asked the Minister for Finance if his attention has been drawn to a report that the tax free allowance in respect of elderly dependants will be reduced by half as a result of the recent increase in the contributory old age pension allowance; and if he will make a statement on the matter.

54.

asked the Minister for Finance whether he is aware that the recent 7/6d social welfare increase is worth approximately only 3/7d per week in cases where social welfare recipients are supported by people in receipt of tax free allowances in respect of these dependent relatives; and what steps he intends to take to ensure that social welfare increases are not offset by decreases in tax free allowances.

55.

asked the Minister for Finance if he is aware that the income tax allowance in respect of a dependent relative is £60 only if the total income of the relative does not exceed £140; and that where the income exceeds £140 the allowance of £60 is reduced by the amount of the excess; and if he will take steps to increase the allowance by at least as much as the increases in widows' and old age pensions, etc., to avoid a situation where such increases in these pensions are, in effect, financed by the pensioner's relative.

With your permission, A Cheann Chomhairle, I propose to take Questions Nos. 53, 54 and 55 together, as they raise the same point.

The social welfare increase of 7s 6d per week is being paid in full, without deduction of any kind, to the social welfare recipient. The tax allowance of £60 granted to a taxpayer in respect of a dependent relative who is a social welfare recipient is an entirely separate question.

The position prior to 1963 was that, if a dependent relative had an income not exceeding £120, the taxpayer maintaining him was granted a tax allowance of £60. But if the dependent relative's income was even £1 above the £120 limit, the taxpayer lost the entire £60 tax allowance.

The Finance Act, 1963, relieved this position by providing that, if the dependent relative's income was more than £120 the tax allowance of £60 would be reduced by £1 for every £1 by which the dependent relative's income exceeded £120. Thus, if the dependent relative's income were, say, £150, the tax allowance would be £30.

The Finance Act, 1967, raised the limit of the dependent relative's income from £120 to £140. At present, therefore, if the income is, say, £180, a tax allowance of £20 is granted.

I should like to make it clear that, whereas the dependent relative's social welfare allowance is being increased by 7s 6d a week—or £19 10s 0d in a full year—there would not be a corresponding loss of £19 10s 0d to the taxpayer. At most he would lose seven shillings in the £ on that amount, that is, £6 16s 6d a year or 2s 7d a week.

Does the latter part of the reply mean that the allowance is not in fact reduced by the amount of the excess—that is the excess above £140 income—for the dependent relative? Is it not reduced only by 7s 6d in the £ of the excess?

The allowance is reduced pound for pound but that is only a loss of 7s in the £ to the taxpayer. The £60 is reduced pound for pound as the dependent relative's income exceeds the £140.

Does the Minister agree that, in practice, where the £60 allowance was charged to the relative, in that category of case what has happened is that the social welfare increase is in fact being financed entirely by the relative who was formerly getting the £60 dependent relative allowance.

That does not follow. Even if the £19 10s a year, equivalent to 7/6d a week were deductible from the taxpayer's £60 allowance he still only suffers loss at the standard rate.

The Minister will agree there is a loss?

The reduction only affects the taxpayer as to 7/- in the £.

To that extent, that particular taxpayer is financing that particular dependent relative's increase in social welfare.

Will the Minister agree there is a total loss to the family unit?

It is not fair to take the two things together. The social welfare recipient is entitled to an increase of 7/6d and he gets it. A totally different set of circumstances relates to the taxpayer who maintains a dependent relative. If the dependent relative has no income, the allowance is £60, and if he had an income of up to £140 the taxpayer still gets the full £60 allowance.

It is taken off him, in certain cases, by way of old age pension.

Regarding it for the moment on the basis of family income, if A is a taxpayer and B is an old age pensioner—a social welfare recipient who has got the increase—is it not a case of robbing Peter to pay Paul?

There are two separate people involved. In respect of one the State is prepared to undertake certain obligations, rightly, we would all agree. In that case we are giving the 7/6d increase. The other is a case of a person who is contributing to the Exchequer. His position is different.

But the Minister will agree that the main burden in the case of old age pensioners falls on a household. Where one of the family is caring for an old age pensioner he actually loses on it. There is no inducement for him to claim in respect of it.

Surely the Labour Party are going round the bend when they expect the community to pay a son for keeping his father?

He should not lose on it.

Surely the Minister is Christian enough to agree that if somebody must keep a father it is better that it should be his son?

He should not be penalised for it. Deputy MacEntee was born in the county home.

All these matters are looked at as sympathetically as we can possibly do so. I think the House will agree with that.