asked the Minister for Finance the current estimated number of persons effectively liable to income tax in the latest available year; and the number liable under PAYE.
Ceisteanna—Questions. Oral Answers. - Income Tax Liability.
25.
It is estimated that the number of individuals effectively liable to income tax for 1970-71, the latest year for which statistics are available, is 630,000 of whom about 500,000 are estimated to have paid income tax under PAYE.
26.
asked the Minister for Finance if social welfare pensions and benefits are subject to income tax; and, if so, if he will have this position remedied.
The various pensions payable under the Social Welfare Acts are treated as income for tax purposes in common with pensions generally and I do not accept that any injustice exists in this treatment.
Income tax is payable only if a person's total income is in excess of the allowances and reliefs to which he is entitled. No liability to income tax can normally arise in the case of a person in receipt of a non-contributory social welfare pension, the award of which is subject to a means test. In the case of a contributory pension, liability to tax would not arise unless the recipient had other taxable income. Social welfare benefits, other than pensions, are not treated as income for tax purposes.
Would the Minister not agree that since the passing of the Social Welfare Act in October, 1970, some people who retired over the age of 65 changed from unemployment benefit to retirement pensions? They were not subject to tax while getting unemployment benefit but are now subject to tax because they are getting a retirement pension, just because there was a change in name.
I am subject to correction on this, but I think the case the Deputy refers to was one of those we dealt with recently in which the person concerned has an option.
Does the Minister agree that what I have said is the simple fact?
It could be, but if the person has an option I think another——
They did not know they had the option until now.
Income tax is related to a person's income, and if one were to accept the proposition that a social welfare pension, as such, should not be subject to income tax, one would also have to accept the proposition that any other kind of pension would not be subject to income tax. If the Deputy would pursue that line of reasoning he would recognise that one could not really accept it.
Could the Minister say if the pensions referred to by Deputy Barry were laid aside out of social welfare payments of the people concerned and, in fact, were taxed with income when being paid? Would the Minister not agree that it was unfair to tax them again?
I am sorry; I do not follow the Deputy.
The Minister is aware that a social welfare stamp is only reckonable as to approximately 50 per cent for tax. That 50 per cent represents the portion which pays for his pension. The Minister is aware that having done that it is now taxed again by his Department. Does he not agree that the people who are now drawing retirement pensions were not informed that they would be taxed if they switched and that they should now be notified that they can increase their income by switching back again to the benefit they were on?
Perhaps the Deputy is mixing up two different things, in the sense that where he is saying that they were taxed, he is referring to the fact that roughly 50 per cent was allowable as a deduction against tax because it was in respect of pension contribution.
No, it was not.
We cannot discuss this question all the evening.
At the time the income concerned was being earned an allowance was made in respect of certain items. The tax levied now is in relation to the income now. They are two separate things.
But you tax it twice.
No. no.
Could we make some progress?
This is a very important question.
It could be discussed freely on the Estimate.
Is the Minister aware that civil servants' widows who had non-contributory pensions before this ex gratia pension was introduced opted over to the ex gratia pension and found when they did so they lost considerably and are not allowed to opt back and that this is a source of grievance?
I think that is a separate matter.
But it is tied up with the same thing.
It is scraping the bottom of the barrel.
27.
asked the Minister for Finance what tax concessions are provided on house mortgage payments.
Interest payable on loans for house-purchase secured by a mortgage is allowed as a deduction in computing liability to income tax and sur-tax.
Would the same conditions apply to a caravan in situ, a caravan that is being used as a house?
I could not answer that offhand.
Say that the person cannot get a house and is using the caravan to house himself and his family? Would he not be allowed the interest on that?
I think the principle would be that provided the caravan was a permanent fixture and was subject to a mortgage as in the case of a house interest would be allowed but I cannot give a definitive answer to this question without notice.
Could the Minister send me the information afterwards?
Yes, I can let the Deputy know.