Dáil Éireann debate -
Thursday, 19 Feb 1998

Vol. 487 No. 5

Written Answers - Tax Reliefs.

Noel Ahern

Question:

96 Mr. N. Ahern. asked the Minister for Finance if, further to Parliamentary Question No. 74 of 9 April 1997, he will clarify the effect a pay increase will have on a person (details supplied); the amount of increase he would need to get in order to improve his overall financial situation; the tax free expenses, if any, for example lunch vouchers, that he could be given by his employer; and if he will make a statement on the matter. [4488/98]

Minister for Finance (Mr. McCreevy)

This question is a follow up to Parliamentary Question No. 74 of 9 April 1997. The overall financial situation of the person now with two children who is currently in receipt of £167.50 and who receives two increases in gross pay of £20 a week respectively is outlined in the table below. The first one relates to the current position and the second reflects the position when all the budget provisions have taken effect.

Pre-Budget 1998.

	£	£	£
Gross Per Week	167.50	187.50	207.50
Tax	–	6.54	14.54
PRSI	3.94	4.84	5.74
Levies	–	–	4.67
Net Pay	163.56	176.12	182.55
Plus
FIS	37.00	26.00	17.00
Fuel All	3.00	3.00	3.00
Rent subs Shared Ownership	21.15	13.46	8.65
Medical Card	7.38	–	–
Total	232.09	218.58	211.20

Post Budget 1998 (including charges to Income Tax, PRSI, Levies and FIS).

	£	£	£
Gross Per Week	167.50	187.50	207.50
Tax	–	5.00	13.50
PRSI	3.04	3.94	4.84
Levies	–	–	4.67
Net Pay	164.46	178.56	184.99
Plus
FIS	41.00	33.00	29.00
Fuel All	3.00	3.00	3.00
Rent subs Shared Ownership	21.15	13.46	8.65
Medical Card	7.38	–	–
Total	236.99	228.02	225.64

It is vital in interpreting these tables that the mechanism for reviewing both the family income supplement and the rent subsidy under shared ownership scheme is understood. FIS is renewable on a 12 monthly basis: once awarded it will not be reduced or withdrawn until the end of the period (provided they continue to meet the basic qualifying conditions), regardless of any upward movement in pay during that period. The rent subsidy under the shared ownership scheme operates in much the same way: all cases are reviewed annually (in July) and the rate for the coming year is based on the income of the recipient in the previous tax year i.e. the applicants P60. It is also important to note that income from FIS is not reckonable when calculating entitlement to the rent subsidy, this practice works in the favour of the applicant. Therefore, gross income from employment can increase significantly during the course of a year while adjustments to both FIS and the rent subsidy may not occur until some time later.

In relation to the fuel sudsidy for designated areas of Dublin and Cork, it should be noted that this is paid in addition to the family income supplement while the person is eligible for this.

Regarding the issue of tax free expenses, the only expenses paid by an employer to an employee which can be regarded as tax-free are those which are incurred wholly, exclusively and necessarily in the performance of the duties of the employment. Details of the subsistence expenses which employers may pay free to tax to employees are set out in the Revenue Commissioners leaflet IT54, which I will arrange to have forwarded to the Deputy. The Revenue Commissioners agree flat rate tax-free expenses in respect of particular employments with the trade unions representing employees in those employments.

The medical card is shown here in the tables as being withdrawn as the income increases by the first £20 per week. However, if the person had previously been long-term unemployed, the medical card can be retained for three years, irrespective of earnings. Medical cards are issued to persons who, in the opinion of the chief executive officer of the appropriate health board, are unable without undue hardship to provide general practitioner medical and surgical services for themselves and their dependants. Income guidelines are drawn up by the chief executive officers to assist in the determination of a person's eligibility and these are revised annually in line with the consumer price index. However, these guidelines are not statutorily binding and even though a person's income exceeds the guidelines, that person may still be awarded a medical card if the chief executive officer considers that the persons's medical needs or other circumstances would justify this.

It is open to any person without a medical card who is experiencing difficulty in paying for general practitioner services to apply to the chief executive officer of the appropriate health board for a medical card on hardship grounds. I understand that the health boards take a sympathetic view of such applications when the circumstances warrant it.

The chief executive officers also introduced a number of measures to assist workers in low and moderately paid employument. Assessment is now based on gross income less PRSI deductions. Weekly payments under the community employment programme, back to work allowance, supplementary welfare allowance and family income support are excluded in assessing an applicant's income. The income guidelines are adjusted to take account of dependant children, rent-mortgage payments and expenses incurred in travelling to and from work over a certain limit.

These tables do not include income from child benefit which in this specific case would mean an increase of £30 per month for the additional child.