Health levy to double for workers earning more than €26,000

ANYONE earning more than €26,000 will pay twice the amount of health tax from May 1 under changes announced yesterday.

For those earning between €26,000 and €75,036, the health levy doubles from 2% to 4%. For those earning above e75,036, the levy doubles from 2.5% to 5%.

Previously, the higher rate had applied to those earning e100,100 and upwards.

Tax expert Michael Lynch said the health levy was “extremely harsh.” It will hit middle-income families who are heavily mortgaged, he said.

“Taking the income levy, the increase in PRSI and the health levy they are losing about 6-7% of their net pay.”

For a married couple with no children earning e100,000, the levy rises from e2,000 to e4,250. A married couple with no children and two incomes earning e200,000 will see the health levy increase from e4,150 to e8,550.

For a single person earning e75,000, it will rise from e1,500 to e3,000.

The health levy is normally paid by everyone in insurable employment and goes back to the Health Service Executive to fund health services. It is payable up to the age of 70.

Yesterday, Health Minister Mary Harney said the additional monies would help offset a e540 million deficit in the HSE’s 2009 budget by raising e160m.

The minister said the HSE had already made e133m in savings that did not affect frontline services.

An additional e100m will be sought later in the year in a supplementary estimate, if the need arises, to fund additional medical cards.

These combined savings would reduce the HSE budget overrun to e147m, Ms Harney said. The HSE has also identified two other areas to save up to e60m.

A e20m cut in capital spending was also announced although it is not known yet what projects will be affected.

Further cuts may be announced in the next two weeks when the minister has finished studying the HSE’srevised service plan for 2009.

Fine Gael health spokesperson Dr James Reilly said while the health levy would double, patients would not benefit because of the HSE’s requirement to save money.

On a positive note, Ms Harney said there would be no increases in statutory charges this year for A&E, private beds in public hospitals, in-patient beds in public hospitals or in the threshold for the Drugs Payment Scheme. Payments under the new consultants’ contract will be addressed under the HSE service plan.