Dáil Éireann Debate, Thursday - 26 January 2012
68 Deputy Joanna Tuffy asked the Minister for Finance if he will provide an update on the abolition of tax relief for bin charges, and prior to this, the abolition of tax relief on trade union subscriptions; the reason these changes were made; and if he will make a statement on the matter. [4620/12]
View answerI am informed by the Revenue Commissioners that, up to the tax year 2011, income tax relief is available for individuals who pay service charges to local authorities and other independent contractors. Qualifying charges include all service charges paid to:
local authorities for the provision of domestic water supply, domestic refuse collection or disposal, or domestic sewage disposal;
group water schemes for domestic water supply; and
independent contractors for domestic refuse collection or disposal.
The relief is given at the standard rate of tax (20%) for any qualifying service charges paid in full and on time in the previous calendar year. The maximum annual amount of qualifying service charges in respect of which tax relief may be claimed is €400. For example, for services charges paid in respect of the years 2007 to 2010, the tax relief given in the tax years 2008 to 2011 is the lesser of—
(a) the amount of services charges paid in the previous tax year @ 20%; and
(b) €400 @ 20%.
The Commission on Taxation recommended that this relief should be discontinued on the basis that it had originally been introduced as a short-term measure and that the "polluter pays" principle should underpin the charging process for local authority services and should not be diluted by the provision of tax relief.
Accordingly, and mindful also of the overall Exchequer position, this relief was abolished by Section 12 of the Finance Act 2010. The final year for which the relief may be claimed is the 2011 tax year as respects service charges paid in 2010. Income Tax relief in respect of trade union subscriptions was introduced in 2001. I am further informed by the Revenue Commissioners that, up to the tax year 2010, income tax relief is available for individuals who paid trade union subscriptions. For the tax years 2008 to 2010, the maximum amount of subscription in respect of which tax relief is available is €350 and the rate of tax relief is at the standard rate of tax (20%).
The most recent year for which the necessary detailed information is available regarding tax relief for trade union subscriptions is the income tax year 2009, in which the cost to the Exchequer is estimated at approximately €26.7 million. The Commission on Taxation recommended that the relief should be discontinued on the basis that membership of a trade union is more likely to be influenced by the benefits of membership. Furthermore, the Commission considered that there was a significant element of deadweight associated with this tax relief. Taking into account the overall Exchequer position and the views of the Commission on Taxation, relief for Trade Union subscriptions was abolished by Section 12 of the Finance Act 2011 with effect from 1 January 2011.
