Vol. 443 No. 6
11 Mr. Sargent asked the Minister for Finance the plans, if any, he has to ensure that personal tax free allowances are set at high enough levels to ensure that all State employment scheme income will not come into the tax net.
The Government's taxation policy is geared towards focusing the resources available for income tax relief on improving the position of lower and middle incomes, especially those with families, and within that context to raise the income threshold at which the higher rate comes into play. Significant steps were made in this year's budget towards that end. The personal allowances were increased by £350 for a married couple and £175 for widowed and single persons. The standard rate tax band was extended by £1,050 for married couples and by £525 for single and widowed persons. In addition, the marginal relief rate of tax was reduced from 48 to 40 per cent, and the special child addition to the exemption limits was increased by £100.
I consider that an appropriate balance has been struck, within the resources available, between the various elements of the income tax system. As the Deputy will be aware, increases in personal allowances are very costly to provide since they benefit all taxpayers, and are also of greater benefit to those paying tax at the higher rate. Consequently, I could not agree to increase the personal allowances to a level that would ensure that all State employment scheme income will not come within the tax net. However, the focused measures I introduced in this year's budget regarding the child addition and the marginal relief rate of tax will be of considerable benefit to the low paid, including people on employment schemes.
