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Tax Code.

Dáil Éireann Debate, Wednesday - 3 November 2004

Wednesday, 3 November 2004

Questions (111, 112, 113, 114, 115, 116, 117, 118, 119)

Paul McGrath

Question:

162 Mr. P. McGrath asked the Minister for Finance the amount of income tax paid by a double income family with a gross pay of €56,000 and a single income family with a total gross pay of €56,000, assuming two equal incomes of €28,000 and salaries of €37,000 and €19,000 respectively; and the way in which this compares to the amount of income tax paid by a single income family with gross pay of €56,000, assuming a home caring spouse is claimable and a home caring spouse is not applicable. [27350/04]

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Written answers

The position is that the tax rates and bands for a married couple for 2004 are as follows: married couple, one spouse with income — first €37,000 @ 20% and balance @ 42%; married couple, both spouses with income — first €37,000 with increase of €19,000 maximum @ 20% and balance @ 42%. In the case of married couples with two incomes the standard rate band available to one spouse will not be greater than that available to a one income married couple, that is, €37,000. The second spouse may avail of the balance of the €56,000 band.

A home carer tax credit of €770 can be claimed by married persons who are jointly assessed to tax and where one spouse works at home to care for a dependent person, which includes a dependent child, provided certain conditions are satisfied. A married couple cannot claim both the home carer tax credit and the increased standard rate band. They can, however, claim whichever of the two is the most beneficial. The home carer tax credit is not due where the home caring spouse's income equals or exceeds €6,620.

The following eight examples show the income tax payable by single and double income families as requested by the Deputy on a gross income of €56,000 for the current tax year. The examples refer to earners in the PAYE and self-employed sectors and are based on the assumption in each case that the married couple is jointly assessed for tax purposes.

Example 1

In this example it is assumed that the individual is in the PAYE system.

One income family with no dependent children.

Gross Income

€56,000

Band Available

€37,000

Band Utilised

€37,000

Tax

€37,000 @ 20% =

€7,400

€19,000 @ 42% =

€7,980

Gross Tax Due

€15,380

Less Tax Credits

Personal Credit

(€3,040)

Employee Credit

(€1,040)

= Total Credits

(€4,080)

Net Tax Due

€11,300

Example 2

In this example it assumes that both spouses are working in the PAYE sector.

Two income family with no dependent children and income split between spouses €28,000: €28,000.

Joint Income

€56,000

Spouses Income

€28,000

€28,000

Band Available

€28,000

€28,000

Band Utilised

€28,000

€28,000

Tax liability

€5,600 (€28,000 @ 20%)

€5,600 (€28,000 @ 20%)

Gross Tax Due

€11,200

Less Tax Credits

(€1,520)

Personal Credit

(€1,520)

(€1,040)

Employee Credit

(€1,040)

(€2,560)

(€2,560)

= total credits

(€5,120)

Net Tax Due

€6,080

Example 3

In this example it is assumed that both spouses are in the PAYE system.

Two income family with no dependent children and income split between spouses €37,000: €19,000.

Joint Income

€56,000

Spouses Income

€37,000

€19,000

Band Available

€37,000

€19,000

Band Utilised

€37,000

€19,000

Tax Liability

€7,400 (€37,000 @ 20%)

€3,800 (€19,000 @ 20%)

Gross Tax Due

€11,200

Less Tax Credits

(€1,520)

Personal Credit

(€1,520)

(€1,040)

Employee Credit

(€1,040)

= Total Credits

(€5,120)

Net Tax Due

€6,080

Example 4

In this example it is assumed that the individual is in the PAYE system.

One income family with dependent children.

Gross Income

€56,000

Band Available

€37,000

Band Utilised

€37,000

Tax

€37,000 @ 20% =

€7,400

€19,000 @ 42% =

€7,980

Gross Tax Due

€15,380

Less Tax Credits

Personal Credit

(€3,040)

Employee Credit

(€1,040)

Home carers

(€770)

= Total Credits

(€4,850)

Net Tax Due

€10,530

Example 5

In this example it is assumed that the earner is self-employed.

