Written Answers Nos. 101 - 112
101. Deputy Peadar Tóibín asked the Minister for Finance the revenue that would be raised for the Exchequer by reducing the tax exemption for lump sum pension payments on retirement to €80,000 and taxing the balance at the marginal rate. [25275/15]
View answer102. Deputy Peadar Tóibín asked the Minister for Finance the revenue that would be raised for the Exchequer by increasing the imputed distribution rate for approved retirement funds and personal retirement savings accounts by 1% in both bands, under and over €2 million, bringing the rates to 6% and 7%, respectively. [25276/15]
View answer128. Deputy Peadar Tóibín asked the Minister for Finance the annual revenue that would be generated from capping relief for employer pension contributions to €75,000 per annum, per employee. [25305/15]
View answerI propose to take Questions Nos. 101, 102 and 128 together.
As regards the first question, I am informed by the Revenue Commissioners, that as there is no requirement to include data in tax returns in relation to tax free lumps of less than €200,000 (the current life-time limit on tax-free retirement lump sums), that they are not in a position to quantify estimated savings to the Exchequer in the event of the reduction of the tax free lump sum entitlement to €80,000.
Regarding the second question, an annual imputed distribution rate of 4% or 5% applies, as appropriate, to approved retirement funds (ARFs) with asset values of €2 million or less and also to vested Personal Retirement Savings Accounts (PRSAs where benefits have commenced) on the same basis. A higher imputed distribution rate of 6% applies to ARFs and/or vested PRSAs with asset values of more than €2 million. I assume the Deputy is suggesting an increase in the imputed distribution from 6% to 7% for ARFs and/or vested PRSAs of more than €2 million in value and an increase from 4% or 5%, as appropriate, to 6% where the asset values are less than €2 million. I am informed by the Revenue Commissioners that information provided to them in the context of the tax paid on these deemed or imputed distributions does not include information on the value of the ARFs and/or vested PRSAs out of which the distributions are deemed to arise. There is therefore no basis on which a definitive estimate of the impact on the Exchequer of the change mentioned in the question could be compiled. It is important to note that the deemed or imputed distribution measure is designed to encourage drawdowns from ARFs and vested PRSAs so that they are used, as intended, to fund a stream of income in retirement in the same way as a retirement annuity, for which ARFs are supposed to operate as a more flexible alternative. The measure, in itself, does not give rise to significant tax revenues as it does not apply to actual draw-downs from ARFs and vested PRSAs, which are taxed in the normal way.
Regarding the final question, I am informed by the Revenue Commissioners that data on employer contributions to pension schemes and other pension arrangements are supplied to them in aggregate form and do not provide a sufficient basis to provide a reliable estimate of any tax saving in the terms set out in the question.
103. Deputy Peadar Tóibín asked the Minister for Finance the revenue that would be raised for the Exchequer by increasing the stamp duty on share transactions from 1% to 1.5%. [25277/15]
View answerI am advised by the Revenue Commissioners that the full year yield to the Exchequer from increasing Stamp Duty on share transactions from 1% to 1.5%, by reference to the expected 2015 out-turn, is estimated to be in the region of an additional €190 million.
104. Deputy Peadar Tóibín asked the Minister for Finance the revenue that would be raised for the Exchequer by increasing Revenue personnel by 125 qualified persons, to target tax evasion and black market activity, as per the Revenue Commissioners contribution to the initial comprehensive review of spending. [25278/15]
View answerI am advised by the Office of the Revenue Commissioners that Revenue's Comprehensive Review of Expenditure 2014 estimated that by increasing audit staffing resources by c.100 staff an additional exchequer yield of €50m per annum could be achieved. It estimated that by increasing staff on compliance projects such as oils, tobacco and alcohol by 100 could raise €20m per annum. It also estimated that increasing staffing on investigations by 20 staff could achieve exchequer savings of €12m per annum. On that basis, an increase of 125 staff on audit, compliance and investigation work targeting tax evasion and black market activity could raise between €25m and €75m per annum. In addition, it should be noted that there is a significant deterrent and voluntary compliance effect on behaviour of an effective, risk based compliance programme. The investment in the training and development of a Revenue auditor or investigator can take up to three years, depending on previous relevant experience. Therefore the full additional yield would not be available immediately.
Revenue undertakes a range of risk management interventions to target and confront those who do not comply, including tax evasion and black market activity. The objective is that people are deterred from filing inaccurate returns and from engaging in shadow economy activity and smuggling. The range of interventions has increased in recent years. Interventions include appraisals, aspect queries, profile interviews, assurance checks, enforcement, investigation and prosecutions, as well as audits. The appropriate intervention depends on the relevant risk. The average rate of return on each type of intervention varies depending on the intervention. In some types of interventions to tackle evasion and the black economy, such as enforcement, the focus is on the detection of drugs and fiscal smuggling where the direct exchequer yield is not the immediate objective.
