McCreevy Rejects Tax Swap Proposal

by Jason Gorringe, Tax-News.com, London

18 September 2001

Irish Finance Minister Charlie McCreevy has rejected a proposal which would allow married couples to transfer income between them retrospectively at the end of the tax year, saying that it would 'run contrary' to what he has been trying to achieve for the last two budgets.

Mr McCreevy, who is already under pressure regarding his forthcoming budget, with a shrinking surplus and constant EU scrutiny possibly at the forefront of his mind, was challenged by Fine Gael front bencher Gay Mitchell who pointed out that an anomaly in the tax system means that some Irish couples pay greatly increased taxes on income compared to others.

According to Mr Mitchell, as a result of the difference in treatment between married one-income, and married two-income families, a couple could be paying up to £12 per week, or around £600 per year, more than the couple living next door.

However, the Finance Minister defended the provision, saying that the difference in treatment is 'an inherent part of the policy of widening the standard rate band,' a policy which he has been pursuing for the last two budgets, and which will ultimately involve the unbundling of the tax affairs of married couples, with each person having their own standard rate band.

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