Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I move amendment No. 3:

In page 7, after line 26, to insert the following: “Report on changes to tax bands for people over 65 years of age

4.The Minister shall, within 3 months of the passing of this Act, prepare and lay before the Oireachtas a report on the potential impacts and costs of increasing the income tax bands for those aged over 65 years of age from the current €36,000 for a couple and €18,000 for singles.”.

This amendment concerns the income tax treatment of older couple. There is a system whereby an exemption limit is in place. For a single person, widowed person or surviving civil partner that limit is €18,000 per annum, while for a married person or a couple in a civil partnership it is €36,000. Until this budget, the previous three budgets of this Government involved changes in the income tax code. Those changes included an increase in the entry to the higher rate of tax and some reductions in the USC, but there were no changes in these annual exemption limits. A couple aged 65 and over, therefore, could be taxed in this way. That would mean no tax because they would be under the exemption limit. The couple could also get what is called marginal relief, which typically only applies if their income is slightly above these limits. If income is significantly above the limits, that couple could then be taxed in the normal.

These thresholds have not changed in the past five years and, therefore, more older couples are moving away from that exemption limit system of being taxed to being taxed in the normal way. This is the final budget of this Government and the purpose of this amendment is to have a debate on whether the Minister believes this issue needs to be reviewed. Three budgets in a row have resulted in changes to income tax and the USC. There have been no changes in the tax treatment of older couples, however, and the issue should be discussed.