Dáil Éireann debate -
Wednesday, 6 May 1998

Vol. 490 No. 5

Written Answers. - Tax Liability.

John V. Farrelly

Question:

163 Mr. Farrelly asked the Minister for Finance the reason a person on a FÁS scheme is being charged tax at the Z rate of 40 per cent for work he does while not on the scheme; his views on whether this is discouraging for someone trying to re-enter the workforce; if he would be entitled to a rebate in view of the fact he feels he should be on the 24 per cent rate; and if he will make a statement on the matter. [10420/98]

Minister for Finance (Mr. McCreevy)

I am informed by the Revenue Commissioners that the taxpayer is being taxed under the marginal relief system which means that he has a tax exemption of £9,750 per year — £8,200 for a married couple and £1,550 for his three children — and any income in excess of this amount is taxable at the rate of 40 per cent.

In general, taxpayers who qualify for marginal relief pay less tax under that system than they would if they were taxed under the normal system of tax free allowances. However, as the taxpayer in question has not provided his inspector of taxes with details of his income from his two employments, the inspector is not in a position to advise him as to whether it would be more beneficial for him to be taxed under marginal relief or the normal system of tax free allowances.

Once the taxpayer forwards to his inspector of taxes details of his gross weekly income from each employment, the inspector will be in a position to issue appropriate certificates of tax free allowances to him. If the taxpayer sends his P60s for the year ended 5 April, 1998 to the inspector, a review of his tax liability will be carried out to establish whether or not any refund is due.

The Government recognises the income tax burden on employment and commenced, in the 1998 budget, on a programme aimed at significantly reducing this burden.