Written Answers. - Tax and PRSI Rates.
Liz O'Donnell
Ceist:
37
Ms O'Donnell
asked the
Minister for Finance
the proposals, if any, he has to reduce the marginal tax and PRSI rate of single persons living well below the average industrial wage from the current level of £5.67 out of every extra £10 earned; and if he will make a statement on the matter.
[11607/96]
Desmond J. O'Malley
Ceist:
59
Mr. O'Malley
asked the
Minister for Finance
the proposals, if any, he has to reduce the marginal tax and PRSI rate of single persons living well below the average industrial wage from the current level of £5.67 out of every extra £10 earned; and if he will make a statement on the matter.
[11606/96]
I propose to take Questions Nos. 37 and 59 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. Such measures included increasing personal allowances and exemption limits, widening the standard band and introducing a new weekly PRSI-free allowance which currently stands at £80 per week for full rate PRSI contributors.
The improvements I have introduced mean that a single full rate PRSI contributor, having only basic personal allowances, will not be liable to pay tax at the 48 per cent rate until their gross income exceeds £12,850 this year as compared to £11,636 in 1994-95. In the case of a married couple, one earner, the threshold for the higher rate of tax has been increased to £24,900 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 and increasing the threshold for the 48 per cent tax rate rather than 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 would hope, within responsible budgetary parameters, to consolidate and built upon the type of measures introduced over the past two years in the 1997 budget.
