Michael McGrath (Cork South Central, Fianna Fail)
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325. To ask the Minister for Finance if he will address an issue regarding income tax raised by a person (details supplied) in County Waterford; and if he will make a statement on the matter. [38104/15]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware, the State pension, including an increase for a qualifying adult dependent, is chargeable to income tax. Where an individual is entitled to the State pension and such pension is increased by virtue of that individual having a qualifying adult dependant, it remains one pension for tax purposes.

This position was not changed by Finance (No.2) Act 2013 which inserted Section 126 (2B) into the Taxes Consolidation Act 1997 in order to reaffirm the position that any increase in the amount of such a pension in respect of a qualifying adult is treated as if it arises to and is payable to the beneficiary of the pension i.e. the person who qualifies for the pension.  It is, therefore, that person's obligation to declare the pension, including any amount paid in respect of a qualifying adult dependent as part of his or her income.

With regard to the effective tax rates suggested in the details supplied, I am advised by the Revenue Commissioners that, as only the individual in receipt of the State pension is liable to income tax on it, and as any such element of their income is only taxed once, there is no basis for the effective rates suggested. It is also worth pointing out that all social welfare payments are exempt from USC.

I would point out that the changes to the income tax system included in Budget 2015 mean that individuals who paid Income Tax and or USC in 2014 are seeing a reduction in their tax bill in 2015 where incomes are equal. This process is continuing with the Budget 2016 changes, which will lead to a further reduction in the tax burden on low and middle income earners from next year.