 3,397 Married couple with 2 children 4,123 Married couple with 3 children 4,849 Married couple with 4 children 5,575
It is estimated that this would cost approximately £5,600 million in 1978–79, assuming the implementation of the Budget proposals.
The tax thresholds for 1949–50 used in the calculations take account of earned income relief and the relief given for employees' national insurance contributions.121W
The calculations allow for the change from taxable family allowance to tax-free child benefit. Child benefit in 1978–79 is the average over the year, including the increase announced in the Budget Statement and due to take effect from November 1978.