Brian Lenihan Jnr (Dublin West, Fianna Fail)

With regard to the amendment, the Deputy is aware why the income levy was introduced - to help deal with the exceptional economic circumstances we face. It is addressed by sharing that burden, based on the ability to pay. I am not going to re-enter the argument we had on Committee Stage about secondary legislation, as I do not accept this is an appropriate device to deal with a relief of this character. That said, on the merits of the proposal I accept, as I did on Committee Stage, that one cannot indefinitely increase levies and not provide for some form of tax relief.

However, the issue then becomes one which we will have to examine on receipt of the Commission on Taxation report, as to the relative importance in our income tax system of flat rate universal taxation on all income as against graduated income with reliefs incorporated. We have both models but one of the difficulties we have is that there are too many examples of the flat rate levy on all income. That has created inconsistencies within that system which have to be addressed. I believe, however, there will still be a place in our system for the taxation of income, a role for levies or other forms of collection which is applied universally on all income. We have that already with PRSI and the health levy and we have it here with the income levy. There have never been PRSI allowances, although sometimes amounts payable can be in excess of what the levy amounts to. In my view, there is no scope for that.

I will now deal with the other question raised by the Deputy on Committee Stage outlining issues regarding the new life insurance levy. I announced the levy in the supplementary budget of 7 April 2009. It has been set at 1% of the premium income of the insurance companies, payable to the Exchequer quarterly. The measures in the supplementary budget were formulated to raise substantial moneys, an overall €3 billion in a full year, inclusive of the 1% levy. Since the supplementary budget a number of issues have been raised by the life insurance industry. In response to some of those concerns I agreed to change the implementation date from 1 June to 1 August to give a longer lead in period for implementing the new levy. This change was contained in the Finance Bill, published on 7 May.

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