Dáil Éireann Debate, Wednesday - 1 June 2022
84. Deputy Catherine Connolly asked the Minister for Finance the estimated amount of additional savings that could be made by not indexing income tax bands and income tax rates; and if he will make a statement on the matter. [28286/22]
Amharc ar fhreagraThe Programme for Government, “Our Shared Future”, states that “from Budget 2022 onwards, in the event that incomes are again rising as the economy recovers, credits and bands will be index linked to earnings. This will be done to prevent an increase in the real burden of income tax, to prevent more low income workers being taken into the tax net because of no changes to the tax system and to ensure there is no increase in the number of people having to pay higher income tax and USC rates”.
The Summer Economic Statement (SES), which will be published in the coming weeks, will include a high level update to the fiscal forecast published in April. The SES will also set-out a budgetary framework within which Budget 2023 can be delivered.
For the information of the Deputy, page 9 of Revenue’s post-Budget 2022 Ready Reckoner, published in November 2021, includes the estimated cost of indexation at 1 percent point, across the main tax credits and standard rate income tax bands, as well as USC rate bands and exemption limits. This information is set out in the table below or available at the following link –
www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf.
|
Cost of Indexation at 1% |
First Year €m |
Full Year €m |
|
Personal Tax Credits with rate bands |
120 |
138 |
|
Exemption limits, Personal Tax Credits with rate bands |
125 |
144 |
|
PAYE Credit, Exemption limits, Personal Tax Credits with rate bands |
155 |
178 |
|
Earned Income Credit |
2 |
3 |
|
USC rate bands and Exemption Limits |
20 |
24 |
Apart from providing a basis to calculate indicatively the cost of a given level of indexation, the information in the table may also be used to estimate roughly the annual savings that might arise from a policy of non-indexation.
