Dáil Éireann Debate, Wednesday - 26 June 2013
85. Deputy Pearse Doherty asked the Minister for Finance if his attention has been drawn to the income tax system in Britain where the personal allowance is only applicable up to an income of £100,000; if he has considered abolishing tax credits for income earners in excess of €100,000 and if so, the amount it would raise for the Exchequer. [30927/13]
View answerThe position is that the income tax system in Britain generally operates on a tax allowance basis, whereas the Irish taxation system generally operates on a tax credit basis. A tax credit system is a fairer and more equitable tax system. This is because tax credits have the same value to both lower and higher income earners, whereas tax allowances are more beneficial to higher income earners, as they reduce the amount of income which is subject to the higher rate of tax. In 2010, the UK Government introduced a personal allowance income limit which was set at £100,000 per annum. Once an individual’s income exceeds the income limit threshold of €100,000, their personal allowance is reduced by £1 for every £2 of earnings in excess of €100,000.
As the Deputy is aware, the Programme for Government states that as part of our fiscal strategy, the Government will maintain the current rates of income tax together with bands and credits. We will not increase the top marginal rates of taxes on income.
I am advised by the Revenue Commissioners that the estimated full year yield to the Exchequer, estimated by reference to 2013 incomes, of abolishing the main personal and employee tax credits for income earners earning in excess of €100,000 would be of the order of €500 million.
