Skip to main content
Normal View

Health Levy.

Dáil Éireann Debate, Tuesday - 24 April 2007

Tuesday, 24 April 2007

Questions (243)

Willie Penrose

Question:

266 Mr. Penrose asked the Minister for Finance if his attention has been drawn to the fact that there are pensioners who are currently on €472 per week, and as a result of the 3% national agreement increase will see their pensions rise to €486 per week and will have same significantly reduced as a result of having to pay €9.70 per week in respect of the 2% health levy contribution, thereby effectively reducing the increase to €4.30 per week; if, in this context, consideration will be given to just applying the levy to the portion of the person’s income, which is in excess of the weekly threshold, by way of application of marginal rate increases in such circumstances; and if he will make a statement on the matter. [15114/07]

View answer

Written answers

The legal basis for the Health Contributions levy is contained in the Health Contributions Act 1979, as amended, and associated regulations.

The levy is charged at a rate of 2% on a person's total income from all sources with only a few exceptions e.g. social welfare payments such as the widow or widowers pension. Those aged 70 or over are exempt from the levy by virtue of entitlement to the medical card. However, the charge arises only where a person's income exceeds an annual threshold. This threshold was increased to €480 per week or €24,960 annually in Budget 2007. In the last three years, the threshold has been raised by almost 35%.

The levy threshold was introduced in 1995 in order to provide assistance for those on low incomes. Where a person's income exceeds the income threshold, he or she becomes liable for the levy on all his or her income. This is known as the "step" effect.

The introduction of a marginal relief system to minimise the step effect, as suggested by the Deputy, would introduce a level of additional complexity into the levy system and would be costly to implement.

There are no plans to change the health levy system along the lines suggested. However, as with all reliefs, the threshold for the health levy is reviewed regularly, in particular in the context of the annual Budget.

Top
Share