Michael McGrath (Cork South Central, Fianna Fail)
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336. To ask the Minister for Finance in the context of other tax changes in the budget, the reason he did not review the income exemption limits for people aged over 65 years of age and the marginal relief rate of 40%; and if he will make a statement on the matter. [41933/14]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware that all aspects of the tax code are reviewed in the normal course of preparing the annual Budget and Finance Bill. As we begin to emerge from a prolonged economic downturn, the Government has chosen to utilise the limited fiscal space available to it in order to assist with job creation and economic growth. The income tax changes announced in the Budget are designed to ensure that work pays and to help individuals to transition from unemployment back into jobs and indeed to remove potential blockages that may be deterring part-time workers from taking on additional hours of employment. 

I have long said that the burden of the income tax system in Ireland is too high and that I would seek to reduce it as soon as it was prudent to do so. The measures announced in the Budget are the first stage of a reform plan, to be undertaken over a number of years, to address this issue, particularly for low and middle-income earners who have borne the greater share of the cost of the economic downturn.

In Budget 2015 I have reduced the two lower rates at which USC is payable from 2% and 4% to 1.5% and 3.5%, respectively. I have also increased the bands of income on which these new lower rates will apply. Furthermore, I have also increased the threshold before which the 7% rate of USC becomes payable to €17,576, so that those on the minimum wage will now only be liable to a maximum 3.5% rate of USC.

The Budget also provides for the retention of the exemption from the top rates of USC for medical card holders with incomes that do not exceed €60,000. These individuals will now only be liable to pay a maximum USC rate of 3.5%, down from 4%. This reduced rate will also apply to the over 70s, with incomes that do not exceed €60,000, again down from 4%.

It should be noted that the over 65s, who currently pay USC, will benefit from these changes regardless of whether they opt for assessment under the general income tax system, or the age exemptions and marginal relief systems. Such individuals can of course elect for assessment under whichever system proves more beneficial to them.