I propose to take Questions Nos. 4, 74 and 86 together.
I have received representations from employers, employees and from various representative bodies about the changes which I announced in the budget in relation to the taxation of the benefit from the availability for private use of company cars. I have met with some of these groups and my officials have met others. I have, of course, been responding to these representations and will continue to do so as I receive them.
The Deputies will appreciate that this aspect of income tax cannot be seen in isolation from the totality of the measures taken in the income tax area in the budget — both their underlying rationale and the fact that the budget effected substantial mainsteam income tax reliefs — which will benefit taxpayers to the extent of £168 million this year.
The current rates of taxable benefit — 20 per cent of original market value where all the costs are met by the employer, falling to 12½ per cent where the car only is provided — are very lenient when compared with the costs of private ownership. When the sliding scale was originally introduced in 1982 it was intended that these rates would double to 40 per cent and 25 per cent for 1983-84 and subsequent years, but this change never took place. There is no doubt that the annual cost to an individual of providing and running a new car is over 40 per cent of the purchase price. This being the case, the increase in the benefit-in-kind rate to 30 per cent announced in the budget is seen as being fair. Equally, the Government consider that the curtailment of tapering relief so as to impose a charge in all cases where a company car is available for private use is not unreasonable.
It should be noted that the benefit-in-kind charge does not apply where an employee arranges with his employer that he will not have the use of the car other than for business purposes; therefore, the provision of cars exclusively for business purposes is not being taxed. Alternatively, no charge will arise where an employee uses his own car for work and, subject to Revenue approval, is recouped the cost involved by his employer.
It is tentatively estimated by the Revenue Commissioners that in any one year about 90,000 individuals in all have private use of business cars. However, to determine the number of commercial travellers affected by the budget changes would require identification of the cases involved and an individual examination of all the income tax returns of such cases. I am advised by the Revenue Commissioners that such an examination could only be carried out at a disproportionate cost.
