Dáil Éireann Debate, Tuesday - 23 July 2019
211. Deputy Brendan Ryan asked the Minister for Finance his plans to restore the marginal relief exemption limit to tax payers over 65 years of age from the reduced rate of €36,000 to the rate of €40,000 that pertained prior to 2011. [33315/19]
Amharc ar fhreagraA person aged 65 and over is fully exempt from income tax where his or her total income from all sources is less than the relevant exemption limit. For 2019, the exemption limits are €36,000 for a married couple or civil partners and €18,000 for a single individual. Where an individual exceeds the exemption limit, he or she is liable to tax based on the normal system of rate bands and tax credits, subject to marginal relief where relevant.
The age exemption limits were reduced from €40,000 to €36,000 for jointly assessed married couples, and from €20,000 to €18,000 for single persons in Budget 2011. This was legislated for in Finance Act 2011 and took effect for the year of assessment 2011 and subsequent years.
The purpose behind the age exemption is to strike the appropriate balance between ensuring that those who are in receipt of income pay some tax and contribute to the Exchequer, against the need to safeguard against poverty in retirement.
I am satisfied that the current limits are appropriate. In 2016, this measure benefited 74,400 taxpayer units and I understand that there is no evidence to indicate that the current exemption limits are causing any undue financial hardships for those over 65.
It should also be noted that the age exemption is only one of many types of relief that are available for those at retirement age – as those over 66 are exempt from Employee PRSI, and those over 70 with a total annual income of less than €60,000 benefit from a reduced rate of Universal Social Charge. Furthermore, other income tax credits may also be available depending on the personal circumstances of the individual, such as the personal tax credit, those for widows/widowers, for blind individuals, for those caring for incapacitated children or dependant relatives, and for health expenses incurred by the taxpayer. These apply in additional to the various expenditure measures that give support to the over 65s, including the State pension and free travel pass.
Any consideration of an increase to the Age Exemption would need to be cognisant of the significant changes to the demographics in Ireland that are projected in the medium to long-term regarding the ageing of the population. As a result, even without making any discretionary changes such as the Deputy is suggesting, there will be significant pressure on the Exchequer to fund expenditure in areas such health and social welfare.
It is my view that the current income exemption limits are reasonable and represent the appropriate use of limited resources, taking account of the various other State supports for people in retirement.
