Tax Appeals Commission

Questions (164)

Seán Fleming

Question:

164. Deputy Sean Fleming asked the Minister for Finance the number of cases before the Tax Appeals Commission; the quantum in euro terms of the amount with the commission; and if he will make a statement on the matter. [21646/19]

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Written answers (Question to Finance)

There were 3,585 appeals on hand before the Tax Appeals Commission (TAC) as at 30 April, 2019. I am advised by the TAC that it is difficult to provide an actual quantum figure because the original quantum of tax under appeal may be modified post filing of the notice of appeal (i.e. where an aspect of the appeal is settled or withdrawn), the parties may disagree in relation to the precise quantum of tax in dispute, or the monetary value of an appeal is not always calculable (e.g. in appeals where the rate of tax is in dispute or where the quantum in dispute represents a refusal of loss relief or of deductions or in appeals in relation to the refusal of Tax Clearance Certificates).  Subject to these caveats, as at 30 April, 2019 the TAC recorded the quantum of tax under appeal amounting to approximately €3.7 billion. Of this amount, €2.5 billion is comprised in 10 appeals, five of which were received by the TAC in the last week of December 2018.

Some appeals before the TAC cannot be progressed when the Commission has to await the outcome of court proceedings.  For example, a stay may have been placed on the progression of the appeals by the TAC by Order of the High Court, Court of Appeal or Supreme Court. Of the 10 highest-value appeals before the TAC, two appeals with a combined value of €1.67 billion are currently stayed by Court Order and cannot be progressed by the TAC until the stays are lifted.

In  view of the growing backlog of appeals, I commissioned an independent review of the workload and operations of the TAC in 2018.  In line with the review's recommendations, I sanctioned the doubling of the TAC’s annual budget in 2019, to allow for additional staffing resources at all levels and additional funding for improved ICT systems. In June 2018 the TAC moved to a new, larger premises that allow for the scheduling of simultaneous hearings, to ensure greater and more efficient use of Commissioner’s time. This is resulting in a reduction in the time parties have to wait for their appeal to be heard. 

In addition, a Public Appointments Service competition for the recruitment of Temporary Appeal Commissioners was completed recently and appointments from the resulting panel are expected shortly. Legislation is also in progress to create the role of Chairperson of the TAC, as per a recommendation of the independent review.

With the substantial increase in resources at the TAC, I expect the overall number of appeals and the quantum of tax under appeal with the TAC to begin to decrease steadily over the coming year. 

NAMA Operations

Questions (165, 166, 167)

Pearse Doherty

Question:

165. Deputy Pearse Doherty asked the Minister for Finance the impact on the general Government balance of the transfer of the €2 billion National Asset Management Agency, NAMA, surplus for 2020 to the State. [21664/19]

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Pearse Doherty

Question:

166. Deputy Pearse Doherty asked the Minister for Finance his plans for the €2 billion National Asset Management Agency, NAMA, surplus to be collected in 2020; the way in which he plans to use it; when he plans to use same; the way in which the transfer of funds will be administered; and the location of its transfer. [21665/19]

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Pearse Doherty

Question:

167. Deputy Pearse Doherty asked the Minister for Finance if the anticipated payment of €2 billion from the National Asset Management Agency, NAMA, in 2020 has been factored into the debt projection in the stability programme update; if not, the way in which it would reduce debt as a quantum and a percentage of gross domestic product and gross national income; and if it is fractured in to show the way in which not using it for debt reduction would affect the debt figures. [21666/19]

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Written answers (Question to Finance)

I propose to take Questions Nos. 165 to 167, inclusive, together.

NAMA was established in December 2009 and its debts of nearly €32 billion represented a substantial contingent liability to the State.

The State recapitalised the domestic banking system at a gross cost of €64 billion, adding around 40 per cent of GDP to national debt.

Total government debt now stands at over €200 billion; this is the equivalent of €42,500 for every person in the State.

As per Eurostat guidance, while the NAMA surplus paid to the Exchequer will have a positive impact on the Exchequer balance it will not impact on the general government balance.

However, such repayment will reduce the Exchequer Borrowing Requirement, decreasing the rate at which debt is incurred by the state. This is taken into account in the projections for public debt published in the Stability Programme Update (SPU) 2019.

The SPU reiterated this Government's commitment to use proceeds from the resolution of the financial crisis, making explicit reference to NAMA, to reduce our stock of debt. This approach forms the cornerstone of the Government's approach to building the resilience of the economy to external shocks, including preparing for the impact of Brexit.

Tax Data

Questions (168, 169, 170)

Joan Burton

Question:

168. Deputy Joan Burton asked the Minister for Finance the estimated number of companies that were involved in aircraft leasing assessed to tax in each of the years 2012 to 2018, in tabular form. [21667/19]

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Joan Burton

Question:

169. Deputy Joan Burton asked the Minister for Finance the estimated number of companies that were involved in aircraft leasing assessed to tax under section 110 of the Taxes Consolidation Act 1997 in each of the years 2012 to 2018, in tabular form. [21668/19]

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Joan Burton

Question:

170. Deputy Joan Burton asked the Minister for Finance the estimated corporation tax yield from companies which were involved in aircraft leasing arising in each of the years 2012 to 2018, in tabular form. [21669/19]

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Written answers (Question to Finance)

I propose to take Questions Nos. 168 to 170, inclusive, together.

