Tuesday, 17 July 2012

Questions (85)

Joe Higgins

Question:

89 Deputy Joe Higgins asked the Minister for Finance if he will provide a break down of the €1 billion contribution to the Exchequer provided by Ireland's International Financial Services Centre into corporation tax and payroll taxes, and to break down the payroll tax figures by tax band. [34619/12]

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Written answers (Question to Minister for Finance)

The €1 billion figure is an estimate based on a corporation tax figure provided by the Revenue Commissioners added to an estimate of payroll taxes which was derived from employment and average salary figures contained in a report which was published by Financial Services Ireland (FSI) in September 2010 —The IFSC — the international financial services sector in Ireland. The report estimates that total direct employment in the sector is 32,700 people and that the average salary across the sector is €60,100 per employee. In relation to corporation tax, I am informed by the Revenue Commissioners that the estimated corporation tax paid in 2011 by companies previously licensed to operate in the International Financial Services Centre is of the order of €466 million. With the change in the corporation tax rate from 10% to the standard rate now applying to international financial services activities, it is generally speaking no longer possible to distinguish between corporation tax paid solely on IFSC activities and on other income. An exception is made in the case of the main associated banks where an estimate of the tax paid by them on their IFSC activities is derived from indicative data available. This estimate is incorporated in the €466 million figure provided above.

The €466 million figure relates only to those companies that were once licensed under the preferential IFSC tax regime which expired in 2005. I am informed by the Revenue Commissioners that it is not possible to identify international financial services companies that have been established since the end of that regime and so the corporation tax paid by such companies is not included in the €466 million figure.

I am informed by the Revenue Commissioners that the detailed data in relation to payroll taxes requested by the Deputy is not readily available and either could not be identified or could not be identified without conducting an extensive investigation of the Revenue Commissioners' records.

In the absence of this data, my Department produced an estimate of payroll taxes based on an average salary figure of €60,100 and total employment figure of 32,700 contained in the FSI report.

The average contribution to the Exchequer per employee (PAYE, USC, Employee PRSI and Employer PRSI) was calculated using the €60,100 average salary figure as an estimate for 2011 for the main categories of income-earners — single, married one-earner and married two-earners.

These estimates were then multiplied by the total number of employees in the sector to give an estimated yield of circa €700 million. It should be noted that these figures do not take account of pension contributions.

When the corporation tax figures and the payroll tax estimates are combined, it shows that the sector contributed in excess of €1 billion to the Exchequer in 2011.