Written Answers Nos. 101-111
101. Deputy Patrick Nulty asked the Minister for Finance the amount that could be garnered annually if a minimum effective tax rate of 6% on all corporate profits were introduced as suggested by Social Justice Ireland. [36054/13]
View answerAll companies resident in Ireland are chargeable to corporation tax at the 12.5% rate on the profits that are generated from their trading activities in Ireland. A higher 25% rate applies in respect of investment, rental and other non-trading profits. Chargeable capital gains are taxable at the capital gains tax rate of 33%. There are different ways of measuring the effective rate of corporation tax depending on the variables that are used. As there is no such single internationally agreed methodology to calculate the effective rate of corporation tax, there is no reliable basis upon which to calculate the current ‘effective rate’ of corporate tax in Ireland without being potentially misleading.
Therefore, neither I, nor my Department, would be in a position to introduce a minimum ‘effective rate’ in Ireland in the way the Deputy has suggested.
To illustrate the debate on the topic, I have previously referred to an estimate from a report produced by the World Bank and PriceWaterhouseCoopers which put the effective rate in Ireland at 11.9% (Paying Taxes, 2013). I also referred to a study by the European Commission (Taxation Trends in the EU 2011), which indicates Ireland has an effective corporate tax rate which is close to or indeed higher than the statutory 12.5% rate (this is likely because of the 25% rate that applies generally to non-trading income).
I have been clear that my Department does not take ownership of these reports, but they do indicate that the ‘effective’ rate of tax paid by companies in Ireland is already much higher than the 6% minimum ‘effective’ rate the Deputy suggests.
Some other countries have a high headline rate of corporation tax which is then supplemented by a high number of tax reliefs which reduce the overall rate of tax paid. By contrast, the approach in Ireland is transparent: we have a competitive headline rate of corporation tax which is applied to a broad base.
We therefore have only a small number of tax incentives in Ireland, and we make sure that those we do have are specifically targeted. They are focused firstly, on the creation of additional employment as is consistent with current Government policy, and secondly on areas of innovation with a view to generating high value-added economic activity in the country. The small number of reliefs we have include, for example, the R&D Tax Credit and the 3 year exemption from corporation tax for start-up companies.
102. Deputy Patrick Nulty asked the Minister for Finance the amount of additional revenue increasing capital gains tax to 40% in budget 2014 would yield for the Exchequer. [36055/13]
View answerI am advised by the Revenue Commissioners that the full year yield to the Exchequer, estimated in terms of expected 2013 gains, from increasing the CGT tax rate from 33% to 40% could be in the region of €109 million. This figure includes corporate gains. However, this estimate assumes no behavioural changes on the part of taxpayers, and increases in rates may have a significant behavioural impact and may not produce a corresponding increase in tax yield. In current economic conditions any estimate of additional yield must be treated with caution. In addition, increasing the rate could, in theory, lead to a reduction in yield from the tax.
103. Deputy Patrick Nulty asked the Minister for Finance the amount of additional revenue increasing capital acquisitions tax to 40% in budget 2014 would yield for the Exchequer. [36056/13]
View answerI am advised by the Revenue Commissioners that the estimated full year yield to the Exchequer from increasing the Capital Acquisitions Tax rate by 7% to 40 %, based on the expected outturn in 2013, could be in the region of €63 million, assuming no change in the existing thresholds. This estimate is provisional and subject to revision.
It should be noted that this estimate is based upon an assumption that there would be no behavioural impact of this change, which could lead to a less than expected impact on Exchequer yield. In addition, the realisation of any estimated yield from an increase in taxation on assets relating to property is subject to movements in the value of such assets, which are currently occurring in the economy.
104. Deputy Patrick Nulty asked the Minister for Finance the number of Irish citizens or Irish domiciled persons claiming to be non-resident for tax purposes who are living abroad for tax reasons for the years 2009 to 2012 inclusive. [36057/13]
View answerI am informed by the Revenue Commissioners that the relevant available information is the total number of persons who have filed tax returns indicating that they are non-resident for tax purposes, rather than the number of Irish citizens or Irish domiciled persons who have filed tax returns indicating they are non-resident. The numbers of non-residents filing Irish tax returns were 10,297 in 2009; 11,594 in 2010; and 13,093 in 2011, which is the latest year for which a figure is available. These are updates of figures provided in replies to previous Parliamentary Questions, as a result of further returns being received.
