Joe McHugh (Donegal North East, Fine Gael)
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Question 167: To ask the Minister for Finance the proportion of salaries the new pension related levies apply to; if it is applicable to tax free allowances; and if he will make a statement on the matter. [5162/09]

Joe McHugh (Donegal North East, Fine Gael)
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Question 168: To ask the Minister for Finance if the new pension levy is tax deductible; if the income levies introduced by him in winter 2008 are tax deductible; and if he will make a statement on the matter. [5163/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 167 and 168 together.

The new public service pension related deduction will apply to the remuneration received by a public service employee at the rates announced on 3 February 2009.

Public Servants paying the new pension contribution will be treated for tax purposes in the same way as those making pension contributions in the private sector. Contributions will be deducted from gross pay by employers before income tax, PRSI and health levies are calculated. Thus, pension contributions will be effectively relieved of tax at the marginal rate.

The income levy on the other hand is payable on gross pay, before account is taken of pension contributions or capital allowances.

Mattie McGrath (Tipperary South, Fianna Fail)
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Question 170: To ask the Minister for Finance the position regarding the pension levy; if income that is not pensionable will be exempt from this levy. [5103/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The pension related deduction announced on 3 February 2009 will realise a payroll saving of €1.35 billion in a full-year and €1.12 billion in 2009. The deduction will apply to all remuneration. Certain income that is not pensionable, for example, overtime earnings, will be subject to the deduction.