It must also be recognised that Revenue has to prioritise its resources and must, for example, provide service for compliance, by making it easier and less costly to voluntarily comply. The administration of taxes and duties requires a wide range of specialists and experts. In 2015 the Minister for Public Expenditure provided for an additional 126 Revenue staff in the Revised Estimates of Services. These additional staff will be mainly deployed on Local Property Tax support, International Tax and on compliance interventions. I fully support the provision of these additional staff. Revenue is actively engaged in recruiting to fill the additional posts, existing vacancies and to replace critical skills as new vacancies arise. Revenue expects to recruit around 400 staff in 2015. 148 staff were already recruited in the first five months of 2015. The recruitment is at all levels and across a diverse range of specialist skills areas such as tax and legal professionals, data analysts, economists and information technology experts.
105. Deputy Peadar Tóibín asked the Minister for Finance the revenue that would be raised for the Exchequer by standardising investment in rented residential relief under section 23. [25280/15]
View answerIt is assumed that the Deputy is referring to standardising all remaining relief that is available in respect of Section 23 properties. As claims in respect of section 23 relief are included in loss claims for all years except for the initial year of claim, and are not separately identifiable from other loss claims, it is not possible to estimate the revenue that could be raised from standardising this relief.
106. Deputy Peadar Tóibín asked the Minister for Finance the revenue that would be raised for the Exchequer by reducing mortgage interest deductions against rent for landlords from 75% to 41%; 40%; 35%; and 30%. [25281/15]
View answerI am informed by the Revenue Commissioners that a breakdown between rent received from residential 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 2013, the latest year for which this information is available, and making certain assumptions about the data, it is estimated that the revenue that could be raised from reducing the level at which individuals can claim interest repayments against tax for residential rental properties from 75% to 41%, 40%, 35% and 30% could be in the order of €108 million, €111 million, €127 million and €142 million respectively.
I am advised by the Revenue Commissioners that the estimated cost of interest relief on residential properties is based on assuming that tax relief is allowed at the Income Tax rate of 40% and the figures 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.
Rental income of companies is returned as net of interest on borrowings and the figures for interest are not separately distinguished in Corporation Tax returns. There is, therefore, no basis for an estimate of the cost of reducing the tax relief for corporate landlords.
107. Deputy Peadar Tóibín asked the Minister for Finance the revenue that would be raised for the Exchequer by increasing withholding tax on royalties, where it applies, from 20% to 22%; 23%; 24%; and 25%. [25282/15]
View answerIt is assumed that the Deputy is referring to the withholding tax applied on Irish patent royalty income.
I am advised by the Revenue Commissioners that payments of patent royalties are subject to withholding tax at the standard rate of income tax under Section 238 of the Taxes Consolidation Act 1997 (TCA). While this is subject to certain exceptions, the requirement to deduct withholding tax applies, inter alia, where such payments are made to an Irish resident company or individual. Any tax so deducted is set off against the Corporation Tax liability of the company or, as the case may be, the Income Tax liability of the individual for the period of assessment in which the payment received is taken into account.
Under Section 239 of the TCA, withholding tax deducted by an Irish resident company in respect of payments made from which Income Tax is deductible, including patent royalty payments, is treated and payable as Corporation Tax for the accounting period in which the payment is made by the company and the company is required to include such tax in its pay and file returns for that accounting period.
While the annual Corporation Tax returns filed by companies provide data on the total amount of tax payable under Section 239, they do not separately indicate the amount of such tax that is attributable to tax deducted in respect of patent royalty payments.
Accordingly, Revenue does not have a statistical basis for providing the tax yield estimates requested by the Deputy.
108. Deputy Peadar Tóibín asked the Minister for Finance the cost to the Exchequer in the case of abolishing the property tax. [25283/15]
View answer127. Deputy Peadar Tóibín asked the Minister for Finance the annual revenue that would be generated from the introduction of property tax on nursing homes. [25304/15]
View answerI propose to take Questions Nos. 108 and 127 together.
I am advised that the Local Property Tax (LPT) is forecast to collect €440 million in 2015. These receipts would be lost if LPT was abolished.
In relation to Question 25304-15, I am advised by the Revenue Commissioners that the cost of all LPT exemptions to the Exchequer for 2014, the most recent full year available for which figures are available, is estimated to be €12 million in total. I am further advised that costs for individual exemptions, such as for nursing homes, are not available at this time.
109. Deputy Peadar Tóibín asked the Minister for Finance if he will provide, in tabular form, the cost to the Exchequer of raising the value added tax registration threshold for small and medium enterprises with low turnover from €70,000 to €100,000; €150,000; €175,000; €200,000; and €250,000. [25284/15]
View answerI am informed by the Revenue Commissioners that the current VAT Registration Threshold for Goods is €75,000. The estimated cost to the Exchequer of raising the VAT Registration thresholds as outlined in your question can be found in the Ready Reckoner document at http://www.revenue.ie/en/about/statistics/ready-reckoners.pdf.
