Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

We all agree with the general thesis that a budget must be fair. We also all agree that we must be careful when designing budgets to ensure the budgetary burden that is necessary to correct the State's finances is distributed in a fair and equitable way. On this occasion, rather than targeting the over-70s for any penal imposition, they are again protected by the budgetary strategy. No cut was made to any pension, be it contributory or non-contributory, and the beneficial income tax credits that apply to the elderly were fully maintained. There was a deliberate policy choice to ensure the incomes of the elderly were protected in these ways.

It is reasonable that, if someone has an income of €60,000, as well as welfare payments, for example, a contributory pension, both the pension and the €60,000 are exempt from the USC. One cannot sustain the argument that people beyond this level of income should have exemptions because they are over 70 years of age when the 65 year old who is still working is paying at the top rate that applies. There is a rebalancing, but it is not as dramatic as the Deputy claims. There is no targeting of the elderly in the budget. As a matter of fact, there were deliberate social welfare and tax policy choices made to protect the incomes of the elderly.

Regarding the other part of the Deputy's amendment, he is right. We reviewed the USC and decided that the exemption limit should be just over €10,000. If one has an income above that figure, one's liability for the USC does not start at €10,036, rather it starts with the first euro. One pays on the totality of one's income. There is a debate on where to draw the line, but many of the people whom the Deputy seeks to exempt are part-time workers rather than full-time workers and in receipt of benefits already exempt from the USC. For example, family income supplement, FIS, is exempt. One-parent allowances are exempt, as is rent supplement. Back to school benefits and some other payments are free from the USC. It is not a question of reaching €10,036 and suddenly having the USC applied to all income. It is applied to the amount of income one earns at work, be it full-time or part-time. Income derived from social welfare payments is generally exempt, particularly in the case of the payments I have mentioned. I agree with the Deputy. The appropriate level at which to draw the line is a matter of opinion. We went into this matter in great detail in our first budget after committing in the programme for Government to exempt the low-paid from liability for the USC. We fixed the threshold at €10,036. That exempted 330,000 people from the charge. This was the dramatic move we made in accordance with the programme for Government and I am not going beyond it in this budget.