Vol. 512 No. 7
126 Mr. N. Ahern asked the Minister for Finance if he will examine the situation in relation to the threshold of the 2% health levy particularly for pensioners where small pension increases can result in actual losses, by putting them within the levy limit; if he will introduce some form of marginal relief whereby the levy is due only on the portion over the threshold or part thereof; and if he will make a statement on the matter. [27259/99]
The health levy is charged at a rate of 2% on a person's total income from all sources with only a few exceptions, for example, social welfare payments. The 1994 budget introduced a low income exemption threshold for the levies of £173 per week or £9,000 per annum which means that where a person's reckonable income is lower than the threshold they are not liable to the levies. However when a person's income rises above the threshold the levies are payable on the person's total income. The threshold ensures that most pensioners on low incomes are exempt form the levies. In this year's budget I announced that the threshold will be raised from £11,250 to £11,750 per annum.
The current arrangements in respect of the health levy are more favourable to many pensioners than most taxpayers because the levy is not applicable to their social welfare pension. The total income of medical card holders and recipients of social welfare survivors' and widows' pensions, lone parents' allowance and deserted wives benefit-allowance are exempt from the levies. After a pension increase, the monthly income of a pensioner may increase to a level above the threshold whereby they become liable to pay the health levy. However, if their annual income remains below the threshold, they may be liable for a refund of any levies paid throughout the tax year.
