Dáil Éireann debate -
Tuesday, 24 Nov 1998

Vol. 497 No. 2

Written Answers - Tax Allowances.

Richard Bruton

Question:

222 Mr. R. Bruton asked the Minister for Finance if the case for granting single parent allowance or its equivalent to an unmarried couple living together where only one is working has been assessed as a policy option; and if he will make a statement on the matter. [24863/98]

Minister for Finance (Mr. McCreevy)

This question essentially refers to the position of cohabiting couples with children.

There are no special income tax allowances for unmarried couples living together. In this context I would point out that tax law follows the general law relating to marriage. The basis of the treatment of married persons for tax purposes derives from the Supreme Court decision in Murphyv. the Attorney General (1980) which held that it was contrary to the Constitution for a married couple to pay more tax than they would if they were two single people living together. The tax treatment of unmarried couples who cohabit was unaffected by the Murphy judgment. Each partner is taxed as a single person and each is entitled to the tax-free allowances and rate bands appropriate to single persons.

I am conscious of the concerns of cohabiting couples. An inter-departmental working group has been set up under the Department of Social, Community and Family Affairs to examine the treatment of married, cohabiting and one-parent households under the tax and social welfare codes. Consideration of tax measures in this area will await the group's report which is expected to be completed early next year.

Richard Bruton

Question:

223 Mr. R. Bruton asked the Minister for Finance the cost of reducing the 24 per cent and 46 per cent tax rates by one point, increasing single personal allowance by £500 and £1,000; increasing each of the single exemption limits by £500 and £1,000 and increasing the single 24 per cent tax band by £500, £1,000, £2,000 in the 1999-2000 tax year. [24864/98]

Minister for Finance (Mr. McCreevy)

I am informed by the Revenue Commissioners that the full year costs to the Exchequer, estimated by reference to the income tax year 1999-2000, of the changes mentioned by the Deputy are estimated as follows:

Changes	Full year cost
	£ million
Reduce standard tax rate from 24% to 23%	116.2
Reduce top tax rate from 46% to 45%	63.8
Single personal allowance:
increase by £500	271.8
increase by £1,000	541.4
Single exemption limits — increase by £500:
general	25.6
aged 65-75	5.2
aged 75 and over	2.4
—increase by £1,000:
general	62.9
aged 65-75	11.5
aged 75 and over	4.7
Single 24% tax band:
increase by £500	77.2
increase by £1,000	149.6
increase by £2,000	281.1

It is assumed that the increases in the single person's allowance, exemption limits, and standard rate band must be combined with double those increases for married persons assessed to tax on the aggregate basis.

The figures for the single personal allowance include the cost of the normal consequential increases in the widowed person's allowance, the widowed parent allowance and the single parent allowance.

These figures are provisional and are likely to be revised. They show the cost of making changes as if each were made separately and without reference to other changes in the tax code.

A detailed ready reckoner showing the cost of tax changes under various tax heads has been placed by me in the Oireachtas Library.