asked the Minister for Finance the expected yield of a 5 per cent social security tax of corporate profits in a full financial year, as recommended by the Commission on Taxation.
Written Answers - Tax Yields.
84.
It is tentatively estimated that a 5 per cent social security tax would yield £85 million in a full year. This assumes that the tax would be levied on the taxable profits of all companies prior to the deduction of capital allowances. If companies benefiting from "Shannon" relief and export sales relief were excluded from the charge, the yield would be about £70 million in a full year. However, if the introduction of this measure was accompanied by the removal of the employer's PRSI contribution for corporate employers, these Exchequer gains would become losses. On the basis of available figures, it is not possible to quantify these losses.
The above calculations are based on figures for taxable profits arising under the current tax regime. The Commission on Taxation recommended major changes in the corporation tax, income tax and social insurance structures. The introduction of a 5 per cent social security tax on corporate profits was recommended as part of this restructuring. The Revenue Commissioners estimated that for the tax year 1983-84 the implementation of the commission's corporation tax reforms (including the replacement of employers' PRSI by a social security tax on corporate profits) would prove costly to the Exchequer — a sum of the order of £200 million would have to be foregone.
85.
asked the Minister for Finance if he will give the expected yield in a full financial year of 1 per cent tax on (a) sales of goods (b) sales of services and (c) company investment income.
As regards (a) and (b), the information requested by the Deputy, in so far as it is available, is provided in relation to the current system of value-added tax. It is estimated that the yield from the application of a 1 per cent rate to the current VAT base (including the zero base) would be £110 million in the full year 1988.
Because of the manner in which VAT returns are completed, separate figures in respect of sales of goods and sales of services cannot be given.
As regards (c) statistics are not available which would enable the information requested by the Deputy in relation to the investment income of companies to be provided. Such information could not be obtained without undertaking an inquiry which could be carried out only at a disproportionate cost.
86.
asked the Minister for Finance the base for the 2½ per cent turnover tax introduced in the 1960s, and the income it would have yielded for the most recent year for which an estimate could be made.
The base for the turnover tax in respect of the last full financial year in which it was in operation, that is the year ended 31 March 1972, is broadly estimated at £6,000 million, in current financial terms. At a rate of 2½ per cent the annual yield therefrom would be about £150 million and at a rate of 5 per cent (that is the rate which applied in the above-mentioned year) about £300 million.