Dáil Éireann debate -
Wednesday, 5 Apr 1995

Vol. 451 No. 6

Written Answers. - Impact of Proposed Changes in Finance Bill, 1995.

Thomas P. Broughan

Question:

74 Mr. Broughan asked the Minister for Finance the effect, if any, the proposed changes in the Finance Bill, 1995, will have on tax relief on mortgage interest and medical expenses; and the proposals, if any, he has to make changes in the tax reform programme in this area as announced in previous budgets. [7112/95]

Minister for Finance (Mr. Quinn)

The Finance Act, 1994, provided for the introduction, on a phased basis, the standard rating of mortgage interest and voluntary health insurance tax relief. The standard rating of mortgage interest relief is being phased in over a four year period and is now in its second year. The phasing in period for voluntary health insurance relief is two years beginning in the 1995-96 tax year.

As the Deputy is aware, the Government's Programme of Renewal contains the commitment that the standardisation of mortgage interest relief and voluntary health premium relief will continue and that any savings which accrue will be utilised to expand the standard rate tax band. In line with this commitment I provided in the 1995 budget for a significant widening of the standard tax band. The standard band is being widened by £700 in the case of a single person and by £1,400 in the case of a married couple. This represents an 8.5 per cent increase in the band and is far in excess of the expected rate of inflation. The cost of this measure is more than three times the expected savings arising in the 1995-96 income tax year from the phased standardisation of the two reliefs. This measure will be enacted in the Finance Bill 1995.

The Government has no plans for any changes in this area of tax reform.