One income family with no dependent children.

Gross Income

€56,000

Band Available

€37,000

Band Utilised

€37,000

Tax

€37,000 @ 20% =

€7,400

€19,000 @ 42% =

€7,980

Gross Tax Due

€15,380

Less Tax Credits

Personal Credit

(€3,040)

Net Tax Due

€12,340

Example 6

In this example it is assumed that each spouse is self employed.

Two income family with no dependent children and income split between spouses €28,000: €28,000.

Joint Income

€56,000

Spouses Income

€28,000

€28,000

Band Available

€28,000

€28,000

Band Utilised

€28,000

€28,000

Tax liability

€5,600 (€28,000 @ 20%)

€5,600 (€28,000 @ 20%)

Gross Tax Due

€11,200

Less Tax Credits

(€1,520)

Personal Credit

(€1,520)

= total credits

(€3,040)

Net Tax Due

€8,160

Example 7

In this example it is assumed that both spouses are self employed.

Two income family with no dependent children and income split between spouses €37,000: €19,000.

Joint Income

€56,000

Spouses Income

€37,000

€19,000

Band Available

€37,000

€19,000

Band Utilised

€37,000

€19,000

Tax Liability

€7,400 (€37,000 @ 20%)

€3,800 (€19,000 @ 20%)

Gross Tax Due

€11,200

Less Tax Credits

(€1,520)

Personal Credit

(€1,520)

= Total Credits

(€3,040)

Net Tax Due

€8,160

Example 8

In this example it is assumed that the earner is self employed.

One income family with dependent children.

Gross Income

€56,000

Band Available

€37,000

Band Utilised

€37,000

Tax

€37,000 @ 20% = €7,400

€19,000 @ 42% = €7,980

Gross Tax Due

€15,380

Less Tax Credits

Personal Credit

(€3,040)

Home carers

(€770)

= Total Credits

€3,810

Net Tax Due

€11,570

Paul McGrath

Question:

163 Mr. P. McGrath asked the Minister for Finance the number of taxpayers in the PAYE sector and self employed who availed, per annum, of the home-caring spouse tax allowance since this tax relief was first introduced. [27351/04]

View answer

I am informed by the Revenue Commissioners that the numbers of PAYE taxpayers availing of the home carer's tax credit, formerly an allowance but converted to a tax credit in 2001, is as shown in the table.

PAYE taxpayers availing of the home carer's tax credit.

Tax Year

2000/01

2001

2002

2003

2004

Numbers availing

92,600

87,900

92,550

92,100

88,700

Figures for 2002, 2003 and 2004 are provisional and subject to revision, the figure for 2004 being especially tentative.

The latest available information in respect of self employed taxpayers availing of the home carer's tax credit is for the income tax year 2001. The corresponding information for later years will not be available until the appropriate data from self-assessment tax returns for tax years 2002, 2003 and 2004 are received. However, the projected number of potential self employed claimants is tentatively estimated for these later years in the table below. The information requested is as follows.

Self employed taxpayers availing of the home carer's tax credit.

Tax Year

2000/01

2001

2002

2003

2004

Numbers availing

18,650

20,150

18,500

19,200

19,800

The data given in the above tables contains revisions to some figures provided in answer to previous similar questions. The figures given previously for 2000-01, 2001 and 2002 were found after further examination to have been inflated by the inclusion of claims which were subsequently found not to have been validly based or were validly based initially and ceased to be so at a later stage. The current revised figures are based on adjustments made for these factors. The numbers above have been estimated to the nearest 50 as appropriate.

Paul McGrath

Question:

164 Mr. P. McGrath asked the Minister for Finance the number of PAYE income earners in a number of income thresholds, or nearest equivalent, in each of the past five years. [27352/04]

View answer

Paul McGrath

Question:

165 Mr. P. McGrath asked the Minister for Finance the number of self employed workers in a number of income thresholds, or nearest equivalent in each of the past five years. [27353/04]

View answer

I propose to answer Questions Nos. 164 and 165 together.

