Jack Wall (Kildare South, Labour)
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Question 162: To ask the Minister for Finance his views in regard to a submission (details supplied); his plans to overcome the concerns expressed; and if he will make a statement on the matter. [18937/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The position in relation to Child Benefit is as set out in my Supplementary Budget on 7 April 2009. The Government does not believe that it is fair to pay the same level of benefit irrespective of the level of income of the recipient. In times of scarce resources the Government believes support should be targeted at those most in need. My Department, together with the Department of Social and Family Affairs and the Revenue Commissioners are considering how best to achieve this policy objective. The tax treatment of child benefit is also being considered by the Commission on Taxation. I will be informed by its proposals on this matter.

Joan Burton (Dublin West, Labour)
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Question 163: To ask the Minister for Finance if he will set out the effective marginal tax rate for those earning €80,000 per annum or more once the Finance Bill 2009 has been enacted, assuming it is enacted unamended; his views on the recent ESRI study of the distributional impact of the 7 April 2009 budget which asserts that the effective marginal tax rate for higher earners has risen from 43.5% in 2008 to 52% in 2009; and if he will make a statement on the matter. [18947/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I assume the Deputy is referring to a single individual earning €80,000 per annum or more. The position is that a single individual earning between €80,000 and €174,979 will have a marginal tax rate of 50% for 2009. This is a combination of income tax at 41%, income levy at 4% and health levy at 5%. In addition, an individual earning €174,980 or more will have a marginal tax rate of 52% for 2009. This is a combination of income tax at 41%, income levy at 6% and health levy at 5%.

It is important to note that the tax rate is just one factor used in calculating the actual tax an individual pays and should not be viewed in isolation. When tax credits and bands are taken into account, a single individual earner on €80,000 will now have an effective average tax rate of 36%.

With regard to the recent ESRI study on the distributional impact of Budget 2009 and Supplementary Budget 2009, the findings show that disposable income for the lowest 20% of incomes will actually increase by almost 5%. This contrasts with a 7% decrease in disposable income for the highest earning 20% and demonstrates the Governments determination that budgetary measures should be as fair as possible. Those who are best able to pay, pay most while the more vulnerable in society are protected.

The report notes that the marginal tax rate for higher earners has risen from 43.5% in 2008 to 52% in 2009. This is due to the introduction of the income levy and the doubling of the health levy rate, which was essential in order to provide fiscal balance in the extraordinary economic circumstances faced by the country. However, in addition to the point raised in relation to the effective average tax rate, I would point out that that Ireland still continues to have a lower marginal tax rate for high earners when compared with a number of European competitors.