Dáil Éireann debate -
Tuesday, 25 Jun 2002

Vol. 553 No. 5

Written Answers. - Tax Code.

Brendan Howlin

Question:

77 Mr. Howlin asked the Minister for Finance when he intends to meet the commitment given in An Agreed Programme for Government to remove all those on the national minimum wage from the tax net; the numbers of persons who earn the national minimum wage or less who are currently paying income tax; and if he will make a statement on the matter. [14486/02]

Minister for Finance (Mr. McCreevy)

The statutory minimum wage is an average hourly rate of gross pay for an employee as defined under the National Minimum Wage Act, 2000. The wage currently stands at €5.97 per hour. The annualised equivalent of the present minimum wage is €12,107. The current position is that, following budget 2002, incomes amounting to up to 90% of the minimum wage annualised are exempt from income tax.

The document, An Agreed Programme for Government, between Fianna Fáil and the Progressive Democrats states that "over the next five years our priorities will be to achieve a position where all those on the minimum wage are removed from the tax net". The commitment is given in the context of a broader economic and budgetary strategy which provides, among other things, that the public finances will be kept in a healthy condition and that personal and business taxes will be kept down in order to strengthen and maintain the competitive position of the Irish economy.

The Deputy will be aware also of the commitment contained in the Programme for Prosperity and Fairness which states that "It is an agreed policy objective that, over time, all those earning the minimum wage will be removed from the tax net".

The question of when all those earning up to an annual amount equivalent to the statutory minimum wage annualised will be not be liable for income tax is a matter for consideration in the context of the Government's budgets over the next five years consistent with the Government's overall economic and budgetary strategy and with the Government's commitments as already outlined.

In the current tax year, it is estimated by the Revenue Commissioners that there are 43,500 tax cases who have income at or below the minimum wage and who are liable for income tax.