There is no concession available to the category of income earner mentioned by the Deputy to address what is known as the "step" effect which is experienced by such persons when their incomes increase to just above the health levy threshold. The health contribution levy is charged at a rate of 2% with only a few exceptions, e.g. social welfare payments, including social welfare pensions. The 1994 budget introduced a low income exemption threshold for the levy of €11,428, £9,000, per annum which meant that where a person's income was lower than the threshold he/she was not liable for the health contribution. However, when a person's income rises above the threshold, the levy is payable on the person's total income from the first cent of that income.
From 6 April 2000, the health contribution threshold was substantially increased by €4,203, £3,310, from €14,285, £11,250 per annum to €18,488, £14,560 per annum, or from €276, £217 per week to €355, £280 per week. This significant increase has exempted even more low income earners from the health contribution. Because of this sizeable increase in the threshold for the levy I decided not to increase it further in the past two budgets. The levy threshold was introduced in order to focus assistance towards those on low incomes. The Government was aware of the "step" that exists at the levy threshold when the threshold was introduced. I have no plans at present to change the system. Nonetheless, I am aware of the difficulties encountered by persons when their income increases to just above the threshold and its operation will continue to be reviewed on a regular basis.