Written Answers. - Employment Support Services.

Seán Haughey


515 Mr. Haughey asked the Minister for Finance if the tax system and levies are used as incentives to get unemployed people back into the workforce; if so, the specific measures in place to achieve this; and if he will make a statement on the matter. [2003/99]

The Government policy programme, An Action Programme for the Millennium, states that the Government parties "recognise the need to reduce the burden of personal taxation in order to reward effort and give people an incentive to take up work".

My last two budgets have been characterised by major changes in the income tax system which I believe has encouraged, and will continue to encourage, unemployed people to return to the workforce. These changes have included exempting the first £100 of a single person's earnings from tax and PRSI; reducing the entry rate of tax to 24 per cent; reducing the levies charge to 2 per cent and increasing the threshold at which they become payable to £216 per week and standard rating personal and PAYE allowances which facilitated significant increases in these allowances in the budget.

In addition to the broad measures outlined above, I introduced in the 1998 budget a special tax incentive for the long-term unemployed called job assist. This provides a special additional tax allowance in the first year of employment of £3,000 plus £1,000 for each child for persons unemployed for one year or more who take up a job. The allowance is tapered down over a three year period. Job assist also allows a double tax deduction for employers who employ a long-term unemployed person.
These tax measures complement the wide range of active labour market policies currently in place and these programmes are administered by the Department of Social, Community and Family Affairs and the Department of Enterprise, Trade and Employment. Such schemes include the back to work allowance scheme, family income supplement, community employment, Jobstart and the training programmes operated by FÁS. The success of the approach adopted is reflected in the continued strong employment growth and the consistent downward trend of the unemployment rate.