Róisín Shortall (Dublin North West, Labour)
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Question 171: To ask the Tánaiste and Minister for Finance the justification for the regime whereby the same income tax exemption threshold for persons over 65 is applied to widowed persons as to single people; the reason no extra tax exemption is applied to widowed persons over 65 years when widowed persons enjoy extra tax credits and wider tax bands to reflect the extra costs associated with their circumstances; the cost in a full year of allowing an income tax exemption threshold to widowed persons of 1.5 times the single persons limit; and if he will make a statement on the matter. [26623/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The position is that the income tax code has many favourable provisions relating to the tax treatment of widowed persons, particularly widowed parents with dependent children. This includes widowed persons aged 65 or over. In the year of bereavement, a widowed person may receive a personal tax credit which is equivalent in value to the married tax credit, currently €3,520. Following the year of bereavement, a widowed parent with a qualifying child or children may qualify for the one-parent family tax credit of €1,760 in addition to the single personal tax credit of €1,760.

In addition, a further credit, the widowed parent tax credit, is available on a sliding scale for the first five tax years following the year of bereavement as follows:

Therefore, in the first year following bereavement, a widowed parent may be entitled to aggregate tax credits of €7,270, that is, a single personal tax credit of €1,760; a one-parent family tax credit of €1,760 and a widowed parent tax credit of €3,750. In addition, by virtue of entitlement to the one-parent family tax credit, the widowed parent may also have entitlement to a standard rate band of €38,000 which is €4,000 greater than the band available for a single person.

Where a widowed person has a mortgage outstanding, the person may be entitled to relief — at the standard rate — equivalent to that for a married couple. Rent relief available to widowed persons is the same level as that received by married couples. It might also be noted that widowed persons who are in receipt of the social welfare non-contributory widow's pension are not liable to the health levy of 2% on any part of their income. Widowed persons who are 65 or over may avail of the above reliefs as appropriate. There is no impediment on age grounds. In addition, such persons would have entitlement to an age tax credit of €275 in the current tax year.

The age exemption limits are available to all elderly taxpayers, including those who are widowed. They are intended to focus assistance on elderly earners with lower incomes. In the case of a single person aged 65 or over, the limit is €19,000 in the current year. In the case of a married couple where one spouse is aged 65 or over, the limit is €38,000 in the current year. In the last 6 years, these limits have increased by 76%. This compares with an increase in the cost of living as measured by the CPI of about 24% in the six years 2002 to 2007.

I am advised by the Revenue Commissioners that the full year cost to the Exchequer, estimated by reference to 2008 incomes, of increasing the exemption limit for widowed persons aged 65 or over to a level of 1.5 times the corresponding limit for single persons is of the order of €20 million. This figure is provisional and subject to revision.