This 'hidden' health tax hits middle-income families hard
TAXPAYERS were shocked when they learned from the announcements made in the crisis Budget that the health levy was to double, with many people not realising that they ever paid a health levy.
The Budget hit middle- income families, especially those with young children, hardest.
In the Budget the income levy was doubled, the health levy was doubled, mortgage interest relief was abolished for non first-time buyers and the PRSI ceiling was raised.
But many people were unaware they have being paying a health levy up to now.
The levy has been in place for 38 years but because it is rolled into PRSI, they may not have realised this.
On most people's payslips the health levy is just lumped in with PRSI and labelled 'PRSI'.
PRSI is charged at 4pc and, following the emergency Budget it will be paid on income up to €75,036, and not on income up to €52,000.
The health levy is now to rise on May 1 from 2pc to 4pc for those earning up to €75,036 and to 5pc for those earning more than this amount.
This means that PRSI and the health levy combined for anyone earning more than €75,000 will be 9pc.
At the moment the levy is 2pc of income above €26,000 and up to €100,100. For amounts over this the health levy is 2.5pc.
But from the start of next month the income levy will be charged at 4pc on income above €26,000 a year or €500 a week. For income over €75,036 the levy will be 5pc.
Director of taxation with the Institute of Chartered Accountants in Ireland, Brian Keegan, said the levy is supposed to go to the Department of Health and Children to help fund the health services.
The Health Contributions Act, 1979, places an obligation on each person over the age of 16 and under 70 to pay contributions towards the cost of the health service. This act repealed early legislation.
Health levies are not paid by those who receive a number of social welfare benefits.
These include those receiving survivors' pensions, widow's (non-contributory) pensions, deserted wife benefit, death benefit, deserted wife allowance, one-parent family benefit and corresponding pensions from an EU member state.
The health levy does not apply to those with medical cards, and payments made under a legally enforceable maintenance agreement.
