Vol. 491 No. 6
154 Mr. O'Shea asked the Minister for Finance his views on whether it is appropriate that single people on the community employment scheme who receive £85 per week are taxed on this amount; and if he will make a statement on the matter. [12677/98]
It is a general principle of taxation that, as far as possible, income from all sources should be subject to taxation. In line with this principle income earned on community employment schemes is liable to income tax in the normal way. Treating such income as income for tax purposes is essentially a matter of equity.
The personal tax burden is of particular concern to the Government. Consequently in the 1998 budget relief was focused towards lowering the tax burden. This was achieved through significant improvements in the income tax and PRSI areas. Measures announced in the budget include increasing the personal allowances by £250 for single persons to £3,150 and by £500 for married persons to £6,300 and widening the standard band by £100 single — £200 married. In addition, the standard and top rates of income tax were reduced by 2 per cent.
The general income exemption limits were increased by £100 single — £200 married to £4,100 single — £8,200 married. Furthermore, the income exemption limits for the elderly were increased significantly from the new tax year by £400 single — £800 married for those aged 65 to 74 to £5,000 single — £10,000 married and by £300 single — £600 married for those aged 75 and over to £5,500 single — £11,000 married. Further significant gains have accrued to those in employment, especially the low paid, from the increase in the PRSI-free allowance by £20 to £100 per week for full rate PRSI contributors. These measures will not only improve take-home pay for those in employment but also contribute to the maintenance and creation of employment.
The tax improvements introduced in the 1998 budget have, as in the case of other taxpayers, reduced the tax liability of people in community employment schemes who are liable to tax. In the case of a person earning £85 per week, the combined income tax and PRSI liability in the last tax year was an average of £3.83 per week. Following the changes in this year's budget the average weekly income tax liability for a single person on these earnings is £2.17, there is now no PRSI liability on weekly earnings below £100, a reduction in the combined income tax and PRSI liability of £1.66 per week.