It is important to note that the circumstances of individuals who are non-resident for tax purposes but who file tax returns can vary widely. They include, for example:
- Irish nationals who have moved abroad for work reasons but who retain their home here (their tax return is generally only in respect of rental income on their Irish home);
- foreign nationals who never resided here but who have investments (including property) here;
- foreign nationals who worked here for a period and who may have acquired Irish tax residence for that period (for example, individuals who worked here on a temporary assignment) may retain an Irish tax liability, after ceasing to be resident, in respect of investments made in Ireland during their period of residence.
Individuals who leave the State are not required to declare the reasons for leaving, either on a tax return or any other document. However, it is likely that a high proportion of non-residents who file Irish tax returns are or have become non-resident for reasons unrelated to taxation.
105. Deputy Ciara Conway asked the Minister for Finance the progress that has been made in applying the universal social charge to pensions worth over €60,000 a year for the over-70s; and if he will make a statement on the matter. [36074/13]
View answerI assume the Deputy is referring to my Budget day announcement that "in order to ensure equity between all citizens based on their level of income, the reduced rate of USC for those over seventy with an income in excess of €60,000 will be discontinued from the 1st of January 2013 and the standard rates of USC will apply". This measure was legislated for in Section 3 of the Finance Act 2013 and took effect from 1 January 2013.
As the Deputy will be aware, when the USC was introduced in Budget 2011, those aged 70 years and over were not liable to the top rates of charge. The maximum rate of charge for such individuals was 4% irrespective of the level of their income, unless they had self-employment income in excess of €100,000 for a tax year, in which case the maximum rate was increased to 7% on the amount of income in excess of €100,000. However, given the current budgetary constraints and the need to raise revenue, the Government decided in Budget 2013 that the reduced rates of USC for those aged 70 years and over and medical card holders with an income in excess of €60,000 would be discontinued from 1 January 2013. Therefore USC has always applied to pension incomes over €60,000 and only the rate was increased in the last Budget.
It is important to point out that payments from the Department of Social Protection such as the State Pension are exempt from the USC. Furthermore, such payments will not be taken into account in determining if an individual has exceeded the €60,000 threshold.
This measure ensures equity between all citizens with incomes in excess of €60,000.
106. Deputy Ciara Conway asked the Minister for Finance the measures that have been taken on reducing tax relief for pensions worth over €60,000 and the amount that this will realise for the State; and if he will make a statement on the matter. [36075/13]
View answer184. Deputy Róisín Shortall asked the Minister for Finance if it is still his intention to limit tax relief on pension contributions to allow for a maximum pension of €60,000, as announced in budget 2013; the preparatory work which has been done to introduce these changes in the October budget; if he will confirm that these changes will apply to both public sector and private sector workers; and if he will outline the projected savings from these measures on a full year basis. [36719/13]
View answer200. Deputy Joanna Tuffy asked the Minister for Finance if he will provide an update on the announcements last December, as part of budget 2013, that pension tax reliefs were to be capped; the way this decision will be implemented; and if he will make a statement on the matter. [36754/13]
View answerI propose to take Questions Nos. 106, 184 and 200 together.
In my 2013 Budget speech, I indicated that the necessary arrangements to give effect to the Programme for Government commitment to effectively cap taxpayers’ subsidies for pension schemes that deliver income of more than €60,000 would be put in place next year.
A cross-Departmental Working Group of officials has been established to examine, among other things, the changes required to the existing arrangements governing the maximum allowable pension fund at retirement (the Standard Fund Threshold) and other potential alternative approaches for achieving the commitment. The Working Group has also sought views from various interested parties as part of the examination of options for delivering on the Budget commitment. This Working Group is also developing estimates of the likely yield from the changes.
A Steering Group of senior officials has also been established to provide direction and guidance to the activities of the Working Group. I expect to receive a report on the results of this work in the context of my preparations for the Budget to which I will have regard in making decisions on the changes necessary to give effect to the Budget 2013 commitment. Budget 2014 will be delivered in October this year and any legislative changes giving effect to Budget announcements in this area will be included in the Finance Bill.
107. Deputy Ciara Conway asked the Minister for Finance the amount of revenue raised by the changes in the taxation of social welfare payments; and if he will make a statement on the matter. [36076/13]
View answerIt is regrettable that I am unable to answer the Deputy’s question as it is unclear which social welfare payments the Deputy refers. For instance, Section 7 of the Finance Act 2012, amended Section 126 of the Taxes Consolidation Act 1997 in order to remove the tax exemption that applies to the first 36 days of Illness Benefit and Occupational Injury Benefit per annum payable by the Department of Social Protection, as announced in Budget 2012. In addition, Section 8 of the Finance Act 2013, amended section 126 of the Taxes Consolidation Act 1997 to apply income tax to maternity benefit, adoptive benefit and health and safety benefit, payable by the Department of Social Protection with effect from 1st July 2013.
