Vol. 514 No. 2
78 Mr. N. Ahern asked the Minister for Finance if he will exempt pensioners not in receipt of a social welfare K1 class payment from the 2% health levy and raise the threshold to the £15,000 exemption limit for income tax purposes; if this is difficult to administer; if it will allow refund on production of a P60 to the Collector General's office as is currently done for those who occasionally exceed £217 per week; and if he will make a statement on the matter. [3877/00]
In my budget speech on 1 December 1999, I announced that as in previous years the threshold for the payment of the health levy will be increased from £11,250 to £11,750 per annum, or from £217 per week to £226 per week, with effect from 6 April 2000. However, as my colleague, the Minister for Social, Community and Family Affairs, announced on 8 February 2000, the Government has now agreed that as one of a number of measures aimed at improving the position of the low-paid workers, the earnings limit for exempting employees form the health levy contribution is to be increased to £14,560 per annum. All employees earning between £217 and £280 per week and all self-employed people earning between £11,250 (the current annual threshold) and £14,560 will benefit by up to £5.60 per week at a cost of £52.6 million in a full year.
At present the health contribution is chargeable on the income of persons over 16 years of age with the following exceptions; income below £217 per week or £11,250 per annum, £280 and £14,560 respectively from 6 April 2000; payments under the Social Welfare Acts; medical card holders; persons in receipt of a widow's or widower's contributory, non-contributory or occupational injuries' pension or a corresponding EU pension; persons in receipt of a deserted wife's benefit or allowance; persons in receipt of a lone parent's allowance; and maintenance payments are also allowed as a deduction to the payer before computing the health contribution.
The health levy is currently 2% and is included with PRSI and where applicable, collected through the PAYE system. Class K1 (health contribution only) applies to people receiving income which is not subject to social insurance contributions, such as; occupational pensions; income deriving from positions of certain office holders, e.g. Judges and State Solicitors and other categories of income, e.g. taxable portion of termination lump sum payments. Under class K1, the health contribution levy is currently payable where an individual's weekly earnings-pension is greater than £217 per week, or £11,250 per annum (£280 and £14,560 respectively from 6 April 2000).
Where an individual pays the health contribution levy during the year because his or her weekly earnings-pension exceeded £217 in any one weeks(s), he or she can claim a refund of any health contributions deducted, where his or her total earnings-pension for the year does not exceed £11,250. The claim for a refund can be made by submitting a form P60 to the Office of the Collector General, Sarsfield House, Limerick.
I am informed by the Revenue Commissioners that increasing the threshold for Class K1 contributions to £14,560 would not pose any administrative difficulties under the present refund system and that the present system of allowing an individual to claim a refund of the health contributions where his or her earnings-pension do not exceed the relevant annual threshold will continue.
