Dáil Éireann Debate, Tuesday - 23 October 2012
183. Deputy Joe Higgins asked the Minister for Finance the impact in increased revenue from the introduction of three new tax bands of a rate of 50% for tax cases of more than €100,000, a rate of 60% for income of more than €135,000 and a rate of 70% for income of more than €200,000; the amount of extra income tax that would be raised; and the estimated effective tax rate paid by these different groupings as a result. [46354/12]
View answerIt is assumed that the threshold for the proposed new tax rates mentioned by the Deputy would not alter the existing standard rate band structure applying to single and widowed persons, to lone parents and married couples. In addition, it is assumed that the 3 new tax rates and bands proposed would be integrated in the current tax system together rather than in isolation. On the above basis, I am advised by the Revenue Commissioners that the estimated full year yield to the Exchequer, estimated by reference to 2013 incomes, of the introduction of a new rates and bands would be of the order of €1.1 billion. However, given the current band structures, major issues would need to be resolved as to how in practice such new rates could be integrated into the current system and how this would affect the relative position of different types of income earners.
It is not possible to measure in a precise manner the impact that changes to tax rates and tax bands, which are based on taxable income values, will have on effective tax rates, which are normally measured by reference to gross income, because these income types are, generally speaking, not comparable. However, an indicative measure can be derived by examining the effect of the proposed changes on the average effective tax rate on all earners with gross incomes exceeding €100,000. On that basis the proposed changes would give rise to average effective income tax rate of 31.1% compared with a rate of 25.6% under the existing system.
The figures refer to income tax only, excluding USC and PRSI. These figures are estimates from the Revenue tax-forecasting model using latest actual data for the year 2010, adjusted as necessary for income and employment trends in the interim. They are, therefore, provisional and subject to revision. It should be noted that Gross Income is as defined in Revenue Statistical Report 2010.
