Vol. 471 No. 1
90 Mr. Hughes asked the Minister for Finance his views on the fact that the current taxation system ensures that a low earner must pay £73 for every £100 invested as against £44.25 for a high earner, thus inhibiting low earners from making adequate provisions. [20417/96]
I understand that this question relates to tax relief on pension contributions. It is not possible to account exactly for the difference between the two examples the Deputy has in mind without fuller details of the actual earnings of the two individuals. However, there are a number of factors which can contribute to the type of difference shown. The first and most significant of these is the fact that the tax relief on pension contributions has always been at the taxpayer's marginal rate of tax. This means that the higher rate taxpayer gets tax relief of £48 per £100 while the standard rate taxpayer gets tax relief of £27 per £100.
A further complication arises because of the interaction of PRSI and levies. If the Deputy has questions on how these interact at different incomes, my Department would be happy to reply to any queries on this issue. I do not accept that tax relief at the marginal rate inhibits low earners from making adequate pension provision.
