Dáil Éireann - Volume 514 - 09 February, 2000

Written Answers. - Pension Provisions.

171. Mr. N. Ahern asked the Minister for Finance if he will refer to cases of people on long-term invalidity pensions who have paid contributions for 30 or 40 years before falling into bad health and whose spouses still work resulting in their invalidity pensions being taxed; when taxation of invalidity pension was introduced; the thinking and philosophy behind this decision; the compensatory increase, if any, made in social welfare payments at the time; if some improvements will be considered or special tax allowance [287] granted based on their many years of insurable employment; and if he will make a statement on the matter. [3728/00]

Minister for Finance (Mr. McCreevy): It is a general principle of taxation that, as far as possible, income from all sources should be subject to taxation. In line with this principle, the majority of social welfare payments, including invalidity pension are reckonable as income for tax purposes. Invalidity pension has been taxable since its introduction in 1970.

The extent to which taxation actually arises in a given case depends, of course, on the amount of other income that the social welfare recipient, or the recipients spouse has in the particular tax year. If there is no other income in addition to the social welfare payment, the existing exemption limits and allowances can be expected to ensure that there is no tax to be paid on the social welfare income itself.