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

I move amendment No. 9:

In page 13, between lines 28 and 29, to insert the following:“Tax bands for people over 65 years of age

10. The Minister shall, within three 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 relates to the tax exemption limits that currently apply for people aged 65 years and over. For a single person, a widowed person or a surviving civil partner, it is €18,000. For a married couple or a couple in a civil partnership, it is €36,000. Those figures have not changed for some years. People have made the point to me and, I am sure, to other Deputies that the value of those exemption limits is eroded over time if they are not changed. I recognise that the priority in this budget was the reduction in the universal social charge and the raising of the entry point to the higher rate of tax. However, this is one issue where the non-indexation of the tax system has a direct consequence. While, on the face of it, people might think those exemption limits are generous, the State contributory and non-contributory pensions are taxable. Therefore, if a person has other income such as a private occupational pension, even of a modest amount, that can be taxable income and the person may have a tax liability. For those whose incomes are marginally in excess of the current exemption limits, there is the option of paying tax at a rate of 40%. This is known as marginal relief. However, it is somewhat complicated because the point at which the marginal relief ceases to be of benefit varies depending on the circumstances and the tax credits that apply. As a practitioner of constituency politics, people come to me with tax issues and so on and, obviously, I advise them to get professional taxation advice. However, many of them would not be aware of this particular provision.

The purpose of the amendment is to establish Government policy on these exemption limits and whether it is its intention over time to amend them, which is why we are proposing a report.

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