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Dáil Éireann Debate, Wednesday - 24 June 2015

Wednesday, 24 June 2015

Questions (83, 93, 94, 111, 112)

Peadar Tóibín

Question:

83. Deputy Peadar Tóibín asked the Minister for Finance the annual cost to the Exchequer of introducing capital gains tax tapering relief for new companies that hold assets for eight years to 15%. [25302/15]

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Peadar Tóibín

Question:

93. Deputy Peadar Tóibín asked the Minister for Finance the revenue that would be raised for the Exchequer by increasing the rate of capital gains tax from 33% to 40%. [25266/15]

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Peadar Tóibín

Question:

94. Deputy Peadar Tóibín asked the Minister for Finance the revenue that would be raised for the Exchequer by abolishing capital gains tax exemptions for private principal residences sold for in excess of €1 million. [25267/15]

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Peadar Tóibín

Question:

111. Deputy Peadar Tóibín asked the Minister for Finance the cost to the Exchequer of allowing entrepreneurs and small and medium enterprise start-ups a three-year capital gains tax window for selling on their ideas and or businesses. [25286/15]

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Peadar Tóibín

Question:

112. Deputy Peadar Tóibín asked the Minister for Finance the cost to the Exchequer of dividing the capital gains tax categories into passive and active and applying a 40% rate to the passive tax activity, for example, buying shares and the existing rate to active engagement, for example, selling on a business. [25287/15]

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Written answers (Question to Finance)

I propose to take Questions Nos. 83, 93, 94, 111 and 112 together.

I am advised by the Revenue Commissioners that a wide range of statistical information is available on their statistical webpage at

 Http://www.revenue.ie/en/about/statistics/index.html.

In relation to the Deputy's questions, detailed information on potential costs can be found in the post-Budget 2015 Ready Reckoner: http://www.revenue.ie/en/about/statistics/ready-reckoners.pdf.

The potential estimated yield from increasing the Capital Gains Tax rate from 33% to 40% could be in the order of €105 million. This estimate includes the yield from increasing the tax rate in respect of corporate gains. The estimate assumes no behavioural impact on the part of taxpayers. Increases in rates may have a significant behavioural impact and as a result may not produce the expected increase in tax yield.

In respect of the revenue that would be raised for the Exchequer from abolishing Capital Gains Tax exemptions for private principal residences sold in excess of €1 million, as information on the value of capital gains arising from the disposal of principal private residences is not required in Capital Gains Tax returns, there is no basis for separately identifying the yield that would arise from the removal of the exemption from CGT for sales of principal private residences above €1 million. Accordingly, the specific information requested by the Deputy is not available.

Regarding the cost of allowing entrepreneurs/small and medium enterprises start-ups a three year Capital Gains Tax window for selling on their ideas and or businesses, it is assumed that the Deputy is referring to the CGT entrepreneurial relief that was introduced to encourage entrepreneurs to invest and reinvest in assets used in new productive trading activities. The measure applies where an individual, who has paid capital gains tax on the disposal of assets, makes investments in a new business in the period 1 January 2014 to 31 December 2018 and subsequently disposes of this investment no earlier than three years after the date of investment. Due to the conditions attaching to the relief no Exchequer cost arises in 2015.  Costs relating to this measure are not expected to arise until at least 2017 and on its introduction in Budget 2014 the full year cost was estimated at €20 million.

Regarding the cost to the Exchequer of dividing the Capital Gains Tax categories into passive and active and applying a 40% rate to the passive CGT activity for example, buying shares and the existing rate to active engagement for example selling on a business, as tax returns do not provide a basis for compiling estimates in relation to the amount of CGT liability separately associated with passive and active activity, it is therefore not possible to provide the information requested by the Deputy.

Regarding the final question, it is assumed the Deputy is asking about the cost of introducing a Capital Gains Tax tapering relief of 15% for new companies who hold assets for eight years. As data is not available from tax returns regarding the extent to which new companies would be in a position to avail of this relief there is, therefore, no statistical basis on which an estimate of the cost can be provided.

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