Willie Penrose (Westmeath, Labour)
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Question 119: To ask the Minister for Finance if he is committed to keeping those on the national minimum wage out of the tax net; the number of persons on the national minimum wage who have been brought back into the tax net as result of the increase to €7.65 per hour which came into operation from 1 May 2005; if he will take steps to remove these low earners from the tax net; and if he will make a statement on the matter. [26643/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Government is committed to having the minimum wage exempt from tax. However, we are also committed to sustaining economic growth and keeping the public finances in a healthy condition. The question of restoring the position which applied after budget 2005 where those earning the minimum wage were removed from the tax net will be a matter for consideration in the context of the annual budgets over the next number of years consistent with the Government's overall economic and budgetary strategy.

I might remind the Deputy that it was this Government that introduced the minimum wage to protect low paid workers and it was this Government who over the last eight budgets removed a record number of about 465,000 workers from the tax net entirely. In addition, I would point out that we now have one of the highest minimum wages in the European Union. Since its introduction in April 2000, the minimum wage has increased by almost 37% taking account of the latest increase; this is well ahead of inflation.

The present entry point to income tax is €14,250 per annum for a single person on PAYE aged under 65. The Revenue Commissioners provisionally estimate that there will be roughly 37,000 income earners in an income range which would bring them into the tax net if their annual earnings reflected fully the increase in the national minimum wage. However, this group will of necessity include part-time workers earning more than the minimum hourly wage, and certain pensioners whose earnings are in the equivalent range. The 37,000 should therefore be seen as the upper limit for any estimate of the number who may ultimately come into the tax net on a full year basis as a result of the minimum wage increase.

The estimates of the numbers removed from the tax net over the last eight budgets and those who may ultimately come into the tax net on a full year basis in 2005 as a result of the minimum wage increase are calculated on a revised post-budget 2005 basis using as a base the most recent data available relating to the tax year 2002.