I propose to take Questions Nos. 10, 19 and 35 together.
The tax burden on people in employment is of particular concern to the Government. Consequently in my two budgets I have focused relief towards lowering the tax burden, particularly of those in low paid employment. This has been achieved through significant improvements in the income tax and PRSI areas. In the 1995 budget, personal allowances were increased by £150 for single persons and £300 for married couples, and the standard band was widened by £700 single and £1,400 married, respectively. The general income exemption limits, below which no income tax is payable, were increased by £100 single and £200 married. Further significant gains accrued to those in employment, especially the low paid, from the introduction of the allowance of £50 per week for full rate PRSI contributors.
These measures were underpinned in this year's budget by further increasing the personal allowances by £150 to £2,650 for a single person, and by £300 to £5,300 for a married couple. The general exemption limits were increased by £200 to £3,900 for a single person, and by £400 to £7,800 for a married couple. The standard band was widened by £500 to £9,400 for a single person and by £1,000 to £18,800 for a married couple. In addition the PRSI-free allowance was increased to £80 per week.
The increase in the PRSI-free allowance to £80 per week full rate contribu-disregarded when calculating their PRSI contribution. The measure, on its own, is worth up to £228.80 per annum, or £4.40 per week, for such workers. When combined with the non-renewal of the PRSI income tax allowance, it still results in significant gains, especially for those on low pay. For example, low income workers exempted from income tax or taxed under the marginal relief system enjoy the full relief of £228.80 per annum, as they did not benefit from the PRSI income tax allowance in the first instance. The net gains can be up to £152 per annum, or just under £3 per week, for those on the standard income tax rate, and up to £92 per annum for those on the top rate.
As regards the point at which a single industrial worker will begin paying tax at the 48 per cent rate, in the current tax year the figure is £12,850. A single worker on the average industrial wage, which is estimated at around £14,800 for 1996, and having only the basic personal allowances, will pay £3,474 in income tax, £585 in PRSI, and £333 in levies in the current tax year. This gives total deductions of £4,392, representing 29.7 per cent of gross income.
The improvements I introduced in my two budgets mean that a single full rate PRSI contributor will not be liable to pay tax at the higher rate, as I have indicated, until their gross income exceeds £12,850 this year, as compared to £11,636 in 1994-95, and a married couple, one earner, until their earnings are in excess of £24,900 this year, as compared to £22,186 in 1994-95. This represents increases in the thresholds for the higher rate of 10.4 per cent and 12.2 per cent respectively, which are more than twice the expected rate of inflation. Furthermore, the total tax and PRSI take for a single worker on the average industrial wage has fallen by slightly over 1.5 percentage points of gross income as compared to two years ago.
The improvements made over the last two budgets are significant. The measures introduced have been aimed primarily towards reducing the average tax take rather than at cutting tax rates. Clearly, however, further progress is needed in reducing the tax and PRSI burden, thereby improving the competitiveness of the economy. There are, of course, different views as to the form further reductions in taxation should take, and the groups towards whom relief should be targeted. I hope, within responsible budgetary parameters, to consolidate and build on the type of measures introduced over the past two years in the 1997 budget.