Skip to main content
Normal View

Dáil Éireann debate -
Thursday, 29 Apr 1999

Vol. 504 No. 1

Written Answers. - Tax Allowances.

Noel Ahern

Question:

63 Mr. N. Ahern asked the Minister for Finance if he will examine the situation of exemption limits, particularly for old age pensioners; the reason they do not receive allowances for VHI payments, mortgages and so on when on exemption limits to justify this approach; and if he will address this in the next budget and allow individuals their full tax free allowances added to the benefits of the exemption limits. [11261/99]

I would explain that under the normal income tax system, an individual taxpayer is entitled to have certain allowances and reliefs taken into account in calculating, their tax liability. Any income greater than the sum total of the allowances and reliefs is then taxed at 24 per cent and-or 46 per cent as appropriate. Such allowances include the personal allowances – single or married allowances, age allowance, PAYE allowance, blind allowance, etc. – and reliefs such as that for health expenses, medical insurance, qualifying rent relief etc.

Alternatively, if more favourable to the taxpayer, he-she may be taxed under the exemption limits-marginal relief system. Under this system individuals are provided with exemption limits, which are higher than the normal personal allowances, and are taxed at 40 per cent on all income above the exemption limits until their level of income is such that it would be more favourable to be taxed under the normal tax system. However, the exemption limits displace the normal personal allowances and reliefs, including medical insurance relief. For historical reasons people on exemption limits-marginal relief continue to be eligible for mortgage interest relief subject to the usual conditions. It must be stressed that if you are being taxed under the marginal relief system you are in fact paying less tax than if you were being taxed under the normal tax system.
The Deputy will, of course, be aware that those aged 65 and over are treated more favourably under the income tax code than the generality of taxpayers. The exemption limits for those aged 65 and over are significantly higher than those which apply generally. In the last two budgets, I have implemented substantial improvements in the tax treatment of the elderly. In the 1999 budget I introduced a unified income tax exemption limit of £6,500 single – £13,000 married for all those aged 75 and over. This represents an increase of £1,500 single, £3,000 married for those aged 65 to 74 and an increase of £1,000 single, £2,000 married for those aged 75 and over. The new age exemption limit compares favourably with the general exemption limits of £4,100 single-£8,200 married. The large increase in income exemption limits for the elderly announced in Budget 1999 will remove 15,000 elderly persons from the tax net.
Top
Share