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|Average National insurance contributions by each household income decile, United Kingdom, 1997-98 to 2004-05|
|£ per year|
|Decile groups of all households ranked by equivalised disposable income|
The effects of taxes and benefits on household income, ONS
Mr. Byers: To ask the Chancellor of the Exchequer if he will estimate the savings to the tax credits and welfare benefits system of an increase in the national minimum wage to (a) £6, (b) £6.25 and (c) £6.50 an hour. 
These figures do not take any account of likely behavioural change caused by a rise, such as changed levels of employment or hours worked. They also do not include the effect of the £25,000 disregard in tax credits, which allows income to rise between one year and the next by up to £25,000 before tax credits begin to be withdrawn. This means that the savings from tax credits would in practice be significantly smaller, at least in the first year.
Mr. Francois: To ask the Chancellor of the Exchequer pursuant to the answer of 18 January 2007, Official Report, column 1341W, on ministerial visits, what the total cost was of the Economic Secretary to the Treasurys trip to Israel and the Palestinian Territories on 19th to 20th December 2006. 
Ed Balls: I visited Israel and the Occupied Territories in December as part of the work Jon Cunliffe and I are leading on opportunities to support economic development to accompany and enhance the Middle East peace process.
All ministerial visits are conducted in accordance with the Ministerial Code and Travel by Ministers. As with all inquiries relating to the cost of ministerial travel, I refer the hon. Gentleman to the information the Government have published on an annual basis since 1999, listing overseas travel by Cabinet Ministers costing in excess of £500 and the total cost of all ministerial travel. Information for 2006-07 will be published as soon as possible after the end of the financial year.
To ask the Chancellor of the Exchequer pursuant to the answer to the hon. Member for South Holland and The Deepings (Mr. Hayes) of 30 November 2006, Official Report, column 838W, on
party political funding, whether funds donated from councillors allowances direct from the council payroll to (a) a political party and (b) a political group of the council are (i) tax deductible and (ii) liable for income tax and National Insurance. 
Dawn Primarolo: Party political donations paid either to a political party or political group are not tax deductible and the councillors allowance would be liable for income tax and national insurance in the normal way.
Mr. Frank Field: To ask the Chancellor of the Exchequer what the net income would be of (a) a single parent and (b) a married couple with one earner on one half to two thirds of average earnings, with the same rent payment, assuming that each is entitled to the (i) working tax credit, (ii) the child tax credit, (iii) child benefit, (iv) housing benefit and (v) council tax benefit. 
Martin Horwood: To ask the Chancellor of the Exchequer how many complaints have been received from county councils concerning losses in theoretical grants due to the 2006-07 changes to the Prudential Code; and if he will make a statement. 
Ed Balls: The latest data published by the Council of Mortgage Lenders show that the number of repossessions in 2006 was less than one half of the number of repossessions in 1997, and one fifth of the number in 1991 relative to the total size of the mortgage market.
On 15 January 2007, the Government launched a long-term approach to financial capability, which will help to improve consumers understanding of financial products and includes a feasibility study on promoting access to generic preventative financial advice.
As National Statistician, I have been asked to reply to your recent question asking what the average tax burden was on each income decile in each year since 1979 (105733).
Estimates of the average tax burden for household income decile groups are based on the ONS analysis The effects of taxes and benefits on household income. The latest analysis for 2004/05 was published on the National Statistics website on 12th May 2006 at:
The analysis is based on data from the Expenditure and Food Survey, which is a sample survey covering approximately 7,000 households in the UK.
The table below shows the average tax burden for each household income decile group. They have been calculated from the numbers appearing in Table 14 of this year's article, and previous versions of the same table. Data has been provided back to 1988, the earliest year for which it is available on a reasonably consistent basis.
The tax burden is the proportion of gross income taken in both direct and indirect taxes. Gross income includes income from wages, occupational pensions, self-employment income, investment income, and income from state benefits, all before tax. Direct taxes include income tax, national insurance contributions and council tax. The indirect taxes include VAT, duties, and a number of smaller items such as television licences. Indirect taxes also include intermediate taxes these are indirect taxes paid by companies which are deemed to be passed onto households through the prices they pay for goods and services. A more detailed breakdown showing each of the different taxes appears in the annual article.
There was a change in the way the figures were compiled in 2002/03 which will affect the estimated tax burden. Up until 2001/02, charges for water, environmental and sewage services were treated as local taxes, whereas from 2002/03 onwards they were excluded. The local tax category now just includes council tax and Northern Ireland rates, and in the annual article it is labelled as such.
Based on figures for 2001/02, the effect of this definitional change is to reduce average household payment of local taxes/council tax from 3.0% of gross income to 2.2%. This obviously reduces the overall estimate of the average tax burden by 0.8%.
There was also a change to the way that tax credits were treated from 2003/04 onwards. Up until 2002/03 tax credits were treated as cash benefits. From 2003/04, they are classified as negative income tax, but only to the extent that income tax less tax credits, remains greater than or equal to zero for each family. So for households paying relatively little or no income tax, tax credit payments were still regarded either partially or wholly, as cash benefits. Based on figures for 2003/04, the effect of this change is to reduce the estimate of the average tax burden for all households by 0.3%.
The tax burden, when expressed as a proportion of gross income appears particularly high for the bottom income decile, although this result needs to be interpreted carefully. The apparently high tax burden is due to payment of indirect rather than direct taxes Estimates of indirect taxes are imputed based on household expenditure. It should be remembered that measured expenditure will not necessarily balance with measured income for the year. This is especially true for the bottom income decile where average measured income is significantly lower than
average expenditure. For these households, when their payment of indirect taxes (which reflect expenditure) are expressed as a proportion of gross income, the result is a high calculated tax burden.
There are a number of plausible reasons why for some households, expenditure might exceed income. Households with low incomes may draw on their savings or borrow in order to finance their expenditure. In addition, the lower decile in
particular includes some groups, who have, or report, very little income (for example, self-employed people starting a business or someone who has just been made redundant). In these cases, expenditure is not being met from current income. Some types of receipts are not included as income in the EFS e.g. inheritance and severance payments. In some cases, the information given on expenditure is not consistent with that on income received because of timing differences.
|Average tax burden as a percentage of gross income for each income decile, United Kingdom 1988 to 2004-05|
|Decile groups ranked by households equivalised disposable income|
|Bottom||2( nd)||3( rd)||4( th)||5( th)||6( th)||7( th)||8( th)||9( th)||Top||All households|
|(1) From 2002-03 onwards charges for water, environmental and sewage services were no longer treated as a tax.|
(2) From 2003-04 onwards tax credits were treated as a negative tax.
The effects of taxes and benefits on household income, ONS
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