Written Answers Nos. 60-74
60. Deputy Michael McGrath asked the Minister for Finance to provide a detailed breakdown of the carry-over effect relating to taxation measures for budget 2016; and if he will make a statement on the matter. [33752/15]
View answerThe table below provides a breakdown of the minus c. €340 million in respect of the carryover effect of measures previously introduced or due to expire in 2016, which was taken account off in the calculation of the estimated fiscal space for 2016 of €1.2 - €1.5 billion in the Spring Economic Statement last April.
|
Tax head |
2016 Carryover €m |
|
Income Tax |
-192 |
|
Corporation Tax |
-15 |
|
VAT |
-2 |
|
CAT |
+1 |
|
Pension Levy |
-135 |
61. Deputy Michael McGrath asked the Minister for Finance the expected yield from the introduction of a 5% and a 10% tax on sugar sweetened drinks; and if he will make a statement on the matter. [33756/15]
View answerA tax on sugar sweetened drinks may be imposed as either an ad valorem tax, which would be imposed as a percentage of the final retail price (i.e 10%), or a specific duty, which would be imposed as a specific amount per volume of liquid (i.e €7.76 per hectolitre). The Deputy seems to be suggesting an ad valorem tax.
There is no official data on the total sales revenue of sugar-sweetened drinks in Ireland. However, using data from industry sources gives the following yield for rates of 5% and 10% on the final sales price of carbonated drinks (diet and non-diet), concentrates, and sports and energy drinks, assuming no behavioural change:
|
Rate |
5% |
10% |
|
Yield |
€49m |
€99m |
I would note that an ad valorem tax may be difficult to administer, given it would be imposed on the final retail price of the product, and thus liable to collection at the point of retail. I would also note that excise duties are traditionally imposed as specific duties, rather than as ad valorem taxes.
62. Deputy Seamus Kirk asked the Minister for Finance if retirees who participate in a pension scheme are permitted to claim tax relief for the full year in which they retire, or only up to the date of retirement; and if he will make a statement on the matter. [33804/15]
View answerI am assuming that the Deputy's question relates to retirees who were formerly, as employees, members of their employer's sponsored occupational pension scheme.
I am advised by the Revenue Commissioners that the legislation governing tax relief for contributions to occupational pension schemes is set out in section 774 of the Taxes Consolidation Act 1997 (TCA 1997). Relief for contributions is granted to an employee against the remuneration from the employment in respect of which the pension scheme is effected. The relief is given by way of deduction of the pension contributions as an expense in determining the employee's income tax liability for the year in question. In any tax year, the amount of contributions on which relief can be granted is limited to an age-related percentage (ranging from 15% to 40%) of the employee's remuneration (subject to an overall annual earnings' cap, which currently stands at €115,000).
Employee contributions can take the form of ordinary annual contributions, additional voluntary contributions (AVCs) or special contributions[1]. AVCs allow employees to improve the retirement benefits provided by their occupational pension scheme at their own expense (i.e. without a corresponding employer contribution) provided the benefits stay within Revenue maximum limits. A common circumstance in which special contributions arise is in the context of payments to AVC schemes at or near the point of retirement (known as "last minute" AVCs) to enhance benefits (normally the lump sum). Irrespective of the type of contribution (ordinary, AVC or special) overall relief on contributions in any year cannot exceed the relevant age-related percentage limit of earnings.
In the case of ordinary annual contributions (and regular additional voluntary contributions) relief is normally provided by an employer under what is known as the net pay arrangement whereby employee pension contributions are deducted from gross pay before tax is calculated. In the case of special contributions, relief is normally granted by way of a claim made by the taxpayer to Revenue at the end of the relevant tax year. Any unrelieved special contributions made in a year can be carried forward and treated as a contribution made in future years for the purposes of tax relief (subject to the relevant limits applying for those years). This spreading forward continues until the full amount had been granted relief or until it is no longer possible to carry the relief forward.
The inability to carry relief forward would occur, for example, where the employee has retired in which case, as the relief for pension contributions is only available against the remuneration in respect of which the pension scheme is effected, the retirement results in a cessation of the roll forward of relief.
In that regard, however, section 774 (8) of the TCA 1997 provides for a limited spread-back provision for special contributions whereby a contribution made before the return filing date for a year (generally 31 October) can, where the taxpayer so elects, be treated as having been made in the previous year with tax relief granted in that earlier year (subject to the relevant age-related and earnings limits applying in that earlier year).
This is particularly useful where an individual is close to retirement, as he or she may have insufficient taxable income in the year in which the contributions are paid (i.e. the year of retirement) to absorb the full amount of the special contribution. In addition, the carry forward of unrelieved contributions to later years is not an option for such individuals, as pension income is not taken into account in computing income for pension contribution tax relief purposes. This facility, therefore, effectively allows the retiree to use the tax relief available to him or her in the year of retirement and, where necessary, to take advantage of any unused tax relief in the previous year.
