Brian Cowen (Laois-Offaly, Fianna Fail)

I propose to increase the health levy from 2% to 2.5% on income exceeding €1,925 per week or just over €100,000 per year. This extra money will help fund services such as long-term care initiatives for the elderly. We need to act now to secure such funds and I believe it is only right that those best able to afford it make an increased contribution. This will raise €34 million in a full year.

Taken together, these changes will reward work and increase disposable income. They will help workers, most obviously those on low and middle incomes, and will, I believe, be welcomed by all. The full year cost of all these income tax measures is estimated at just over €1.25 billion.

Helping Taxpayers Claim

It is not just a matter of providing additional tax reliefs for the ordinary taxpayer. The taxpayer must also be helped by making it as easy as possible to access tax reliefs. We already made strides in this regard by giving mortgage interest relief and medical insurance relief at source via the banks, building societies and health insurers. However, there are other areas where getting access to reliefs can be improved, especially in the area of various expenses reliefs. Accordingly, the Revenue Commissioners will put in place measures specifically to help the taxpayer, in addition to the major publicity campaigns already undertaken to make taxpayers more aware of their entitlements.

In 2007, all age-related tax credits will, where possible, be credited automatically to the taxpayer, where a verified date of birth can be established through Revenue and social welfare records. Credit institutions will be enabled to operate DIRT-free accounts for those aged 65 and over and for those who are permanently incapacitated where their income falls below the relevant income tax limits. At the moment, both categories of depositor have to reclaim the DIRT paid in such cases.

In 2007, Revenue will also implement a system to credit tax relief on trade union subscriptions automatically, based on trade union membership lists, and will be engaging with the unions to make the necessary arrangements in respect of their members.

For 2008, Revenue plans to move, where possible, to automatic repayments in respect of certain hospital and other expenses that qualify for tax relief. Tax relief due on medical insurance paid by employers that has been subject to benefit-in-kind taxation will be automatically included in the employee tax credit. I have asked Revenue to progress work on applying similar procedures in due course to nursing home and other medical expenses that qualify for tax relief.

Revenue will explain the details of these simplification measures later this week. The Government is determined to make it easier for ordinary taxpayers to claim and receive their rightful entitlements.

Promoting Enterprise and Innovation

Ireland has become one of the world's most enterprising economies to the benefit of all. More jobs, better opportunities, improving prospects and greater tax resources have been the results so far. I want to see that development continuing so that the people of this country can face with confidence an increasingly competitive global marketplace. I want to see the State encouraging Irish businesses to work smarter, to pursue excellence and to invest in innovation and creativity for the future.

The budget measures I am announcing today will encourage enterprise, incentivise innovation and promote competitiveness in Irish industry. They will help position our businesses for long-term success.

Supporting growing businesses

In the past ten years, we have refocused the business expansion scheme and the seed capital scheme to ensure that they channel funds to help transform and modernise our small business sector and improve our national competitiveness. These schemes are due to expire on 31 December and have been specifically reviewed at my request. Hundreds of small businesses using these schemes were consulted and asked for data and for their views on the schemes. Many of these firms using BES are ordinary small to medium-sized manufacturing companies in every part of the country. They make a vital contribution to job creation and to maintaining our competitiveness.

On foot of this review and the suggestions of groups such as the Small Business Forum, I am announcing an extension of these schemes for a further seven years and I am raising the ceiling per company on total BES investment from €1 million to €2 million. The annual limit on BES investment per investor, which has not been increased since 1984, is being raised from €31,750 to €150,000.

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