Dáil Éireann Debate, Tuesday - 22 June 2004
121 Mr. R. Bruton asked the Minister for Finance the details of his assessment on the cost of making all tax credits refundable when they are unused; the main category of refunds under such a proposal; and if he will make a statement on the matter. [18297/04]
View answerI assume that the Deputy is referring to those personal credits, which were converted from personal allowances in the changeover to tax credits, which was completed in 2001. I am advised by the Revenue Commissioners that the cost of making all personal tax credits refundable when they are unused including the personal and employee credits, the home carer tax credit, the one-parent family credit and the age credit as well as the minor personal credits such as incapacitated child credit and the blind person's credit, is broadly in the region of €1.6 billion annually.
The main category of refund would relate to the basic personal credit — single, married and widowed — where the annual cost of refunding the unused portion of the credit to income earners with insufficient income to fully absorb it would amount to approximately €830 million. The next two categories of refund in order of scale would be the employee credit, approximately €660 million, and the home carer credit, approximately €70 million. The figure of €1.6 billion above relates only to the cost of extending refundable tax credits to all those on Revenue's tax files. If a refundable tax credit system were to be introduced, one would have to consider those who are not on the tax files, for example, those who are of employable age but not working. This would increase the cost significantly.
Apart from the issue of cost, there would be a range of other policy and practical difficulties arising in introducing such a system. I have no plans to introduce refundable tax credits at present.