In recognition of the fact that retiring employees who are not chargeable persons (within the meaning of Part 41A TCA 1997) may overlook the 31 October deadline for making an election, Revenue, in such cases, treats an election as being timely where it is received on or before the 31 December of the year of retirement, once the special contribution has been made by the earlier of the return filing date (i.e. 31 October) and the date of retirement.
[1] The legislation only refers to ordinary annual contributions and contributions that are not ordinary annual contributions but the latter encompass AVCs and special contributions. AVCs can be made on a regular basis (like ordinary annual contributions) or on a once off or occasional basis in which case they are generally referred to as special contributions.
63. Deputy Michael McGrath asked the Minister for Finance the cost of equalising the treatment of pay as you earn, PAYE, and non-PAYE workers earning over €100,000 per year; and if he will make a statement on the matter. [33825/15]
View answer64. Deputy Michael McGrath asked the Minister for Finance the cost of reducing the 11% rate of universal social charge for non-pay as you earn workers earning over €100,000 per year to 10% and to 9%; and if he will make a statement on the matter. [33826/15]
View answer65. Deputy Michael McGrath asked the Minister for Finance the cost of introducing an earned income tax credit for self-employed people of €250; €500; €825; €1,650, per annum; and if he will make a statement on the matter. [33827/15]
View answer66. Deputy Michael McGrath asked the Minister for Finance the cost of increasing the personal income tax credit by €100 and by €200 per year; the number of taxpayers who would benefit; and if he will make a statement on the matter. [33828/15]
View answer67. Deputy Michael McGrath asked the Minister for Finance the cost of reducing the 7% rate of universal social charge to 5.5% and to 5%; and if he will make a statement on the matter. [33829/15]
View answer68. Deputy Michael McGrath asked the Minister for Finance the number of persons who paid the 3% universal social charge surcharge on earnings over €100,000 in each year since 2011; and if he will make a statement on the matter. [33830/15]
View answerI propose to take Questions Nos. 63 to 68, inclusive together.
Regarding the question as to the cost of equalising the treatment of Pay As You Earn (PAYE) and non-PAYE income earners over €100,000, it is assumed that the Deputy is referring to the current 3% Universal Social Charge (USC) surcharge applicable to self-assessed income over €100,000. I am informed by the Revenue Commissioners that the estimated first and full year costs of abolishing this surcharge are in the order of €59 million and €144 million respectively. Alternatively, the estimated first and full year yields to the Exchequer of applying a comparable 3% USC surcharge to Pay As You Earn (PAYE) income over €100,000 are in the order of €84 million and €108 million respectively. The Deputy will be aware that other differences also exist in the treatment of employed and self-employed taxpayers, such as differences in expenses deduction regimes and the timing of tax payments. In this regard, the PAYE and self-assessment systems are not directly comparable.
Regarding the question as to the cost of reducing the 11% rate of Universal Social Charge for non-Pay As You Earn income earners over €100,000 to 10%; and to 9%, I am informed by the Revenue Commissioners that the estimated first and full year costs to the Exchequer of reducing the rate from 11% to 10% are in the order of €20 million and €48 million respectively. The estimated first and full year costs of reducing the rate from 11% to 9% are €40 million and €96 million respectively.
In relation to the question as to the number of persons who paid the 3% Universal Social Charge surcharge on earnings over €100,000 in each year since 2011, I am informed by the Revenue Commissioners this information is available for 2012 and 2013 on the Revenue Statistics webpage at http://www.revenue.ie/en/about/statistics/usc-rates.pdf.
In response to the question as to the cost of introducing an earned income tax credit for self-employed people of €250; €500; €825; €1,650, per annum the Revenue Commissioners estimate, on the basis of 2013 returns, the latest year for which data are available, introducing this credit would cost in the region of €21 million, €41 million, €68 million and €137 million respectively. For the purposes of this estimate, it is assumed that the credit would only be extended to cases identified to be in receipt of Trading or Professional (Case I or Case II) income, and not currently in receipt of the PAYE credit. The estimate does not take into account the ability of the credit to be fully absorbed.
Regarding the question of the cost of increasing the personal income tax credit by €100; and by €200, per annum; and the number of tax payers who would benefit, I am advised by the Revenue Commissioners that the estimated full year cost to the Exchequer would be of the order of €219 million and €436 million respectively. The number of income earners to benefit from the Deputy's proposal would be 1.4 million. The increase in the personal tax credits mentioned in the Deputy's Question is assumed to apply in similar measure to widowed persons tax credit and to include the normal consequential increases in the tax credit for lone parents and the married tax credit. It should also be noted that a married couple or civil partners who has elected or has been deemed to have elected for joint assessment is counted as one tax unit.
