Written Answers - Tax Yield

Tuesday, 15 June 2010

Dáil Eireann Debate
Vol. 712 No. 2

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  145.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from an increase in the standard rate of income tax by 1%, 2%, 3%, 4% or 5%; and if he will make a statement on the matter. [25366/10]

Minister for Finance (Deputy Brian Lenihan): Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan  I am informed by the Revenue Commissioners that the full year yield to the Exchequer, estimated by reference to 2010 incomes, of changing the standard rate of tax by 1%, 2%, 3%, 4% or 5% would be approximately €420 million, €840 million, €1,260 million, €1,680 million and €2,100 million respectively.

[242]The figures are estimates from the Revenue tax-forecasting model using actual data for the year 2007 adjusted as necessary for income and employment trends for the year 2010. They are therefore provisional and likely to be revised.

A basis for providing corresponding figures for 2011 is not yet available.

  146.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from an increase in the higher rate of income tax by 1%, 2%, 3%, 4% or 5%; and if he will make a statement on the matter. [25367/10]

Minister for Finance (Deputy Brian Lenihan): Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan  I am informed by the Revenue Commissioners that the full year yield to the Exchequer, estimated by reference to 2010 incomes, of changing the higher rate of tax by 1%, 2%, 3%, 4% or 5% would be approximately €145 million, €290 million, €435 million, €580 million and €725 million respectively.

The figures are estimates from the Revenue tax-forecasting model using actual data for the year 2007 adjusted as necessary for income and employment trends for the year 2010. They are therefore provisional and likely to be revised.

A basis for providing corresponding figures for 2011 is not yet available.

  147.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from a reduction in the personal income tax credit of €100, €200 for a married couple with one income; and if he will make a statement on the matter. [25368/10]

Minister for Finance (Deputy Brian Lenihan): Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan  I am informed by the Revenue Commissioners that the full year yield to the Exchequer, estimated by reference to 2010 incomes, of reducing the single person tax credit by €100 would be of the order of €155 million. The reduction mentioned in the Deputy’s question is assumed to apply in similar measure to widowed persons and to include the normal consequential reductions in the tax credit for lone parents and the married tax credit.

The figures are estimates from the Revenue tax-forecasting model using actual data for the year 2007 adjusted as necessary for income and employment trends for the year 2010. They are therefore provisional and likely to be revised.

A basis for providing corresponding figures for 2011 is not yet available.

  148.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from the introduction of a new rate of tax of 48% on individual incomes over €100,000 and married couple incomes over €200,000; and if he will make a statement on the matter. [25373/10]

Minister for Finance (Deputy Brian Lenihan): Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan  It is assumed that the threshold for the proposed new tax band mentioned by the Deputy would not alter the existing standard rate band structure applying to single and widowed persons, to lone parents and married couples.

I am advised by the Revenue Commissioners that the estimated full year yield to the Exchequer, estimated by reference to 2010 incomes, of the introduction of a new 48% rate would be of the order of €375 million. Given the current band structures, major issues would need to be resolved as to how in practice such a new rate could be integrated into the current system and how this would affect the relative position of different types of income earners.

[243]This figure is an estimate from the Revenue tax-forecasting model using actual data for the year 2007, adjusted as necessary for income and employment trends for the year 2010. It is therefore provisional and likely to be revised.

A basis for providing corresponding figures for 2011 is not yet available.

  149.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from increasing the carbon tax to a rate of €25 per tonne of carbon; and if he will make a statement on the matter. [25374/10]

Minister for Finance (Deputy Brian Lenihan): Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan  I am informed by the Revenue Commissioners that the estimated notional yield, inclusive of VAT, in 2010 and 2011 from the carbon tax if the rate remains at €15 per tonne or was set at €25 per tonne is set out below:

2010 Est. Yield (inclusive of VAT) 2011 Est. Yield (inclusive of VAT)
€m €m
Carbon Tax @ €15 per tonne 250 330
Carbon Tax @ €25 per tonne 420 550

  150.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from increasing the rate of capital acquisitions tax by 1%, 2%, 3%, 4% or 5%; and if he will make a statement on the matter. [25375/10]

Minister for Finance (Deputy Brian Lenihan): Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan  I am advised by the Revenue Commissioners that the estimated full year yield to the Exchequer from increasing the Capital Acquisitions Tax rate by 1%, 2%, 3%, 4% or 5%, based on the Budget estimate of €240 million for 2010, could be in the region of €9.5 million, €19 million, €29 million, €38 million and €48 million respectively.

It should be noted that this estimate is based upon an assumption that there would be no behavioural impact of such an increase, which could lead to a less than expected result from a change to the tax rate. In addition, the realisation of any estimated yield from an increase in taxation on assets relating to property is subject to movements in the value of such assets, which are currently occurring in the economy.

A basis for providing corresponding figures for 2011 is not yet available.

  151.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from increasing the rate of capital gains tax by 1%, 2%, 3%, 4% or 5%; and if he will make a statement on the matter. [25376/10]

Minister for Finance (Deputy Brian Lenihan): Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan  I am informed by the Revenue Commissioners that the estimated full year gain from increasing the rate of Capital Gains Tax (CGT) by 1% is €16 million; by 2% is €32 million; by 3% is €48 million; by 4% is €64 million; and by 5% is €80 million. These estimates assume no behavioural changes on the part of taxpayers.

CGT is very dependent on individual behaviour and a change in rate may not produce a corresponding increase or decrease in tax yield. In current economic conditions any estimate of additional yield must be treated with caution. In addition, increasing the rate could, in theory, lead to a reduction in yield from the tax.

A basis for providing corresponding figures for 2011 is not yet available.

