Sir, – Brendan O'Donoghue (August 15th) is right to point out that tax relief on medical expenses is no use if you don't earn enough to pay tax. However this is but one of the many inequities caused by our threshold-based social support system.
For example, if an aspiring student from a very disadvantaged background takes a summer job and earns, say, €1,000, they could easily find that their family income, which is used to calculate grant eligibility, then exceeds the threshold for the highest rate of grant. This could result in a loss of almost €3,000, giving a marginal tax rate of 300 per cent. This is unjust and unnecessary.
Unjust because no one should face such confiscatory levels of tax.
After all, we are repeatedly told that at a marginal rate of 60 per cent our highest earners would lose the “incentive to work”.
Unnecessary because the single step-like cut-off arrangement is a hangover from pre-computer days when eligibility had to be calculated manually.
It is a trivial IT problem to arrange for a graduated payment of benefits so that those marginally above the limit receive some (reduced) benefit. Of course, if this change is to be revenue-neutral, those just below the limit will see some reduction in benefit also. Similar changes across a range of benefits would together deliver increased equity and economic efficiency. – Yours, etc,
Dr KEVIN T RYAN,
Castletroy Heights,
Limerick.