Vol. 461 No. 2
10 Mr. M. McDowell asked the Minister for Finance the anticipated yield in income tax for 1996; the estimated increase over the yield for 1995; the average amount of tax per income tax payer which the increase represents; the assumptions on which the amount for 1996 is calculated by reference to numbers of taxpayers and growth in earnings; and if he will make a statement on the anticipated growth in the income tax burden. [2760/96]
22 Mr. O'Malley asked the Minister for Finance the anticipated yield in income tax for 1996; the amount it will increase over the estimated yield for 1995; the average amount of tax per income tax payer which the increase represents; the assumptions under which the amount for 1996 is calculated by reference to numbers of taxpayers and growth in earnings; and if he will make a statement on the anticipated growth in the income tax burden. [2626/96]
31 Mr. M. McDowell asked the Minister for Finance the anticipated yield in income tax for 1996; the amount it will increase over the estimated yield for 1995; the average amount of tax per income tax payer which the increase represents; the assumptions under which the amount for 1996 is calculated by reference to numbers of taxpayers and growth in earnings; and if he will make a statement on the anticipated growth in the income tax burden. [2625/96]
I propose to take Questions Nos. 10, 22 and 31 together.
The post-budget estimate for income tax in 1996 is £4,388 million, an increase of £259 million on the 1995 Exchequer receipt of £4,129 million. I am informed by the Revenue Commissioners that this represents an individual average increase of about £217 per taxpayer. This forecast yield is based on the macroeconomic assumptions that pay rates are expected to increase by some 4 per cent and the anticipated numbers in employment to rise by just over 2.5 per cent.
I draw to the Deputy's attention that income tax as a percentage of GNP in 1996 is projected to be 12.1 per cent as compared to 12.3 per cent in 1995 and is the lowest level since 1986 when the percentage stood at 13.5 per cent. It is the Government's policy, as set out in the programme of renewal, to relieve the tax and PRSI burden, especially on those with low income. Towards this end I have introduced significant measures in my 1995 and 1996 budgets.
In his Budget Statement the Minister stated that 18,000 people were being taken out of the tax net. I do not know how many people he expects to come into the net in some other way, but the bottom line for the average taxpayer is that he or she will be expected to pay £217 more into the Exchequer in the next tax year. Does the minister agree that the increase of £259 million in income tax yield is a conservative estimate of the buoyancy in the tax system and that it amounts to a 6 per cent increase at a time when wages are scheduled to increase by 4 per cent?
The Deputy asked a number of questions. His position and that of his party is contradictory. His colleague was thrown out of the House this morning for accusing the Government of not spending enough money——
The Minister should stick to the question.
Deputy McDowell is not here as an independent Deputy, he is representing a respected party and should make up his mind about what he wants. Does he want tax reductions or tax expenditure? Deputy Molloy was thrown out earlier because of the lack of expenditure, as he perceived it, on Galway hospital. The burden of income taxation is reducing, notwithstanding the fact that there are more than 100,000 extra people in employment now compared to when the Deputy's party left Government some three years ago.
We would like to further reduce the income tax burden but to do so we must find alternative sources of taxation or reduce expenditure. If there is consistency in the Deputy's party, it appears to want increased expenditure, particularly in terms of health services in Galway.
The Minister must acknowledge that while he claims the tax burden is reducing, the average taxpayer will pay £217 more in the next tax year. Those are the facts.
Their salary will have increased by 4 per cent.
That may be true but the income tax yield will increase by 6 per cent. We have a progressive tax system. The Minister should concede that many more people will be substantially worse off as a result of the budget. If he takes into account the 18,000 people, whom he claims the budget took out of the tax net, he must accept that many people will pay much more than an additional £217 in tax next year and that this was another tax and spend budget.
We had an example of hysteria this morning in relation to tax and spend for which your colleague and former Minister, a distinction which Deputy McDowell has not yet achieved, was thrown out of the House. He wanted to spend more money without specifying from where the tax would come. Surely this is in direct conflict with the views of his leader. There is a contradiction in the Deputy's thinking. Given the performance in the economy. people will get promotion and pay increases. We are talking about an average increase of 4 per cent. Some people will get substantial pay increases and because we have a progressive tax system, which no doubt the Deputy supports, they will pay additional tax but they will retain more money. By and large the burden of income tax this year as a percentage take in the economy will be less than last year and precisely 12.1 per cent as against 13.5 per cent of total tax take in the mid-1980s. That is progress.
