§ Mr. Austin Mitchell
asked the Chancellor of the Exchequer what is his forecast of the yield in 1984–85 on an index-linked basis of (a) abolishing the wife's earned income allowance and (b) replacing it with an allowance based on, respectively (i) £1,200, (ii) £1,200 plus 10 per cent. of wife's earnings, (iii) £1,200 or 25 per cent. of wife's earnings up a to maximum allowance of £2,000, whichever was the greater; and if he will give an estimate of the numbers liable for tax in each case, together with the total of income-earning wives.
§ Mr. Moore
The latest estimates are as follows. The yield from abolition of the wife's earned income allowance is based on the assumption that the election for separate taxation of wife's earnings would no longer be available, as otherwise nearly all two earner couples would be able to benefit from the election, and the yield would be substantially reduced. The figures do not take into account married women with earnings below the PAYE limit who are not known to the Inland Revenue.
Revenue yield in a full year at 1984–85 income levels compared with statutorily indexed allowances and thresholds Wife's earned income allowance Revenue yield Number of earning wives liable to tax Total tax-payers £ million thousands thousands (a) Abolished 3,300 6,300 26,800 (b) (i) £1,200 950 5,100 25,600 (ii) £1,200 + 10 percent. of wife's earnings 250 4,900 25,400
Wife's earned income allowance Revenue yield Number of earning wives liable to tax Total tax-payers £ million thousands thousands (iii) Greater of £1,200 or 25 per cent. of wife's earnings up to a maximum of £2,000 860 5,100 25,600
The estimates do not take account of any changes in behaviour that might occur if the proposals were introduced.
If the above changes in the wife's earned income allowance were made relative to the tax regime for 1984–85 proposed in the Budget, the revenue yields would be increased by about £140 million and the total taxpayer numbers reduced by about 275,000 in each case.
§ Mr. Squire
asked the Chancellor of the Exchequer what is the cost to the Exchequer, at the 1984–85 tax rates announced in the Budget, of the married man's tax allowance in excess of the corresponding single person's allowance; how much of this cost is attributable to taxpayers aged below 65 years; and what is the weekly value of this extra relief to a married man paying income tax at the standard rate.
§ Mr. Moore
The cost of the excess of the married man's tax allowance and the married age allowance over the corresponding single person's allowance is estimated to be £4.1 billion in 1984–85, of which about 3.6 billion is in respect of taxpayers under 65. The additional personal allowance and widow's bereavement allowance together cost about a further £200 million. The married man's allowance exceeds the single person's allowance by £1,150 which has a weekly value of £6.63 to a basic rate taxpayer.