Vol. 502 No. 3
275 Mr. Rabbitte asked the Minister for Finance the reason a different tax deduction formula exists for unemployment benefit and disability benefit; his views on whether this is a fair system; and if he will make a statement on the matter. [7762/99]
Disability benefit (DB) became a taxable source of income with effect from 6 April 1993 while unemployment benefit (UB) was brought into taxation with effect from 6 April 1994. There have been a number of changes in the arrangements for the taxation of these benefits since then which have resulted in some differences in the tax treatment currently applying. These are outlined below.
UB paid to those on systematic short time work was made exempt from taxation in the 1994 Finance Act. This measure, which initially had effect only for the 1994/95 tax year, has been extended in each subsequent Finance Act. This relief relates to the unique position of those on systematic short time work.
In the 1995 budget the Minister for Finance announced certain chances on foot of the statement in the Government's policy agreement that the method of taxing UB and DB would be restructured in order to improve the position of those most adversely affected. First, to assist families, the child dependant additions payable with UB and DB were made exempt from tax. Second, the first £10 per week of UB was also made exempt from tax from 6 April 1995.
The 1997 budget announced certain concessions in relation to the taxation of DB arising from commitments in P2000. A three week exemption was introduced for the 1997/98 tax year, while the administrative arrangements were being put in place, with a six week exemption applying from the 1998/99 tax year.
