Eoghan Murphy (Dublin South East, Fine Gael)
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Question 146: To ask the Minister for Finance his views on a proposal regarding the VHI health insurance premiums and income tax (details supplied). [11825/11]

Michael Noonan (Limerick City, Fine Gael)
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The position is that health expenses relief is granted at the standard rate only, in respect of expenses incurred from 1 January 2009 except for nursing home expenses which continue to be granted at the marginal rate (up to 41%). Further information can be found in leaflet IT6 and Tax Briefing 68 on www.Revenue.ie

It should be noted that the Finance Act 2010 also allows relief at the marginal rate in respect of private contributions made towards the cost of the upkeep of an individual under the Fair Deal Scheme for nursing home care.

Section 470 of the Taxes Consolidation Act 1997 provides for income tax relief in respect of payments made to authorised insurers under relevant contracts in respect of medical insurance and dental insurance. Income tax relief is granted at the standard rate of tax and is generally granted at source under the Tax Relief at Source system (TRS).

In order to provide additional assistance to those aged 60 years or more, additional tax credits are made available under section 470B of the Taxes Consolidation Act 1997 where medical insurance is renewed or entered into. The amount of these additional tax credits was increased by section 9 of the Finance Act 2011 and is now €625 where the individual is aged between 60 and 70 years; €1,275 where the individual is aged between 70 and 80 years; and €1,725 where the individual is aged over 80 years. These additional tax credits are also given under the TRS system.

The universal social charge (USC) was introduced with effect from 1 January 2011. USC applies to gross income without any provision for tax credits or reliefs for expenditures such as pension contributions or medical expenses. There is an exempt annual threshold of €4,004 (€77 per week). However, where this threshold is exceeded, the entire amount is chargeable.

The standard rates of charge are:

- 2% on the first €10,036,

- 4% on the next €5,980, and

- 7% on the balance.

The USC does, however, provide relief for those who are in possession of a full medical card or a Health Amendment Act card or who are aged 70 years or over in that the maximum rate of charge of USC for individuals in receipt of employment or pension income is capped at 4% irrespective of the level of their income. In the case of individuals who are in receipt of income subject to the self-assessment system of taxation, this 4% rate increases to 7% where an individual's income from self-employment exceeds €100,000.

A comprehensive publication of "Frequently Asked Questions" (FAQs) in relation to the USC has been posted on the Revenue website and is updated at regular intervals.

This charge is separate from income tax.

I should point out that there is no proposal in the Programme for Government to allow income tax relief or USC relief at the marginal rate in respect of healthcare costs or health insurance premiums.

However, as a matter of policy, taxation measures are reviewed on a regular basis as part of the annual Budget and Finance Bill process.