Billy Timmins
Question:225 Mr. Timmins asked the Minister for Finance the estimated cost, for one year to the Exchequer, if no income tax was paid on the first £200 weekly earnings. [26803/98]
Written Answers. - Tax Yield
Assuming the enactment of the changes announced in the 1999 budget I am advised by the Revenue Commissioners that if the general and aged income tax exemption limits for single and widowed persons were increased to the level of earnings of £200 per week, and assuming a pro rata increase of double those amounts for married couples, the cost to the Exchequer is estimated at £1,165 million in a full year.
However, raising the exemption limits in this way would significantly increase the numbers in the marginal relief tax system who would then face a marginal tax rate of 40 per cent. Successive Governments have supported the policy of moving persons out of the marginal relief tax system through ensuring that increases in allowances are greater than increases in exemption limits, as endorsed by the Tax and Welfare Integration Group, because this course of action alleviates poverty traps over time. Budget 1999, presented last week, made significant progress in this regard, reducing by two thirds the numbers on marginal relief. If instead, the personal allowances for single and widowed persons were increased to the level of such earnings, with pro rata increase of double that amount for married couples, the cost would be of the order of £1,887 million.