Tuesday, 17 July 2012

Questions (96)

Aengus Ó Snodaigh

Question:

100 Deputy Aengus Ó Snodaigh asked the Minister for Finance the value of the revenue forgone to the State as a result of the tax relief on contributions to private pensions each year for the past five years. [34651/12]

View answer

Written answers (Question to Minister for Finance)

The following table provides a breakdown of the estimated cost of tax and PRSI reliefs relating to private pension contributions for 2006, 2007, 2008 and 2009, the latest year for which the most up-to-date data is available together with estimates of the notional or imputed cost of the tax exemption for the investment income and gains of approved superannuation funds. Corresponding estimates of the cost of tax reliefs are also provided for 2005 to the extent that it has been possible to provide them on a consistent and comparable basis. Figures have been rounded where appropriate. I am advised by the Revenue Commissioners that while corresponding updates of the cost figures are not yet available for the tax year 2010 the necessary work of assembling the basic data to enable this to be done is ongoing. No data is available for 2011.

Finally, it should be borne in mind that the information imparted by the costing of tax and other reliefs in the pensions area is inherently limited. It may suggest a significant notional loss in terms of tax foregone as compared with the savings that might be expected if the tax relief was not available. However, where tax relief arrangements are of such significance, as in this instance, the removal of the reliefs would represent a fundamental adjustment to the current balance of the tax system and would have very significant implications in terms, among other things, of the economic and behavioural impacts which would ensue. These impacts would be difficult to model in advance. For these reasons, the real informational content of the costings of tax reliefs is limited and should be treated with some caution.

2005 €m

2006 €m

2007 €m

2008 €m

2009 €m

Employees’ Contributions to approved Superannuation Schemes

423

540

590

655

730

Employers’ Contributions to approved Superannuation Schemes

90

120

150

165

155

Estimated cost of exemption of employers’ contributions from employee BIK

370

510

540

595

560

Retirement Annuity Contracts (RACs)

358

435

408

353

237

Personal Retirement Savings Accounts (PRSAs)

42

55

61

74

77

Estimated cost of PRSI and Health Levy relief on employee contributions

Not available

220

240

255

230

Exemption of investment income and gains of approved Superannuation Funds

1,050

1,200

900

685

780