Dáil Éireann Debate, Tuesday - 13 December 2005
61 Mr. Broughan asked the Minister for Finance the number and percentage of income earners who are paying tax at the higher rate and the standard rate for 2005; the anticipated figures for each category for 2006; and if he will make a statement on the matter. [38989/05]
View answerI am advised by the Revenue Commissioners that the information requested by the Deputy is as follows. It is estimated that 666,400 income earners, representing 32.8% of all income earners, will pay tax at the higher rate in 2005 while 624,000 income earners, representing 30.75% of income earners, will pay at the standard rate. After budget 2006 it is estimated that in the 2006 tax year, 658,100 income earners, representing 31.9% of all income earners, will pay tax at the higher rate while 647,500 income earners representing 31.4% of income earners will pay at the standard rate. However, in the absence of the budget 2006 income tax changes, it is estimated that in the 2006 tax year 748,900 income earners, representing 36.3% of all income earners, would pay tax at the higher rate while 608,800 income earners, representing 29.5% of income earners, would pay at the standard rate.
The numbers of income earners are based on actual data for 2002 projected forward in accordance with macroeconomic data relating to actual and expected growth in income and employment. The percentages are expressed in terms of the numbers of all income earners on the income tax record, including those who are exempt. It should be noted that a married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit.
The changes made in budget 2006, in particular the widening of the standard rate bands by €2,600, representing an increase of just under9%, will ensure that more than 90,000 taxpayers will be removed from the higher rate of tax for 2006. This measure will also ensure that those earning on or below the estimated average industrial wage for 2006 will pay tax only at the standard rate.
The Government's tax policies since 1997 have ensured that Ireland now has the lowest tax wedge in the EU and one of the lowest in the entire OECD, as measured by that organisation using comparative data relating to those earning an average production wage. In addition, after tax income, adjusted for CPI inflation, for a person on the average industrial wage is now about 44% higher than it was in 1997. Approximately half of this increase is due to lower taxes.
