Written Answers - Tax Code.

Wednesday, 22 November 2006

Dáil Eireann Debate
Vol. 628 No. 1

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  101.  Mr. Broughan  Information on Thomas P. Broughan  Zoom on Thomas P. Broughan   asked the Minister for Finance  Information on Brian Cowen  Zoom on Brian Cowen   the percentage of taxpayers currently paying tax at the top rate of 42%; and if he will make a statement on the matter. [39227/06]

Minister for Finance (Mr. Cowen): Information on Brian Cowen  Zoom on Brian Cowen  I am advised by the Revenue Commissioners that the most up-to-date estimates of the information requested by the Deputy are as follows:

Numbers of income earners on income tax record

Year Exempt Paying at 20% or less Paying at greater than 20% Total
2006 776,100 937,700 446,700 2,160,500
35.9% 43.4% 20.7%

[227]These figures allow for the fact that many income earners pay no tax at all; many pay tax at a standard rate but pay a much lower average rate because of the application of credits. And for many taxpayers who are, strictly speaking, liable for tax at the higher rate on part of their income, the amount of their liability at the higher rate is fully offset by their tax credits. In fact, tax credits fully offset the 42% liability in the case of all but about 20% of all income earners. Effectively, therefore, many of the ‘top rate’ taxpayers actually pay at an average rate of 20% or less.

  102.  Mr. Durkan  Information on Bernard Durkan  Zoom on Bernard Durkan   asked the Minister for Finance  Information on Brian Cowen  Zoom on Brian Cowen   his plans to revise the rate and thresholds in respect of stamp duty; and if he will make a statement on the matter. [39124/06]

Minister for Finance (Mr. Cowen): Information on Brian Cowen  Zoom on Brian Cowen  As the Deputy is aware, I do not comment on possible tax changes ahead of the budget.

  103.  Mr. Hayes  Information on Tom Hayes  Zoom on Tom Hayes   asked the Minister for Finance  Information on Brian Cowen  Zoom on Brian Cowen   if he has studied proposals for tax reform to ease the operation of charities; and his views on proposals for VAT compensation, threshold for donation relief and duty relief on banking cards. [39148/06]

Minister for Finance (Mr. Cowen): Information on Brian Cowen  Zoom on Brian Cowen  As with all tax reliefs, the scheme of tax relief for donations is constantly kept under review and any proposals submitted are examined carefully by my Department.

On the subject of VAT compensation, the position is that charities and non-profit groups engaged in non-commercial activity are exempt from VAT under the EU Sixth VAT Directive, with which Irish VAT law must comply. This means they do not charge VAT on the services they provide and cannot recover VAT incurred on goods and services that they purchase. Essentially only VAT registered businesses which charge VAT are able to recover VAT.

I understand that the Irish Charities Tax Reform Group (ICTRG) accepts that charities cannot be granted VAT refunds through the tax system. However, they are seeking the introduction of a grant or subsidy in lieu of the VAT charities pay on their business inputs and estimate that this would cost the Exchequer €18 million per annum.

[228]The Revenue Commissioners have advised that there are currently 7,000 charities registered with them. It is therefore likely that the introduction of a scheme along the lines proposed by the ICTRG would cost the Exchequer significantly more than the €18 million they have estimated. The introduction of a grant in lieu of VAT paid by registered charities would undoubtedly lead to other exempt bodies such as schools, hospitals and sporting organisations, many of which are already registered as charities, seeking to benefit from such a system. These are in most cases already receiving considerable Exchequer funding.

Finally, even if funds were available to introduce such a grant scheme, relieving charities registered with the Revenue Commissioners of the VAT paid on inputs as opposed to grant-aiding their activities using other criteria is not considered the most appropriate use of Exchequer funds.

On the issue of the threshold for donations relief, amending the scheme to increase the tax relief available could significantly increase the current cost of the scheme to the Exchequer. The relief is already very generous. There is no upper limit on the amount which can be donated generally and relief is granted at the donor’s marginal rate of income tax. Donations can be cumulative, so that a donation of just €5 per week over the course of a year would qualify, for example. The donations scheme was one of the tax reliefs examined as part of last year’s overall review of tax reliefs and exemptions. The review concluded that the €250 minimum threshold is serving its purpose and should be retained at its current level, subject to ongoing review. I agree with this conclusion.

With regard to duty relief on banking cards, I assume the Deputy is referring to the proposal to introduce a donation scheme in relation to the stamp duty paid on such cards. I have no plans to introduce a scheme along the lines proposed. In line with normal practice, stamp duty revenues are applied by the Exchequer for the common good, as determined by the Oireachtas. Earmarking particular taxes reduces the discretion of Government and the Oireachtas in determining the priority areas in which public money should be spent.


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