Michael Noonan (Limerick East, Fine Gael)

I have a few minutes now and again at 8.30 p.m. While I have the attention of the Minister, who may not be back at 8.30 p.m., I wish to raise the matter of tax relief for medical expenses. When I was debating with the Minister for Defence on budget day, I understood that it was the intention of the Minister for Finance to exempt nursing home fees from the standard rate and to continue them at the marginal rate of tax. The text of the Bill does not do so. It exempts them for 2009 but since the subsection lapses at the end of 2009, the primary section is maintained as law. It will apply to nursing home fees from 1 January 2010. If it is the intention of the Minister that this would apply at the marginal rate, an amendment is required. If he simply deletes the provision referring to the tax year 2009 it is a sufficient amendment to allow the issue to stand at the marginal rate of tax. The argument is that when the Fair Deal scheme is introduced, this will be necessary but the two schemes do not match. The means test in the Nursing Homes Support Scheme Bill is unusual, in that it decides what contribution people will make rather than what entitlement they will get. The higher the fee and the higher the income, the greater the contribution. If one reads the tables for income tax in the Bill, people who qualify for the fair deal are standard rate taxpayers, unless the nursing home fee is very high.

Another quirk is that because it is a means test that decides a contribution, the level at which one gets a rebate will be calculated on income. If a person is paying tax at the higher rate and gets relief at the marginal rate, he or she will be assessed as having to make a greater contribution because the income has increased by that net amount. Under the Fair Deal scheme, it is great that sons and daughters will no longer pay but if they are not paying any longer they will not get relief at either the standard or marginal rates. The issue will not arise.

The Nursing Homes Support Scheme Bill is silent on tax issues. When a family home is attached at 7.5%, it is not clear that there is a tax rebate on that to the inheritor of the family home or at what level that will apply. I am not pushing that case. If someone inherits the family home and there is an attachment of 7.5% of its value, there is not a great case to be made for relief at either the standard or marginal rate but the Bill is silent on this. I understood it was the intention of the Minister to grant this relief. He has not done so in the Finance Bill.

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