In relation to the question as to the cost of reducing the 7% rate of Universal Social Charge to 5.5%; and to 5%, I am advised by the Revenue Commissioners that a Ready Reckoner is available on the Revenue Statistics webpage at http://www.revenue.ie/en/about/statistics/ready-reckoner.pdf. This Pre-Budget 2016 Ready Reckoner shows a wide range of information including a number of indicative changes to USC rates and thresholds. While the Ready Reckoner does not show all of the specific costings requested by the Deputy, other changes can be estimated broadly on a pro-rata (or straight-line) basis with those displayed in the Reckoner.
All figures provided above are estimates for 2016 incomes from the Revenue tax forecasting model using latest actual data for the year 2013, adjusted as necessary for income, self-employment and employment trends in the interim. They are provisional and may be revised.
69. Deputy Michael McGrath asked the Minister for Finance with regard to the existing employment and investment incentive scheme, the cost of increasing the €150,000 annual investment limit for individuals to €200,000, €250,000 and €500,000; and if he will make a statement on the matter. [33831/15]
View answer70. Deputy Michael McGrath asked the Minister for Finance with regard to the existing employment and investment incentive scheme, the cost of permanently removing the scheme from the high earners’ restriction; and if he will make a statement on the matter. [33832/15]
View answer71. Deputy Michael McGrath asked the Minister for Finance with regard to the existing employment and investment incentive scheme, the cost of providing full income tax, universal social charge and pay related social insurance relief in the year of investment, rather than over two stages, as currently provided; and if he will make a statement on the matter. [33833/15]
View answer72. Deputy Michael McGrath asked the Minister for Finance with regard to the existing employment and investment incentive scheme, the cost of the tax expenditure relating to the scheme in each year since it was established; the number of jobs it supports; and if he will make a statement on the matter. [33834/15]
View answer73. Deputy Michael McGrath asked the Minister for Finance with regard to the existing employment and investment incentive scheme, the cost of increasing the investment period to five years; and if he will make a statement on the matter. [33835/15]
View answer74. Deputy Michael McGrath asked the Minister for Finance with regard to the existing employment and investment incentive scheme, the cost of increasing the €10 million company investment life-time limit to €15 million, €20 million and €25 million; and if he will make a statement on the matter. [33836/15]
View answerI propose to take Questions Nos. 69 to 74, inclusive, together.
The cost of increasing the €150,000 annual investment limit for individuals to €200,000, €250,000 and €500,000 would depend on future investment levels in excess of the existing annual investment level but there is no information available from returns filed with Revenue to predict these levels. It should be noted that in 2014, the most recent year available, it is estimated that over 70 individuals claimed relief under the Employment and Investment Incentive (EII) for investments at or near the limit of €150,000. This does not take into account individuals who invest via a fund.
The Deputy should note that it is not possible to state the cost of permanently removing the EII from the High Earners restriction as the effect of including the scheme in the restriction is to delay the relief rather than disallow it. This means the effect of removing it from the restriction would only lead to a temporary cash flow gain which could be in the region of €1 million each year from 2018. There would be no cash flow for earlier years as the scheme is not included in the restriction for investments before 1 January 2017.
The estimated cash flow cost of providing full Income Tax relief in the year of investment, rather than over two stages, as currently provided, would be in the region of €7 million to €10 million in the first year of introduction. The incentive does not provide relief from Universal Social Charge and Pay Related Social Insurance, so this has not been costed.
I am advised by the Revenue Commissioners that a wide range of statistical information is available on the Commissioners' Statistics web page: http://www.revenue.ie/en/about/statistics/index.html. In particular, the tax expenditure section of the web page includes the cost of the scheme: http://www.revenue.ie/en/about/statistics/costs-tax-expenditures.pdf.
Data in relation to the number of jobs supported will become available at a later stage. Under the terms of the scheme, relief in respect of 30% of the amount invested in a qualifying company is granted to the investor in the year of investment, while the balance is only due where it has been proven that employment levels have increased at the company at the end of the 3 year holding period or where evidence is provided that the company used the capital raised for expenditure on research and development. Claims for the balance of the relief will be due from 2015.
In relation to increasing the investment period to five years, it is not possible to accurately estimate the impact of the tax cost but presumably there would be a disincentive effect on investment in the scheme which would likely lower the tax cost.
The cost of increasing the €10 million company investment lifetime limit to €15 million, €20 million and €25 million would depend on the ability of companies to secure investment in excess of the existing scheme. No company has utilised the full limit of €10 million so far.