I assume that what the Deputy requires is the number of PAYE and self employed income earners on the income tax record for each of the past five years over a range of income categories. I am informed by the Revenue Commissioners that the information requested by the Deputy is provided in the following tables.

For the tax years 2000-01 and 2001, the numbers of income earners at all income levels in the tables are best estimates based on data from completed end of year returns but adjusted to take account of returns which had not been received when the data were compiled. For later years, the numbers of earners in the various ranges of income are based on the adjusted data for 2001 projected forward in accordance with macroeconomic data relating to actual and expected growth in wages and employment.

Distribution of PAYE income earners on tax records, including tax exempt individuals, by ranges of income

Range of Gross Income €

2000/01

2001

2002

2003

2004

€1 —€10,000

429,680

489,670

346,900

332,390

317,430

€10,001 —€20,000

406,470

493,650

384,440

367,670

351,600

€20,001 —€30,000

293,150

280,920

323,890

331,360

332,590

€30,001 —€40,000

168,440

147,740

206,760

218,290

226,310

€40,001 —€50,000

102,870

73,870

132,080

144,490

154,000

€50,001 —€60,000

55,150

38,240

79,530

90,280

98,990

€60,001 —€70,000

32,290

21,190

47,550

55,240

62,220

€70,001 —€80,000

21,320

11,650

29,560

34,630

39,070

€80,001 —€100,000

20,330

10,820

30,990

37,100

42,670

€100,001 —€125,000

10,070

5,710

14,430

17,830

21,170

€125,001 —€150,000

5,910

2,950

6,400

7,630

8,810

€150,001 —€200,000

4,590

2,590

5,560

6,510

7,490

Over €200,000

5,740

2,890

5,710

6,470

7,260

The numbers of income earners in each income range above have been estimated to the nearest ten as appropriate.

Distribution of self employed income earners on tax records, including tax exempt individuals, by ranges of income

Range of Gross Income €

2000/01

2001

2002

2003

2004

€1 —€10,000

45,520

56,730

37,920

34,460

32,820

€10,001 —€20,000

55,110

58,880

47,340

43,760

41,850

€20,001 —€30,000

38,480

34,080

37,560

37,470

37,660

€30,001 —€40,000

22,600

19,600

24,400

25,680

26,540

€40,001 —€50,000

12,150

11,030

16,460

17,810

18,610

€50,001 —€60,000

7,880

6,780

10,880

12,110

13,040

€60,001 —€70,000

4,880

4,350

7,260

8,290

8,950

€70,001 —€80,000

3,890

2,930

5,180

5,950

6,400

€80,001 —€100,000

4,850

3,750

6,410

7,380

8,260

€100,001 —€125,000

4,540

2,740

4,490

5,170

5,720

€125,001 —€150,000

2,000

1,720

2,760

3,190

3,430

€150,001 —€200,000

2,900

1,960

3,230

3,680

3,940

Over €200,000

4,210

3,540

6,090

7,040

7,750

The numbers of income earners in each income range above have been estimated to the nearest ten as appropriate.

Notes:

It should be noted that the income ranges shown in the above tables relate to gross income. Gross income is income which: is prior to deductions for capital allowances, interest paid, losses, allowable expenses, retirement annuities, etc.; is after deduction of superannuation contributions by employees but not by the self employed; includes income of individuals whose total income falls below the exemption limits; does not include certain other income which is not income for tax purposes or is exempt from tax, such as profits or gains from stallion fees, profits from commercial forestry and certain income from patent royalties, certain investment income arising from personal injuries, child benefit, maternity benefit and unemployment assistance paid by the Department of Social, Community and Family Affairs, certain earnings of writers, composers and artists, bonus or interest paid under instalment savings schemes operated by An Post, interest on certain Government securities, certain foreign pensions which are exempt from tax in the foreign paying country, portion of certain lump sums received by employees on cessation of their employment, statutory redundancy payments and certain military pensions; and does not include or not fully include other income sources such as interest income that does not need to be declared or is not recorded but from which tax has been deducted, unemployment benefit and disability benefit — non-recording of non-taxable amounts and of amounts taxed by restriction of repayments or indirectly through employers in the PAYE system, and the incomes of certain self employed persons, including some farmers, as well as some individuals in receipt of pensions, who are not processed annually on tax records because their incomes are below the income tax thresholds.

