Dáil Éireann Debate, Tuesday - 19 July 2016
173. Deputy Pearse Doherty asked the Minister for Finance the revenue from tapering out the single personal, that is, no taper for married portion of credit entitlements €1,650 pay as you earn, and earned income credits by 0.7% per €1,000 on individual income between €100,000 and €170,000 per year, resulting in no entitlement to these tax credits when income is in excess of €170,000 and introducing a levy of 2% and 4% on income over €170,000. [22095/16]
View answerI am advised by Revenue that the estimated first and full year yields to the Exchequer of tapering the Personal, PAYE and the Earned Income Credits per €1,000 of income between €100,000 and €170,000 in the manner specified by the Deputy (which would require a taper of approximately 1.43% per €1,000) and applying a 2% levy on income over €170,000 are in the order of €323 million and €401 million respectively.
The first and full year yields increase to €429 million and €545 million where a 4% levy on income over €170,000 is applied in addition to the tapering of credits as described.
In calculating the yield to the Exchequer, the Personal Credit tapering was limited on a pro-rata basis to a maximum of €1,650. Consequently the credit would not be fully extinguished for those with income greater than €170,000 and who currently benefit from a Personal Credit greater than €1,650, such as Married Couples/Civil Partners and Widows.
I have been advised by Revenue that, given the current tax structures, major issues would need to be resolved as to how in practice such a credit tapering could be integrated into the current system and how this would affect the relative position of different types of income earners.
The estimates above have been generated by reference to 2017 incomes as calculated on the basis actual data for the year 2014, the latest year for which returns are available, adjusted as necessary for income, self-employment and employment trends in the interim. The estimates are provisional and may be revised.
The Deputy may wish to note that the annual update of the Tax Modeller application has now taken place. The Base Year dataset has been updated from 2013 to 2014, the latest year for which returns are now available. In addition, the reference year for which costs/yields are estimated, after adjustments for income, self-employment and employment trends in the interim, has been updated from 2016 to 2017. In advance of the updating of the model this year, an analysis of the First Year/Full Year apportionment of costs was also undertaken to ensure the estimated apportionment is as accurate as possible. It should be noted that this revision does not impact on the total cost/yield of a measure, it only changes the apportionment of the Exchequer impact over the first and second years in which it comes into effect.