Furthermore, the majority of social welfare payments are reckonable as income for tax purposes. These include long-term payments such as Disablement Benefit, the State Pension, Widows, Invalidity and Blind Pensions, Carers Allowance and the One Parent Family Payment, as well as short term benefits such as Job Seekers Benefit. I am advised by the Revenue Commissioners that information on Income Tax receipts are not recorded in such a manner as would enable the tax yield from social welfare payments to be distinguished from the tax attributable to other income sources.
108. Deputy Ciara Conway asked the Minister for Finance his views that the revenue raised by the taxation of social welfare payments should be ring-fenced to protect social welfare payments; and if he will make a statement on the matter. [36077/13]
View answerAs the Deputy will be aware, it is a general principle of taxation that, as far as possible, income from all sources should be subject to taxation. In line with this principle, the majority of social welfare payments are reckonable as income for tax purposes. These include long-term payments such as Disablement Benefit, the State Pension, Widows, Invalidity and Blind Pensions, Carers Allowance and the One Parent Family Payment, as well as short term benefits such as Job Seekers Benefit. Treating these payments as income for tax purposes is essentially a matter of equity.
The taxation of these payments form part of the overall receipts of income tax and are paid into the Central Fund. They are therefore available, along with other sources of tax revenue, non-tax revenue and capital receipts as well as the funds sourced from borrowing, to fund overall Exchequer expenditure.
I am not in favour of hypothecating receipts from the taxation of social welfare payments or indeed any other taxes for any particular purpose. All revenues collected by the state should go to the Exchequer.
109. Deputy Andrew Doyle asked the Minister for Finance the maritime patrol capabilities of the Revenue Commissioners and its Irish tax and customs section; the names of the vessels currently in service, their capabilities and their recent activity; and if he will make a statement on the matter. [36143/13]
View answerI am informed by Revenue that the role of the Maritime Unit, equipped with the two Revenue Customs Cutters, is to exercise responsibility for the customs function around the Irish coast and in territorial waters, up to 12 miles offshore. Revenue currently operates two purpose-built patrol craft (Revenue Customs Cutters), RCC "SUIRBHÉIR" in service since 2004 and RCC "FAIRE" in service since 2009. Both craft, operated by appropriately qualified officers from Revenue’s Customs service, are capable of extended patrols right around the Irish Coastline and adjacent waters. The primary aim of coastal activity is to prevent, detect and deter smuggling and illegal importation of controlled drugs and other goods. It involves co-operation between land-based Revenue and Gardaí, the Maritime Unit and the Navy, and of course international authorities. The Revenue Maritime Unit completes the range of responses now regarded as standard in international anti-smuggling activities.
Regarding recent activity, for operational reasons specific details of the Cutter activities is not made public.
The range of cutter activities mirrors that of land based customs officers and includes:
- Patrol of the external frontier to outer limits of Territorial Sea (12 mile limit).
- Monitoring (overt & covert) all vessel movements - Assess, Board, Rummage as required.
- Enforcement of import and export prohibitions and restrictions.
- Identification and securing of outstanding VAT/duty liability on pleasure craft.
- Information/Intelligence management.
- International anti-smuggling operations at sea.
- Managing and monitoring maritime information systems.
- Servicing national and international M.O.U.s and Mutual Assistance requests.
- Supporting national anti-smuggling operations.
- Developing and servicing coastal contacts (Customs Drugs Watch Programme).
- eParticipating in marine search & rescue.
Cutter operations are risk-led, so they tend to be most often deployed where intelligence suggests a need, either on their own or in conjunction with other national and international agencies. It is also important however to ensure that there is a visible presence in all parts of the country, and cutters are based in Dublin, East Coast, and North West for extended periods as well as in their "home" base in the South West – traditionally the highest risk area for transatlantic drug smuggling. In addition, the cutters participate in a limited number of public events and maritime festivals to build public awareness of the Customs Drugs Watch programme.
Each cutter has a crew of six, and is at sea for more then 200 days per annum, with 24/7/365 availability. Each cutter carries a rigid inflatable (RIB) which can be launched at sea to enable boarding. They are also equipped with the latest radar, satellite monitoring and communications equipment, and have constant access to Revenue and other enforcement agency databases.
As an island nation the provision of customs cutters to police our maritime frontiers is regarded as an essential investment. The cost and adequacy of the present level of provision is continually reviewed. For the moment, I am satisfied that Revenue has an effective service at reasonable cost, that meets the foreseeable needs.