A married couple who has elected or has deemed to have elected for joint assessment is counted as one tax unit.

The figures for the years, 2001, 2002 and 2003 have been revised from those quoted in the reply to the Deputy's question of 27 November 2003, Dáil Debates, Vol. 575, No. 5, Cols. 1153-1154, to take account of more up to date base information and revised macro-economic projections of income levels and number at work which have become available. The figures for 2002 onwards are projected estimates and may be subject to further revision.

Paul McGrath

Question:

166 Mr. P. McGrath asked the Minister for Finance the estimated cost of reducing the top rate of income tax by one point and two points. [27354/04]

View answer

I am informed by the Revenue Commissioners that reducing the top rate of income tax by one percentage point and two percentage points would cost the Exchequer an estimated €190 million and €380 million respectively, in a full year, based on projected 2005 incomes. These figures are provisional and are subject to revision.

Paul McGrath

Question:

167 Mr. P. McGrath asked the Minister for Finance the estimated cost of increasing the single person tax credit of €1,520 by €100, €200, €300 and €400 respectively. [27355/04]

View answer

The increases mentioned in the question are assumed to apply in similar measure to single and widowed persons and to include the normal consequential increases in the tax credit for lone parents. Double those amounts are assumed to apply to married couples. On this basis, I am informed by the Revenue Commissioners that the full year costs to the Exchequer, based on projected 2005 incomes, of the increases mentioned by the Deputy are estimated as follows:

Increase in Personal Tax Credit

Estimated Full Year Cost

Single / Married

€m

€100 /€200

190

€200 /€400

375

€300 /€600

560

€400 /€800

735

These figures are provisional, subject to revision and estimated to the nearest €5 million.

Paul McGrath

Question:

168 Mr. P. McGrath asked the Minister for Finance the estimated cost of increasing the PAYE allowance of €1,040 by €100, €200, €300 and €400 respectively. [27356/04]

View answer

I am advised by the Revenue Commissioners that the full year costs to the Exchequer, based on projected 2005 incomes, of the increases mentioned by the Deputy are estimated as follows.

Increase in employee PAYE credit

Estimated full year cost €m

€100

125

€200

250

€300

370

€400

490

These figures are provisional, subject to revision and are estimated to the nearest €5 million.

Paul McGrath

Question:

169 Mr. P. McGrath asked the Minister for Finance the estimated cost to the Exchequer in 2003 of tax relief on medical expenses. [27357/04]

View answer

I am informed by the Revenue Commissioners that the most recent relevant information available on medical expenses relates to the short income tax "year" 2001, in respect of which some 105,600 claims for tax relief were allowed at an estimated cost to the Exchequer of approximately €36 million. The last full year for which actual data are available is the tax year 2000/01. In that year, there were some 107,800 claims for tax relief allowed at an estimated cost to the Exchequer of approximately €41 million.

Paul McGrath

Question:

170 Mr. P. McGrath asked the Minister for Finance the number of PAYE taxpayers who availed of the PRSI holiday in each of the past five years; and the estimated numbers who will have a similar break in PRSI payments in the 2004 tax year. [27359/04]

View answer

I am informed by the Revenue Commissioners that the number of individual employees with reckonable income in excess of the PRSI contribution ceiling for each income tax year from 1999/2000 to 2004, is as follows:

Year

Numbers

1999/2000

302,600

2000/2001

332,800

2001*

148,900

2002**

313,900

2003**

334,100

2004**

343,800

* It should be noted that as taxpayers were charged PAYE on their earnings in the period from 6 April to 31 December 2001, the numbers of individual employees with reckonable income in excess of the PRSI ceiling in that period may not be directly comparable with those of earlier or later years.

** Provisional and likely to be revised.

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