Written Answers Nos. 79-82
79. Deputy Pearse Doherty asked the Minister for Finance the plans, if any, he has to publish the economic rationale for all existing tax reliefs and for all proposed tax reliefs being considered; and if he will make a statement on the matter. [14456/13]
View answerThe rationale for existing tax reliefs is already in the public domain. The Commission on Taxation included a comprehensive review of all tax expenditures then current in its 2009 Report, with a view to assessing their economic and social benefits. The Commission examined tax expenditures introduced in legislation up to and including Finance (No. 2) Act 2008 which had not been repealed by legislation up to Finance Act 2009.
Not many tax reliefs have been introduced since that time. However, when a relief is introduced or indeed amended or abolished, this is done via the Budget and Finance Bill process. In this way any such change is done in a public manner and the reasons, economic and otherwise, behind the proposed change are fully explained. If Deputies consider that more information is required than initially is being provided by the Minister, then Committee Stage of the Finance Bill provides an opportunity for more detailed analysis to be made. Records of these Oireachtas proceedings are themselves subsequently published.
Where a particularly major change is contemplated, an additional level of analysis is undertaken, frequently involving a consultation process.
An example of such work recently conducted by my Department would be the Economic Impact Assessment of Potential Changes to Legacy Property Reliefs. This assessment, undertaken in 2011 and published by my Department, included a consultation paper, engagement from over 700 submissions and an analysis, enabled the Department to understand the possible legacy costs to the State as well as the impacts on individuals and economic sectors of a change in law relating to the use of these particular reliefs.
Another recent example is the Public Consultation on Section 481 Film Tax Relief. I published a consultation paper which set out preliminary analysis and data and invited interested parties to make submissions as part of an economic impact assessment of film tax relief. Twenty responses were received and published on my Department’s tax policy website (http://taxpolicy.gov.ie), along with the results of the review.
The impact assessment has enabled my Department to better understand the benefits that may accrue to the Exchequer as well as consequences for investors, the audiovisual industry, and the wider economy arising from changes to the relief and indeed such changes were included in Finance Bill 2013 currently before the Seanad.
This year I announced a comprehensive review of the R&D Tax Credit, which is currently being undertaken by my Department. The terms of reference for this review have been published on the Department’s website and interested parties are encouraged to make a submission. It is intended that the results of this review will be published in due course.
A list of all public consultations carried out by the Tax Policy Unit of my Department can be viewed on my Department’s tax policy website. I would add also that much of the preparatory work done by my Department in relation to tax policy options and choices generally is reflected in the papers prepared for and presented to the Tax Strategy Group. These papers also are subsequently published on my Department’s tax policy website.
80. Deputy Pearse Doherty asked the Minister for Finance the plans, if any, he has to publish the direct cost to the Exchequer of all existing tax reliefs, including a distributional analysis of which households by income decile group are expected to benefit from each existing tax relief; the firms that are expected to benefit; and if he will make a statement on the matter. [14457/13]
View answerAs regards tax reliefs currently available, a comprehensive summary of these was provided today in my reply to Question No. 79. That reply contains details, as advised to me by the Revenue Commissioners, of the total identifiable costs to the Exchequer relating to income tax and corporation tax allowances, reliefs, exemptions and tax credits available. The information relates to 2008 and 2009, the most recent year for which the necessary detailed information is available.
A breakdown of these estimates of cost by income deciles is not available and could not be provided without undertaking an extensive and costly development of the Revenue tax model.
82. Deputy Pearse Doherty asked the Minister for Finance the amount of money that would be raised in a full year by reducing the level at which persons and companies may claim interest repayments against tax for residential rental properties to 40%; and if he will make a statement on the matter. [14459/13]
View answerI am informed by the Revenue Commissioners that a breakdown between rent received from residential property and other types of property is not sought or provided in tax returns. However based on personal income tax returns filed by non-PAYE taxpayers for the year 2010, the latest year for which this information is available, and making certain assumptions about the data it is estimated that the revenue that would be raised from reducing the level at which individuals can claim interest repayments against tax for residential rental properties from 75% to 40% could be in the region of €157m. Rental income of companies is returned as net of interest on borrowings the figures for interest are not separately distinguished in corporate tax returns. There is, therefore, no basis on which an estimate of the cost of reducing the tax relief involved could be provided.
The estimated cost of 2010 residential interest relief is based on assuming that tax relief was allowed at the top income tax rate of 41% and the figure provided could therefore be regarded as the maximum Exchequer cost in respect of those taxpayers. This figure is subject to adjustment in the event of late returns being filed or where returns already filed are subsequently amended.
It should be noted that any corresponding data returned by PAYE taxpayers in the income tax return form 12 is not captured in the Revenue computer system. However, any PAYE taxpayer with non-PAYE income greater than €3,174 is required to complete an income tax return form 11. This return is the source of the figure provided in this reply in respect of individuals.
The level at which interest repayments can be claimed against tax for residential rental properties was reduced from 100% to 75% in section 5 of the Finance Act 2009.
There is no specific proposal in the Programme for Government to decrease the amount of interest on borrowings that can be offset against rental income for tax purposes, however, as a matter of course all such taxation measures and reliefs are considered in the context of the budgetary process.