110. Deputy Gerald Nash asked the Minister for Finance if he will establish, with the Revenue Commissioners, the number of high net worth persons who meet the domicile levy criteria with whom they has been in contact this year in order to ascertain the reason the persons have failed to pay the levy in 2013; the number of persons who are considered to be non-resident for tax purposes; the total tax take available to the State if all persons liable to pay the domicile levy paid in full; the actions the Revenue Commissioners will take against those who fail to pay the levy; and if he will make a statement on the matter. [36153/13]
View answer180. Deputy Michael McGrath asked the Minister for Finance if the Revenue is undertaking a specific compliance initiative in regard to persons who are not tax resident here; the number of such persons who have been contacted by Revenue on their non payment of the domicile levy; and if he will make a statement on the matter. [36690/13]
View answerI propose to answer Questions Nos. 110 and 180 together.
I am informed by the Revenue Commissioners that 14 persons have submitted Domicile Levy returns for the tax year 2011. These persons paid a total of €2,319,768 in domicile levy for that tax year. The year 2011 is the latest year for which figures are available. Domicile Levy returns for the year 2011 were due by 31 October 2012 or 15 November 2012 (for ROS electronic filers). This represents an increase of €674,439 in the total amount of levy paid and four to the number of persons who have paid the levy since figures were last provided to the House on foot of Parliamentary Question 51696 of 2012, from Deputy Nash, regarding the Domicile Levy on 21 November 2012. Based on figures available to that date in 2012, ten persons had submitted returns declaring a liability in respect of the Domicile Levy for the tax year 2011 and had paid a total of €1,645,329.
The Revenue Commissioners are currently undertaking a compliance programme on the Domicile Levy. Inquiries are being made in a number of cases where a Domicile Levy return has not been filed and the person concerned has been identified by Revenue as having a possible requirement to file such a return. Where Revenue identifies a liability to the Domicile Levy that has not been paid, the full levy, interest and the appropriate penalty will be sought. Initial Domicile Levy inquiries have issued to 33 persons. This number should increase as the programme proceeds.
As the Domicile Levy is a self-assessment tax, with the onus on the taxpayer to declare their liability, it is not possible for Revenue to provide any estimate of the total domicile levy yield if all persons liable to pay the levy were to pay in full. However, following finalisation of the current compliance programme and depending on the level of non-compliance uncovered, it may be possible for Revenue to provide additional information and/or estimates on the level of compliance with the levy.
I am also informed by the Revenue Commissioners that 13,093 persons filed income tax returns for 2011 and indicated they were non-resident for income tax purposes for that year. Again, 2011 is the most recent year in respect of which this information is available.
The circumstances of individuals who are non-resident for tax purposes but who file Irish tax returns can vary widely. They include, for example:
- Irish nationals who have moved abroad for work reasons but who retain their home here (their tax return is generally only in respect of rental income on their Irish home);
- foreign nationals who never resided here but who have investments (including property) here;
- foreign nationals who worked here for a period and who may have acquired Irish tax residence for that period (for example, individuals who worked here on a temporary assignment) may retain an Irish tax liability, after ceasing to be resident, in respect of investments made in Ireland during their period of residence.
Individuals who leave the State are not required to declare their reasons for leaving, on a tax return or any other document. However, it is likely that a high proportion of non-residents who file Irish tax returns are or have become non-resident for reasons unrelated to taxation.
111. Deputy Andrew Doyle asked the Minister for Finance if he or officials in his Department have held discussions with the EU or US regarding the United States of America and its participation in the International Bank Account Number system; his views on whether the inclusion of the US in IBAN would improve financial dealings for both consumers and business here; and if he will make a statement on the matter. [36155/13]
View answerNeither I nor officials in my department have held discussions in the recent past with either EU or US authorities in relation to the International Bank Account Number, (IBAN) and the United States position towards it. The EU holds regular talks on financial regulation with its key economic partners including the United States, Japan, China, India and Russia. The EU and US also actively participate in the work of the Financial Stability Board. The issue of financial services and financial regulation may be discussed in the Transatlantic Trade and Investment Partnership (TTIP) currently underway between the US and EU. It is too early to anticipate if IBAN will feature in the eventual negotiated outcome of the Agreement.
The IBAN uniquely identifies an individual account, at a specific financial institution, in a particular country. The benefits of the IBAN system include quicker processing with lower risk of payment rejection. Approximately 60 countries use IBAN format for account identification including the banks in all countries in the European Economic Area and many states in the Middle East, North Africa and Caribbean. The United States of America is one of a number of countries that do not use IBAN at present. There is no indication that the US will adopt the IBAN standard in the near future.
