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Thursday, 15 Nov 2012

Written Answers Nos. 51-54

Tax Code

Questions (51)

Alan Farrell

Question:

51. Deputy Alan Farrell asked the Minister for Finance if he will outline the projected implications of introducing a higher rate of tax on income earners over €100,000 on industry and competitiveness here; and if he will make a statement on the matter. [50253/12]

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Written answers

As the Deputy is aware, the Programme for Government states that as part of the Government’s fiscal strategy we will maintain the current rates of income tax together with bands and credits and not increase the top marginal tax rates. In addition, the Deputy will also be aware that competitiveness is a crucial factor in achieving sustainable growth in a small open economy, such as Ireland’s. The economy’s competitiveness is the result of a wide number of factors, with the National Competitiveness Council’s Scorecard analysing Ireland’s international competitiveness using 127 individual indicators. These range from measures such as economic growth and quality of life, to the policy inputs that will drive future competitiveness, such as the education system and the delivery of infrastructure. Taxation is one element of this policy-mix, as taxation rates impact upon the attractiveness of an economy as a place to do business and work.

It is the standard practice for the Minister for Finance to review taxation policy in the run up to the annual Budget. It is also a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that could be the subject of Budget decisions.

However, speaking generally, the marginal tax rate, which is described as the tax rate that applies to the last euro of the base, is an important consideration in the formulation of tax policy. Marginal tax rates are important because they influence individual decisions to work more. The OECD in its working paper ‘Tax and Economic Growth’ points to the “possibility that high top marginal rates will increase the average tax rates paid by high-skilled and high-income earners so much that they will migrate to countries with lower rates resulting in a brain drain which may lower innovative activity and productivity” .

Question No. 52 answered with Question No. 23.

Public Sector Staff Increment Payments

Questions (53)

Peadar Tóibín

Question:

53. Deputy Peadar Tóibín asked the Minister for Finance if he will provide details of the full remuneration packages currently being paid out to the previous four Secretaries General of his Department; and if he will make a statement on the matter. [50242/12]

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Written answers

The following table sets out the annual gross pension (after application of the Public Service Pension Reduction) being paid to two of the four most recent Secretaries General of the Department of Finance and the last two Secretaries General, Public Service Management and Development (PSMD).

Tom Considine

€125,379.93

David Doyle

€125,379.93

Eddie Sullivan (PSMD)

€112,697.06

Ciarán Connolly (PSMD)

€112,697.06

In the case of Mr. John Hurley, he moved from the position of Secretary General to the governorship of the Central Bank. His pension, which is paid by the Central Bank, is based on his position at retirement and his entitlement from his service in the Civil Service would have transferred to the Central Bank under the pension transfer arrangements applying in the public sector. He is not in receipt of a pension based on his position as Secretary General.

In the case of Mr. Kevin Cardiff, as he moved to a position in an international body viz the EU Court of Auditors, he is not currently in receipt of a pension and no enhanced superannuation terms will apply when he becomes entitled to a preserved pension at age 60.

Budget 2013

Questions (54)

Pearse Doherty

Question:

54. Deputy Pearse Doherty asked the Minister for Finance if he will provide an estimate of the impact of the planned fiscal adjustment to be contained in budget 2013 on GDP employment and Government revenue projections for 2013; if any assessments of the impact of the adjustment on these matters has been undertaken or is due to be undertaken by his Department; and if he will make a statement on the matter. [50236/12]

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Written answers

Each year as part of the budget, a table is published showing the impact of the planned budgetary adjustment on the fiscal position. In Budget 2012, this analysis was presented in Table 5. It compares the post budget position, following the implementation of the consolidation measures, with the pre budget (or white paper) position which is published the weekend prior to the budget.

The white paper for 2013 will be published the weekend before the budget and a table showing the impact of the budget on the fiscal position in 2013 will be published as part of the budget documentation on the 5th of December.

It should be acknowledged that while restoring the public finances to a sound footing is crucial for Ireland’s future, consolidation can have a negative short-run impact on the economy. However, I want to assure the Deputy that the Government is conscious of the need to minimise the impact of consolidation on the labour market and in this regard is framing Budget 2013 in such a way as to make it as job-friendly as possible.

The short term impact on GDP as a result of the fiscal adjustment in 2013 was factored into my Department’s forecasts released last December at Budget time, and no substantial change to estimates of this specific impacts were made in the MTFS forecast of 14 November. The downward revision to real GDP growth for 2013 to 1.5 per cent contained in the MTFS is a primarily a result of a realisation of downside risks highlighted at the time of SPU in relation to weaker international growth, and its pass-through to domestic demand.

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