Written Answers. - Income Tax Payments.

Proinsias De Rossa

Question:

97 Proinsias De Rossa asked the Minister for Finance if he will outline in respect of each of the past five years the average amount of income tax paid by (a) PAYE workers (b) farmers and (c) the self-employed.

Following is the information requested:

Average tax payment made by

Year

(a)

(b)

(c)

PAYE

Farmers

Other self-employed

£

£

£

1985

2,457

672

1,958

1986

2,690

629

2,097

1987

2,904

585

2,829

1988*

3,084†

1,349†

5,452†

1988**

2,982†

724†

3,628†

1989

3,123†

820

2,878†

†Provisional — subject to revision.
* Includes the effects of the tax amnesty in 1988.
** Excludes the effects of the tax amnesty.
The figures in column (a) of the table are based on income tax collected through the PAYE mechanism which covers more than income tax on ordinary wages and salaries. It includes tax paid by directors of close companies who are akin to the self-employed as well as tax on "other income" of employees such as rent and other investment income. It also includes the tax paid under PAYE on the income from employment of farmers and other self-employed individuals.
NOTES ON TABLE
Column (a)
(i) The average tax payment for each year is obtained by dividing the net receipt of PAYE tax in each calendar year by the number of taxpaying units effectively liable to tax in the income tax year in which the calendar year ends e.g. the 1985 net receipt is divided by the number liable to tax in 1985-86.
Column (b)
(i) In calculating the figures in this column the estimated net receipt from farm taxation in each calendar year has been divided by the number of farming tax units assessed to tax on their farming profits in the year of assessment in which the calendar year ends e.g. the 1985 receipt is divided by the number assessed for the year 1985-86, irrespective of whether the assessed tax was actually payable.
(ii) The reduction in the average tax payments made by farmers over some of the years in question is mainly due to the introduction of additional numbers of farmers to tax records since 1983-84 consequent on the abolition of the rateable valuation threshold. It follows that the new cases, in general, had much smaller holdings and consequently had, on average, lower taxable incomes.
(iii) Full-time farmers and farmers who, or whose spouses, carry on another trade or profession have been included in the calculations in respect of tax paid on their farming profits.
(iv) Income tax on farming profits is collected with schedule D tax generally and because of this it cannot be separately distinguished. Accordingly, the figures shown for tax payments by farmers are estimated.
Column (c)
(i) The figures contained in this column are obtained by dividing the estimated net receipt of income tax from other self-employed tax units in each calendar year by the estimated number of those units assessed to tax in the year of assessment in which the calendar year ends as explained in note (i) for column (b).
(ii) Some of the increases in the average tax payments made by other self-employed in 1987 and 1988 are due to the introduction of the withholding tax on professional fees in 1987 and the combined effects of the tax amnesty, the introduction of the selfassessment system and a full year payment of the withholding tax in 1988.
Columns (a), (b) and (c)
(i) A married couple who has elected or has been deemed to have elected to have the income of both spouses assessed on the husband is counted as one tax unit.
(ii) Some figures in the columns differ from those given previously. This is due to more accurate information becoming available in the meantime.
(iii) Receipts of deposit interest retention tax and tax deducted by building societies under the former composite rate arrangements are not included in the calculations. Basic data are not available which would enable the amounts of these taxes referable to interest paid or credited to particular classes of taxpayers to be ascertained.