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22 Feb 2007 : Column 830W—continued
Shari’a-compliant Financial Products
Michael Gove: To ask the Chancellor of the Exchequer (1) if he will list the organisations (a) ministers and (b) officials in his Department have met in their development of policy and regulations governing Shari’a-compliant financial products; [103183]
(2) what discussions his Department has had with the Muslim Council of Britain on the (a) design and (b) regulation of Shari’a-compliant financial products. [103185]
Ed Balls: The Government have taken a range of steps to modernise the taxation and regulatory framework for Shari’a-compliant financial products. This includes changes to ensure the consistent taxation treatment of Shari’a-compliant home financing arrangements in 2003, retail finance in 2006 and business finance in 2007.
In addition, the Regulation of Financial Services (Land Transactions) Act 2005 brings Ijara home financing arrangements within the scope of Financial Services Authority regulation, ensuring a level playing regulatory field within the Shari’a-compliant home financing market. The changes will take effect from 6 April 2007.
HM Treasury Ministers and officials meet and receive representations from a wide range of organisations and individuals in the public and private sectors as part of the process of policy development and delivery. As was the case with previous administrations, it is not the Government’s practice to provide details of all such meetings and representations.
Special Advisers
Mr. Hoban: To ask the Chancellor of the Exchequer pursuant to the answer of 4 December 2006, Official Report, column 209W, on special advisers, what the titles were of each of the DVDs; and what the name was of the donor of each gift. [120333]
John Healey: The DVDs of films and television series donated to charity were received from a film and television company.
Mr. Francois: To ask the Chancellor of the Exchequer if he will place in the Library a copy of the letter of appointment of his unpaid special adviser, Sue Nye. [120699]
John Healey: Sue Nye was reappointed on 10 May 2005 following the general election and is an unpaid adviser as set out in the Prime Minister’s written statement of 24 July 2006, Official Report, column 86-90WS.
Stairway Consultancy
Mr. Francois: To ask the Chancellor of the Exchequer for what services the Stairway Consultancy was paid by his Department in 2005-06; and what the total value has been of payments in 2006-07. [115927]
John Healey: The Treasury paid the Stairway Consultancy £1,818 for the provision of training courses in 2005-06. There have been no services provided or payments in 2006-07.
Tax Statistics
Mr. Francois: To ask the Chancellor of the Exchequer what estimate he has made of tax paid by each income decile group in each year since 1997-98. [115525]
John Healey: The information requested falls within the responsibility of the National Statistician, who has been asked to reply.
Letter from Colin Mowl, dated 22 February 2007:
The National Statistician has been asked to reply to your recent question asking what estimate has been made of the total taxation paid by each income decile group in each year since 1997-98. I am replying in her absence. (115525).
Estimates of tax paid by each household income decile group 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 http://www.statistics.gov.uk/taxesbenefits. The analysis is based on data from the Expenditure and Food Survey (EFS), which is a sample survey covering approximately 7,000 households in the UK.
The table below shows the average tax paid by households in each income decile group, both in per year, and as a percentage of gross household income. They have been calculated from the numbers appearing each year in Table 14 of the taxes and benefits analysis. Data has been provided back to 1997/98.
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 effect 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 total tax as a percentage of gross income 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 total tax as a percentage of gross income 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 gross household income and total tax payment by income decile, United Kingdom, 1997-98 to 200405 | |||||||||||
| Decile groups ranked by households equivalised disposable income | |||||||||||
| Gross household income | |||||||||||
| Bottom | 2nd | 3rd | 4th | 5th | 6th | 7th | 8th | 9th | Top | All households (£ per year) | |
| Total tax( 3) | |||||||||||
| Bottom | 2nd | 3rd | 4th | 5th | 6th | 7th | 8th | 9th | Top | All households (£ per year) | |
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