Róisín Shortall
Question:348. Deputy Róisín Shortall asked the Minister for Finance the cost to the Exchequer of indexing the entry point to the 49.5% marginal rate of tax to wage growth for every 1% increase in wage growth. [26343/16]
View answerFriday, 16 September 2016
Questions (348, 349)
Róisín Shortall
Question:349. Deputy Róisín Shortall asked the Minister for Finance counting PRSI, income tax and the universal social charge, the percentage of income earners who pay tax on their income at each of the marginal rate bands with a breakdown for employed persons and the self-employed persons. [26344/16]
View answerWritten answers
I propose to take Questions Nos. 348 and 349 together.
The cost to the Exchequer of indexation to achieve the effect described by the Deputy is difficult to compute exactly. The 49.5% marginal rate is comprised of three separate elements - income tax, USC and PRSI - and each is applied on a different tax base. Furthermore, USC and PRSI are individualised whereas income tax may operate on a joint assessment basis. The best approximation available is the cost of increasing Income Tax rate bands, as in most cases the point of entry into the higher rate of income tax is the point at which the 49.5% rate will begin to apply. For each 1% increase in standard rate bands, the first and full year costs are estimated by the Revenue Commissioners to be of the order of €60m and €70m respectively.
These figures are estimates from the Revenue tax forecasting model using latest actual data for the year 2014, adjusted as necessary for income, self-employment and employment trends in the interim. They are estimated by reference to projected 2017 incomes, they are provisional and may be revised.
As regards marginal rates paid by income earners, I must point out that PRSI is a matter for my colleague, the Minister for Social Protection in the first instance. I am advised by Revenue that the following tables provide a percentage breakdown of PAYE and self-assessed income earners at each income tax rate and Universal Social Charge (USC) rate. This information represents the out-turn figures based on actual tax returns from 2014, the most recent tax year for which such data is available.
|
Tax Rate |
PAYE |
Self-Assessed (Schedule D) |
Total |
|
Exempt |
39% |
31% |
857,394 |
|
Marginal Relief |
1% |
2% |
24,796 |
|
20% |
41% |
51% |
937,419 |
|
41% |
18% |
16% |
404,439 |
|
All |
2,035,249 |
188,799 |
2,224,048 |
|
USC Rate |
PAYE |
Self-Assessed (Schedule D) |
All |
|
Exempt |
30.48% |
31.86% |
680,430 |
|
2 & 4% |
19.10% |
20.91% |
428,267 |
|
7% |
50.38% |
42.10% |
1,104,802 |
|
3% Surcharge |
0.04% |
5.13% |
10,549 |
|
Total |
2,035,249 |
188,799 |
2,224,048 |