Mary Hanafin (Dún Laoghaire, Fianna Fail)

I move amendment No. 2:

In page 3, between lines 13 and 14, to insert the following:

" "Act of 1979" means the Health Contributions Act 1979;".

Amendment No. 2 is a technical amendment to include the Health Contributions Act 1979 in the definitions. Amendment No. 20 is a new section which replaces section 12, as published. It contains mainly technical amendments to the original provision.

On the advice of the Office of the Attorney General, new and updated definitions of the terms "reckonable earnings", "reckonable emoluments" and "reckonable income" are being included in the primary legislation. Until now, these definitions were contained in Articles 4 to 6, inclusive, of the Health Contributions Regulations 1979. Given the development of case law in the area of administrative law, the Office of the Attorney General has advised that it would be more appropriate to include these provisions in the Act rather than relying on regulations. As a consequence of introducing these definitions, it is necessary to repeal section 2 of the Health Contributions Act 1979 as it provided that the Minister for Health and Children may set out these definitions by regulation. Articles 4 to 6, inclusive, of the regulations are also being revoked.

The other technical amendments set out more clearly how the new rates will operate in 2009. As the changes to the contributions are being introduced in the middle of the contribution year, it is necessary to make specific provision for this year. As Deputies are aware, the rates at which health contributions are deducted will increase from 2% to 4% and from 2.5% to 5% from 1 May. The threshold at which the higher rate will be deducted will be reduced to €75,036 per annum.

Section 4A provides for average calculation over the year to allow for the different rates in the two periods, namely, January to the end of April and May to December. Any person who is paid on a weekly, fortnightly or monthly basis will have his or her deductions calculated in accordance with section 5(1A) or 5(1B) or section 6(1A) or 6(1B) as appropriate, subject to the overall calculations set out in section 4A(1). Self-employed individuals who submit their deductions annually will have them calculated at the rate set out in section 4A(1).

With the introduction of section 4A, section 7 of the Health Contributions Act 1979 was deemed on legal advice to be no longer necessary or appropriate. It is, therefore, being repealed in this amendment. Having further examined the proposed section 7C in the published Bill, which was designed to ensure all reckonable earnings, reckonable emoluments and reckonable income were taken into account when calculating contributions, on legal advice it has been considered unnecessary, particularly in view of the introduction of section 4A, which provides an overarching mechanism for calculating deductions over the course of the year.

Section 7D provides for the repayment of contributions when they have been overpaid. This replaces the previous provisions in sections 5(1B) and 6(1B) of the 1979 Act, as amended by the Social Welfare Act 2006.

The final substantive amendment being introduced is the new section 7E. This is intended to ensure equity for any person who received a redundancy payment over and above the statutory redundancy payment before 1 May. Under this provision, the person will be charged at the rates in place up to 30 April, that is, the lower rates rather than the average rate over the year.

The other amendments Nos. 2 to 4, inclusive, are technical, following on from the insertion of the new definitions of the terms "reckonable earnings", "reckonable emoluments" and "reckonable income".

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