Joe Flaherty (Longford-Westmeath, Fianna Fail)
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87. To ask the Minister for Finance if he has any plans to amend the €60,000 USC threshold for the over-70s; and if he will make a statement on the matter. [21521/23]

Michael McGrath (Cork South Central, Fianna Fail)
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The USC was designed and incorporated into the Irish taxation system in 2011 to replace two other charges, namely the Health and Income Levies. When the USC was introduced in 2011 those aged 70 years and over were not liable to the top rates of charge. However, in Budget 2013, it was decided that the reduced rates of USC for those age 70 years and over with an income in excess of €60,000 would be discontinued from 1 January 2013. This measure ensured equity between all citizens with incomes in excess of €60,000.

The USC is an individualised tax, meaning that a person’s liability to the tax is determined on the basis of his/her own individual income and personal circumstances. This means that a married couple, or civil partners, both aged 70 or over can earn up to €60,000 per annum each and not be subject to the higher rates of USC. In addition, the USC does not apply to social welfare payments such as the contributory and non-contributory State pensions. Such social welfare payments are excluded when determining if a person aged over 70 has income that exceeds the €60,000 per annum threshold.

Additionally, it should be noted that those aged 65 and over are currently treated more favourably under the Irish income tax system than the generality of taxpayers. For example, persons aged 65 or over may avail of the age tax credit, which currently amounts to €245 per year for single persons or €490 per year for married couples or civil partners. Persons aged 66 and over are also exempt from PRSI.

As such, I have no current plans to increase the threshold for the reduced rate of USC for persons aged 70 or over.

The Commission on Taxation and Welfare recently reviewed the tax system in the round. The Commission recommended that age should be removed as a factor for determining the charge to income tax and USC, as it breaches the principle of horizontal equity and the concept of inter-generational equity. Further information is available at the following link: www.gov.ie/en/publication/7fbeb-report-of-the-commission/

Finally, my Department is currently undertaking a review of the personal tax system, which will take account of the Commission on Taxation and Welfare recommendations and other personal tax matters.