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Dáil Éireann díospóireacht -
Wednesday, 3 Oct 2001

Vol. 541 No. 2

Written Answers. - Tax Reliefs.

Brian O'Shea

Ceist:

383 Mr. O'Shea asked the Minister for Finance the proposals he has to exempt old age contributory pensions based on pre-1953 social welfare contributions from income tax; and if he will make a statement on the matter. [21699/01]

I assume that the Deputy is referring to the special half-rate old age contributory pension which gave increased recognition to social insurance contributions paid prior to 1953 and which was introduced in May 2000. This is a special measure targeted at a specific group, namely those people who had paid contributions prior to 1953 but at a rate which failed to meet the yearly average test. The yearly average figure is arrived at by dividing a person's total number of contributions, either paid or credited since 1953 – or since the persons first started insurable employment – by the number of years since 1953 or since commencement of insurable employment. A yearly average of at least 48 full rate contributions must be made to qualify for a maximum rate contributory old age pension. Alternatively, a person with a yearly average of 48 full rate contributions since 1979 may also qualify for a full rate pension. A yearly average of at least ten full rate contributions is required to qualify for a minimum, that is, half rate contributory old age pension. To qualify for the special half-rate old age contributory pension, a person must have paid at least 260 contributions which may comprise all pre-1953 contributions or a combination of pre and post 1953 insurance. This new pension is not payable in addition to any other social welfare pension.

I would point out that it is a general principle of taxation that, as far as possible, income from all sources should be subject to taxation. In line with this principle, the majority of social welfare payments, including pre-1953 contributory pensions, are, therefore, reckonable as income for tax purposes. Treating such benefits as income for tax purposes is essentially a matter of equity. Of course, the extent, if any, to which taxation will actually arise in a given case will essentially depend on the level of other income that a recipient or the recipient's spouse has in the same tax year. I have no plans to change this at present.

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