Dáil Éireann díospóireacht -
Wednesday, 3 Jul 1996

Vol. 468 No. 1

Written Answers. - Disposable Income Levels.

Joe Walsh

Ceist:

65 Mr. J. Walsh asked the Minister for Finance the estimated net disposable income of a married person with due income, with two, three and four children on gross pay of £6,000 to £16,000 for each £1,000 taking into account all ancillary benefits. [14656/96]

Minister for Finance (Mr. Quinn)

The information requested by the Deputy is set out in the following table.

In addition, child benefit is currently payable at a rate of £27 per month for the first two qualifying children, to be increased to £29 per month from next September, and at a rate of £32 per month for the third and subsequent qualifying children, to be increased to £34 per month from September.

Net disposable Income: Single Earner Couple, Two Children

Gross Pay	Tax	PRSI	Levies	Net Pay	FIS	Net Income
£	£	£	£	£	£	£
6,000	0	101	0	5,899	3,108	9,007
7,000	0	156	0	6,844	2,508	9,352
8,000	0	211	0	7,789	1,908	9,697
9,000	120	266	0	8,614	1,308	9,922
10,000	520	321	225	8,934	708	9,642
11,000	920	376	248	9,456	260	9,716
12,000	1,320	431	270	9,979	0	9,979
13,000	1,720	486	293	10,501	0	10,501
14,000	2,120	541	315	11,024	0	11,024
15,000	2,403	596	338	11,663	0	11,663
16,000	2,673	651	360	12,316	0	12,316

Net Disposable Income: Single Earner Couple, Three Children

Gross Pay	Tax	PRSI	Levies	Net Pay	FIS	Net Income
£	£	£	£	£	£	£
6,000	0	101	0	5,899	3,732	9,631
7,000	0	156	0	6,844	3,132	9,976
8,000	0	211	0	7,789	2,532	10,321
9,000	0	266	0	8,734	1,932	10,666
10,000	260	321	225	9,194	1,332	10,526
11,000	660	376	248	9,716	732	10,448
12,000	1,060	431	270	10,239	260	10,499
13,000	1,460	486	293	10,761	0	10,761
14,000	1,860	541	315	11,284	0	11,284
15,000	2,260	596	338	11,806	0	11,806
16,000	2,660	651	360	12,329	0	12,329

Net Disposable Income: Single Earner Couple, Four Children

Gross Pay	Tax	PRSI	Levies	Net Pay	FIS	Net Income
£	£	£	£	£	£	£
6,000	0	101	0	5,899	4,356	10,255
7,000	0	156	0	6,844	3,756	10,600
8,000	0	211	0	7,789	3,156	10,945
9,000	0	266	0	8,734	2,556	11,290
10,000	0	321	225	9,454	1,956	11,410
11,000	400	376	248	9,976	1,356	11,332
12,000	800	431	270	10,499	756	11,255
13,000	1,200	486	293	11,021	260	11,281
14,000	1,600	541	315	11,544	0	11,544
15,000	2,000	596	338	12,066	0	12,066
16,000	2,400	651	360	12,589	0	12,589

Notes on Table

1. The main factors contributing to the apparent decline in net income as gross income increases are the withdrawal rate of Family Income Supplement (60%) and the operation of marginal relief for income tax. (involving a 40% tax rate).

2. It is essential in interpreting this table that the mechanism for reviewing Family Income Supplement (FIS) is understood. FIS is renewable on a 12 monthly basis. Once awarded it will not be reduced/withdrawn until the end of the period regardless of any upward movements in pay. Therefore, gross income from employment can increase significantly during the course of a year while any adjustment of FIS will not occur until after the end of the year.

3. The numbers of people who potentially lose disposable income as gross pay increases are small. In so far as FIS and marginal relief income tax are the main elements of the poverty trap, the number of people affected is essentially a function of the numbers who both receive FIS and pay tax. It is estimated that the numbers both paying tax and receiving FIS are of the order of 1,500 to 2,000. The OECD has also concluded that this situation potentially "applied to a very small proportion of the employee workforce (0.75 per cent)".

4. Finally, it should be noted that the entitlement to a medical card applies:

—up to a gross income of £8,086 in the case of a married couple with two children

—up to a gross income of £8,886 in the case of a married couple with three children

—up to a gross income of £9,646 in the case of a married couple with four children.