John Deasy
Question:63 Mr. Deasy asked the Minister for Finance the extent to which his Department is conducting a review of tax breaks in the tax code; and if he will make a statement on the matter. [25830/03]
Written Answers. - Tax Code.
I presume that Deputy Deasy is referring to tax expenditures and tax reliefs but not to those which are considered inherent to the tax system, such as personal tax credits for income tax.
Tax expenditures and reliefs are spread throughout the tax system and are found under all tax headings, including income tax, corporation tax, capital taxes and indirect taxes. These are incentives within the tax code which are designed to meet a specific need within the economy or society in general by encouraging and incentivising certain behaviours or reducing particular costs on the part of the tax paying public. They take a number of forms and have different and sometimes several objectives.
As I said in the budget for 2003, I am a supporter of properly focused, clearly defined, specific reliefs which can encourage the development of goods and services, including public services, which might otherwise not be provided, or where provided are too little too late. However, as I also said, reliefs narrow the tax base. A widened tax base is the price that must be paid to keep tax rates low and all tax reliefs must therefore be subject to ongoing review. Accordingly, in the budget I indicated that a range of reliefs would not be extended beyond their end-2004 termination date.
There are difficulties in providing costs for some reliefs mainly due to the simplification of the tax returns process and the resulting aggregated nature of the information gathered. My Department is working closely with the Office of the Revenue Commissioners to consider mechanisms to enhance the level of information captured in respect of tax reliefs in order to facilitate work on evaluation and review. In addressing this requirement, I am conscious of the need to balance the needs of the Exchequer with the desire to minimise as far as possible the administrative burden on taxpayers in general and on the business community. I will be reviewing all tax expenditures and tax reliefs in the context of the forthcoming budget.
Enda Kenny
Question:64 Mr. Kenny asked the Minister for Finance his views on the case for tax neutrality to accompany carbon taxation in order that the proceeds of the new tax are used to reduce the tax burden on other resource-friendly items. [25821/03]
In my budget speech last December, I said that there would be full consultation with interested parties on the design of the carbon energy tax.
In July this year, I commenced this consultation process and made available a carbon energy tax consultation paper prepared by my Department. This consultation paper was designed to facilitate discussions on the introduction and design of the carbon energy tax while recognising that there are divergent views on the issue. The paper gives a concise overview of the issues relevant to consideration of the proposal including revenue recycling or tax neutrality. Submissions in response to the paper were invited from interested parties to be received in this Department by 30 September 2003, but extra time has been given where requested by organisations to complete their submissions. To date, 117 submissions have been received by my Department in response to the carbon taxation consultation paper.
The issue of revenue neutrality and recycling will be examined – along with all other relevant considerations – during the development of the carbon energy tax proposal in the coming months. Such an examination will include consideration of whether the tax should be recycled to the sectors on which it is levied or whether it should be used for other purposes including reducing the tax burden on other sectors. It would not be appropriate for me to comment further on any particular issue at this stage. The current step in this process is the examination of submissions received in the Department.