[244]

  152.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from introducing a tax at the rate of one cent per text on mobile telephone texts; and if he will make a statement on the matter. [25377/10]

Minister for Finance (Deputy Brian Lenihan): Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan  I am informed by the Commission for Communications Regulation (ComReg) that no projections are made for mobile telephone usage, whether calls or texts. The only basis for estimating the yield from a tax on text messages is the figures for mobile telephone usage per quarter supplied by the companies to ComReg. In the 12 months to end December 2009, the last 12 month period for which figures are available, over 11.912 billion SMS messages and over 56 million MMS messages were sent in Ireland, a total of over 11.969 billion messages. At those usage rates, a levy of one cent on such messages could raise c. €119 million per annum. However, this potential yield does not take account of any behavioural impact that might result if a levy was directly imposed on customers or imposed on the mobile phone companies and passed on to customers.

While I am not aware of a similar tax anywhere else in the world, I would point out to the Deputy that text messages are already subject to VAT at 21%.

  153.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from the imposition of a cap of €50,000 on artists’ tax exemption; and if he will make a statement on the matter. [25378/10]

Minister for Finance (Deputy Brian Lenihan): Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan  It is assumed that the imposition of a cap of €50,000 as mentioned in the question would have the effect of withdrawing the tax exemption from all qualifying income in excess of €50,000. On this basis, I am advised by the Revenue Commissioners that the full year yield to the Exchequer, estimated by reference to the claims for the exemption made in income tax returns for the tax year 2007, the latest year for which the necessary detailed information is available, could have been of the order of €20 million.

However, it should be noted that this figure does not take account of the current application of the restriction of reliefs measure to the exemption of certain earnings of writers, composers and artists and thus the actual yield achievable at this stage could be significantly lower. The restriction was originally provided for in section 17 of Finance Act 2006 and was significantly tightened in Section 23 of Finance Act 2010. Individuals are now subject to the restriction where they have adjusted income of €125,000 and claim specified tax reliefs of €80,000 or more. Those subject to the full restriction will pay an effective income tax rate of 30% in addition to PRSI and levies.

In addition, it must be stressed that this estimate assumes no significant behavioural change on the part of the affected taxpayers. Moreover, the application of income tax to this income source could also lead to additional claims being made for expenses and allowances by persons currently exempt.

  154.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from the abolition of tax relief on trade union subscriptions; and if he will make a statement on the matter. [25379/10]

Minister for Finance (Deputy Brian Lenihan): Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan  I am informed by the Revenue Commissioners that the most recent year for which the necessary detailed information is available regarding tax relief for trade union subscriptions is the income tax year 2006, in which the cost to the Exchequer is estimated at approximately €19 million. On this basis, the full year yield to the Exchequer of abolishing tax relief for trade union subscriptions would be of the same order, [245]although it should be noted that the value of the relief was increased from €300 to €350 in Budget 2008. At that time, it was estimated that the increase in the relief would cost approximately €3 million in a full year.

  155.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from the abolition of heritage relief; and if he will make a statement on the matter. [25380/10]

Minister for Finance (Deputy Brian Lenihan): Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan  I am advised by the Revenue Commissioners that estimates of the full year cost to the Exchequer of tax reliefs for heritage items and property are reproduced in the following table:

Heritage Relief Year Cost
€m
Payment of tax by means of donation of heritage items. 2009 0.7
Payment of tax by means of donation of heritage property to the Irish heritage trust. 2009 0.0
Income tax relief for expenditure on heritage buildings and gardens. 2006 6.0
CAT exemption for heritage property and heritage property of companies. 2008 0.0

On this basis, the full year yield to the Exchequer of abolishing these reliefs would be of the same order.

A basis for providing corresponding figures for 2010 and 2011 is not yet available.

  156.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from the imposition of a cap of €200,000 on public sector salaries; and if he will make a statement on the matter. [25381/10]

  157.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from the implementation of a cap of €175,000 on public sector salaries; and if he will make a statement on the matter. [25382/10]

  158.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from increasing the public sector pension levy by 1% on salaries between €150,000 and €200,000; and if he will make a statement on the matter. [25383/10]

Minister for Finance (Deputy Brian Lenihan): Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan  I propose to takes Questions Nos. 156 to 158, inclusive, together.

The implementation of the pay reductions provided for under the Financial Emergency Measures in the Public Interest (No. 2) Act, 2009 substantially altered the range of earnings of public servants to that which applied in 2009. The estimates sought by the Deputy are based upon the pay reductions implemented with effect from 1 January 2010.

A substantial cohort of staff, principally medical consultants, who were earning in excess of €200,000 in 2009 are, after the implementation of the pay reduction, encompassed by the proposed pay cap thresholds of €175,000 and €200,000. On this basis, it is estimated that if a cap was imposed on public sector salaries at €200,000 it would yield savings in the region of €1.6m in 2010 and €3.1m on a full year basis in 2011, while it is estimated that a similar cap on salaries at €175,000 would produce savings of the order of €9.1m in 2010 and €18.2m on a full year basis in 2011.

[246]The estimated yield through the application of an increase of an additional 1% in the pension levy on all earnings in the case of those earning above €150,000 would be in the region of €2.5m in 2010 and €5m on a full year basis in 2011.

  159.  Deputy Joan Burton  Information on Joan Burton  Zoom on Joan Burton   asked the Minister for Finance  Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan   the expected yield in 2010 and 2011 from the abolition of performance related pay in the public sector, including the Civil Service and the Health Service Executive; and if he will make a statement on the matter. [25384/10]

Minister for Finance (Deputy Brian Lenihan): Information on Brian Joseph Lenihan  Zoom on Brian Joseph Lenihan  It is estimated that the abolition of performance related awards in the public service would yield approximately €8.0 million in 2010 and 2011.


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