Dáil Éireann díospóireacht -
Wednesday, 13 Jun 2001

Vol. 538 No. 1

Written Answers. - Home Helps.

Nora Owen

Ceist:

146 Mrs. Owen asked the Minister for Finance if his attention has been drawn to the inequity being suffered by those people who are offering home help through the health boards and are being charged tax on the income which they receive; if he will examine the matter to see if home help payments could be declared exempt from income tax; and if he will make a statement on the matter. [17473/01]

Minister for Finance (Mr. McCreevy)

It is a principle of the taxation system that, in general, all income is reckonable in determining a person's income tax liability. In relation to home helps, in view of the low level of pay and the fact that many of them did not have any taxable income and would have been entitled to the PAYE allowance, Revenue decided many years ago to exclude payments to them from the PAYE system of taxation until further notice. I understand from the Revenue Commissioners that, from time to time, they monitored the average amounts paid to home helps.

The rate of pay to home helps has been reviewed and an agreement was concluded between the employers and the home help representatives. The revised rate of pay from 1 January 2000 is £5 per hour increasing to the group 1 non-nursing rate from 1 January 2001. The increases resulted in home helps having an hourly rate of pay which is higher than many employees who currently pay tax under the PAYE system. Consequently, it was necessary to bring home helps within the PAYE system of taxation.

Following the implementation from 6 April of the increase in tax credits that I announced in budget 2001, the first £144 of weekly income is free from tax in the case of a single person on PAYE. In the case of a married couple with one income on PAYE the first £308 per week is free from tax where the taxpayer is entitled to the home carer's tax credit; otherwise the weekly income made free from tax for a married couple with one income is £250. Income in excess of these amounts, which is subject to tax, is taxed at a rate 2% less than the rate in the last tax year as a result of the reductions in tax rates announced in budget 2001. In my Budget Statement I also indicated that in the next budget the Government intends to increase the entry point to the taxation system towards the level of the minimum wage.

Having regard to these factors, I do not propose that special arrangements be made in relation to the situation outlined by the Deputy. However, I will bear it in mind in the context of overall plans with respect to income tax matters to be outlined in my Budget Statement for 2002.