Dáil Éireann díospóireacht -
Tuesday, 10 Feb 1998

Vol. 486 No. 6

Written Answers. - Tax Allowances.

John Gormley

Ceist:

193 Mr. Gormley asked the Minister for Finance if he will introduce additional measures, in relation to pensioners and elderly taxpayers, to increase the age allowance, to remove the payment of levies from pensions, to raise the threshold on this or to make available medical cards to people over 65 years of age. [3414/98]

Minister for Finance (Mr. McCreevy)

I draw the Deputy's attention to the fact that the tax measures introduced in my recent budget will be of considerable benefit to pensioners. I announced a substantial increase in the exemption limits for the elderly of £400 single —£800 married to £5,000 single —£10,000 married for those aged 65 to 74 and of £300 single —£600 married to £5,500 single —£11,000 married for those aged 75 and over, which will take effect in the new tax year. I also announced that it is the intention ultimately over a number of budgets to have a single exemption limit for all those aged 65 and over.

Where pensioners are taxed under the normal personal allowance tax system they will benefit from the general tax improvments introduced, that is, the increase in personal allowances of £250 single —£500 married, the widening of the band by £100 single —£200 married and the 2 per cent reduction in both the standard and top income tax rates.

As regards the health contribution and the employment and training levy, it should be noted that the levies are charged at a rate of 2.25 per cent on a person's total income from all sources with only a few exceptions, for example, social welfare payments, the income of medical card holders. Occupational pensions are, therefore, liable to the levies. However, the 1994 budget introduced a low income exemption threshold for the levies of £173 per week or £9,000 per annum which means that where a person's income is lower than the threshold they are not liable to the levies. Prior to the 1994 budget the levies were applied to person's income irrespectiive of the amount earned. The threshold figure of £173 per week, or £9,000 per annum, was selected on the basis that two thirds of the average industrial wage is a widely used international measure of low pay. The measure is aimed at focusing assistance towards those on low incomes.

The threshold for the levies was increased in subsequent budgets and in my recent budget I announed that the threshold is being increased to £207 per week or £10,750 per annum with effect from 6 April 1998. While the low income threshold for the levies will continue to be increased there are no plans to exempt people aged 65 and over from the levies.