£7 increase in old-age pension expected

 

The Government is expected to add at least £7 to the weekly old-age pension in next week's Budget and to increase significantly tax exemptions for people over 75.

With 10 days to go, the Cabinet will tomorrow discuss the package, which is also due to contain overall tax cuts of up to £400 million in a full year. The Minister for Finance, Mr McCreevy, is expected to outline his proposals to his ministerial colleagues, but sources said last night they did not expect any detail to emerge. ail on December 2nd.

The present old-age pension is £83 a week, with an extra £56.90 for a spouse. The decision to increase the pension by more than twice the rate of inflation is in line with a commitment in the Programme for Government to bring it to £100 a week within the lifetime of this Coalition.

Sources last night said the Minister for Social, Community and Family Affairs, Mr Ahern, was determined to secure increases which would bring the pension "within kicking distance" of the overall target of £100 a week.

At a time of Exchequer buoyancy, the Government was criticised last year for failing to provide a more generous increase when it raised the weekly old-age pension by £5. Mr McCreevy is also expected to make provision for additional relief for older people paying tax on income.

Some inroads were made in this area in 1997, and additional tax exemptions are to be provided in the Budget, primarily aimed at the elderly.

It is also expected that carers of the elderly and long-term ill or disabled at home will also benefit significantly. The ardfheis keynote speech by the Taoiseach, Mr Ahern, has been interpreted by carer groups as indicating that many of their demands will be addressed.

Middle and lower-income groups are expected to benefit most from the Budget's tax package. The Cabinet sub-committee on the Budget is understood to have ruled out the possibility of tax credits, advocated by the Tanaiste, Ms Harney.

They were seen as a fairer way of distributing tax cuts, but the Government takes the view that they are too complex to implement this year at least.

The tax package is likely to be delivered along the lines sought by the social partners to incorporate a widening of the tax bands and increases in allowances. However, a cut in the standard 24 per cent rate seems likely.

No decrease is expected in the higher 46 per cent rate in spite of a commitment in the Programme for Government to reduce this also. The Government is still acutely aware of the severe criticism levelled by the trade union movement, the Conference of Religious in Ireland and other groups over last year's Budget which favoured the better off.

With the crisis in farming continuing, a farm family income supplement is to be provided for those worst hit by falling beef and cereal prices.