It is not clear at what rate the Deputy is suggesting indexation, or to what extent this would apply across all taxes and duties. However, I am advised by the Revenue Commissioners that the Deputy may be interested to note the following in relation to indexation.
A Post-Budget 2016 Ready Reckoner is available on the Revenue Statistics webpage at
http://www.revenue.ie/en/about/statistics/index.html. This Ready Reckoner shows a wide range of information, including the cost to the Exchequer of a 1% indexation of certain key elements of Income Tax and Universal Social Charge, as also set out in the following table. The following table looks at a number of different options with regard to indexation.
Cost of Indexation
|
|
€ Million
|
|
|
|
First Year
|
Full Year
|
Indexation at 1%
|
Personal Tax Credits (incl. Home Carer's Credit) with rate bands
|
76
|
103
|
|
Exemption limits, Personal Tax Credits with rate bands
|
80
|
110
|
|
Earned Income Credit
|
0.2
|
0.6
|
|
PAYE Credit, Exemption limits, Personal Tax Credits with rate bands
|
101
|
136
|
|
USC rate bands
|
11
|
16
|
These figures are estimates 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 estimated by reference to 2016 incomes and are provisional and may be revised.
I am further advised by Revenue of the following:
- A 1% indexation of CAT thresholds would imply a full year cost of approximately €3 million.
- A 1% indexation of the CGT annual exemption would imply a full year tax cost of approximately €0.1 million.
- A 1% indexation of VAT thresholds would imply an estimated €3.4m cost per annum.