Dáil Éireann debate -
Wednesday, 17 Apr 1996

Vol. 464 No. 1

Written Answers. - Pensioners' Taxation.

Noel Ahern

Question:

47 Mr. N. Ahern asked the Minister for Finance the number of pensioners over 65 years in the tax net; whether this differs from the numbers claiming the age allowance in their tax free allowance; the number of pensioners over the tax exemption limit paying tax at the marginal 40 per cent rate; and the cost of increasing the tax free allowance of pensioners to the tax exemption level. [7801/96]

Noel Ahern

Question:

48 Mr. N. Ahern asked the Minister for Finance the number of people currently claiming an age allowance in their tax allowances; the annual cost involved; and whether data is available on those persons claiming, divided into age categories, such as 65 - 74 years, 75 - 85 years and 85 upwards or any other groupings. [7802/96]

Minister for Finance (Mr. Quinn)

I propose to take Questions Nos. 47 and 48 together.

I am advised by the Revenue Commissioners that income tax statistics do not generally distinguish between individuals who have income from pensions and from other sources. The only relevant information available is in respect of recipients of social welfare pensions, of whom some 32,000 individuals aged 65 years or over are estimated to have taxable incomes.

The total number of individuals aged 65 years or over, including individuals with income from pensions, who are estimated to be liable to income tax in the income tax year 1996-97 is of the order of 93,000. Some 31,500 of this number will qualify for marginal relief at the marginal rate of 40 per cent on total income in excess of the aged exemption limits. The balance of 61,500 will be liable to tax at the standard or higher rates and will qualify for the age allowance at an estimated cost to the Exchequer of £6 million in a full year. Statistics are not available which would enable the number of claimants for the age allowance to be classified into age groupings.

The extent to which taxation actually arises in a given case depends, of course, on the amount of other income that the social welfare recipient, or the recipient's spouse, has in the particular tax year. If there is no other income in addition to the social welfare payment the existing exemption limits and allowances can be expected to ensure that there is no tax to be paid on the social welfare income itself.

It is impossible to provide a precise costing for increasing the combined tax free allowances of pensioners to the level of their tax exemption limits as both the levels of tax free allowances and exemption limits can vary considerably depending on individual circumstances. However, as an illustration, on the basis of increasing the combined tax free allowances of a married couple, aged 65 or over, with no dependent children and in receipt of only one PAYE allowance, to their relevant tax exemption limit, through increasing the age allowance, and applyingpro-rata increases to the age allowance of other aged taxpayers, the cost is estimated to be of the order of £50 million in a full year.