Vol. 473 No. 3
40 Mr. E. O'Keeffe asked the Minister for Finance the reason an additional 5 per cent income tax liability is being imposed on farmers and selfemployed people who choose to pay their income tax by monthly instalments under the recently announced direct debit scheme; and if he will consider accepting 100 per cent of the final liability for the preceding tax year and not 105 per cent. [25044/96]
I am informed by the Revenue Commissioners that the direct debit scheme for payment of preliminary income tax is designed to spread the preliminary tax payment evenly throughout the calendar year and thus avoid a single lump sum payment in November. Normally, the minimum amount of preliminary tax which must be paid is the lower of: 90 per cent of the tax liability for the actual year of assessment, or 100 per cent of the tax liability for the preceding year of assessment. However, for taxpayers who avail of the direct debit scheme an additional option has been added viz.: 105 per cent of the tax liability for the pre-preceding year of assessment provided that liability is not nil.
It will be appreciated from the foregoing that basing the preliminary tax payment on 100 per cent of the final liability of the preceding tax year remains an option for taxpayers who avail of the direct debit scheme. The suggestion that an additional 5 per cent liability is being imposed is not correct; in practice, the additional option will allow taxpayers who avail of the direct debit scheme more flexibility in determining the amount of preliminary tax to be paid.
