Michael McGrath (Cork South Central, Fianna Fail)
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126. To ask the Minister for Finance if he will consider increasing the income exemption limits for a single person or married person aged 65 years or over; and if he will make a statement on the matter. [27736/16]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, the income tax system contains an exemption limit for individuals aged 65 or over. Where an individual's income exceeds the exemption limit, he or she is liable to tax based on the normal system of rate bands and tax credits, but he or she may still benefit from marginal relief. This is explained in further detail in leaflet IT8, available on the Revenue website via the following link: 

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The purpose of the exemption limit is to identify a certain income limit below which a taxpayer aged 65 or over is not required to pay income tax or to submit claims to Revenue for income tax reliefs. This exemption limit does not equate to the amount of income which would be sheltered by the tax credits available to the individual or couple as both the exemption limit and the tax credits available can vary depending on the personal circumstances of the individual.  For example:

- There are separate single and married exemption limits, and increases are also available for individuals with dependent children including incapacitated adult children.

- While all taxpayers have a personal tax credit, a PAYE or an Earned Income credit is available only in respect of qualifying income and is limited for use against that type of income.  Additional tax credits are also available, such as those for widows/widowers, for blind individuals, for those caring for incapacitated children or dependant relatives, and for health expenses incurred by the taxpayer. 

In my view the current income exemption limits are the most appropriate use of limited resources, especially given the constraints on finances available for changes to the tax system in the forthcoming Budget. However, I would point out that in the Programme for Partnership Government there is a commitment to ask the Oireachtas to continue to phase out the Universal Social Charge (USC) as part of a wider medium-term income tax reform plan that keeps the tax base broad, reduces excessive tax rates for middle income earners, and limits the benefit for high earners. Reductions will be introduced on a fair basis with an emphasis on low and middle income earners, including those aged 65 years or over.