I am advised by Revenue that the estimated number of companies (rounded to the nearest 100) that were involved in aircraft leasing liable to corporation tax is shown below together with the estimated Corporation Tax yield from companies which were involved in aircraft leasing.  

Year

Number of Companies

Net Receipts of Corporation Tax €m

2018

4,000

54

2017

3,300

40

2016

2,900

61

2015

2,500

34

2014

2,200

23

2013

1,900

29

2012

1,700

36

 

In relation to question on companies assessed to tax under section 110, I am advised by Revenue that there is no requirement for companies that have submitted a notification to Revenue that the company is a qualifying company for the purposes of section 110 of the Taxes Consolidation Act 1997 to state whether the company is engaged in aircraft leasing on the corporation tax returns submitted by the company.  Therefore, Revenue is not in a position to provide the information requested regarding the number of section 110 companies engaged in aircraft leasing.   

Company Data

Questions (171, 172, 173)

Joan Burton

Question:

171. Deputy Joan Burton asked the Minister for Finance the estimated gross assets of companies that were involved in aircraft leasing in each of the years 2012 to 2018, in tabular form. [21670/19]

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Joan Burton

Question:

172. Deputy Joan Burton asked the Minister for Finance the estimated total indebtedness of companies that were involved in aircraft leasing in each of the years 2012 to 2018, in tabular form. [21671/19]

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Joan Burton

Question:

173. Deputy Joan Burton asked the Minister for Finance the estimated number of employees directly employed here by companies which were involved in aircraft leasing in each of the years 2012 to 2018, in tabular form. [21672/19]

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Written answers (Question to Finance)

I propose to take Questions Nos. 171 to 173, inclusive, together.

The most recent information available is from the CSO publication, Aircraft Leasing in Ireland 2007-2016. 

 In relation to the number of direct employees in aircraft leasing companies, the CSO report shows that this has increased from 1,010 in 2012 to 1,482 in 2016.

Table 1 Direct employees in companies of aircraft leasing

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Persons employed

396

546

737

821

895

1,010

1,086

1,180

1,321

1,482

Total pay

€41m

€62m

€82m

€106m

€110m

€123m

€132m

€164m

€207m

€245m

  The CSO report shows the total liabilities of companies involved in aircraft leasing has risen from €60.6bn in 2012 to €141.1bn in 2016.

Table 2 Total liabilities of companies in companies of aircraft leasing € million

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Bonds and Notes

2,399

2,408

2,201

3,953

3,451

3,231

3,410

3,753

4,134

5,300

Creditors

8,704

1,589

1,518

1,251

1,392

1,620

1,828

5,020

6,087

6,567

Equity Insurance

13,588

14,071

14,951

16,435

16,406

16,843

18,335

29,059

34,601

40,571

Loans

12,920

17,750

17,882

19,244

22,862

28,723

33,681

75,696

71,943

81,287

Other

1,658

4,915

6,526

5,637

9,621

10,215

9,242

9,849

11,294

7,406

Total Liabilities

39,269

40,733

43,077

46,520

53,732

60,633

66,496

123,376

128,060

141,130

Finally, the CSO report shows that the total assets of companies involved in aircraft leasing rose from €65.8bn in 2012 to €141.6bn in 2016.

Table 3

Total assets of companies in aircraft Leasing € million

 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Cash and Bank Deposits

555

418

521

290

446

1,445

1,899

3,193

4,691

4,887

Debtors

2,265

1,810

1,810

1,404

3,242

3,209

3,847

17,013

18,943

19,399

Loans

1,100

4,399

4,360

6,733

7,073

8,816

8,765

8,560

5,563

11,352

Tangible Fixed Assets

27,385

28,625

31,475

35,621

38,726

43,980

47,073

77,480

*

*

Other

2,191

4,475

5,042

4,035

6,394

8,362

6,464

10,862

*

*

Total Assets

33,496

39,727

43,209

48,083

55,881

65,812

68,048

117,108

128,567

141,633

*Tangible Fixed Assets have been suppressed in 2015 and 2016 due to confidentiality

Film Industry Tax Reliefs

Questions (174)

Tom Neville

Question:

174. Deputy Tom Neville asked the Minister for Finance if Irish actors are required to be hired by a production company for a film to qualify for section 481 tax credit; if so, the status of the roles for the actor, that is, if they are lead roles, support or minor roles; and if he will make a statement on the matter. [21720/19]

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Written answers (Question to Finance)

Section 481 provides relief in the form of a corporation tax credit related to the cost of production of certain films. The credit is granted at a rate of 32% of the lowest of:

- eligible expenditure

- 80% of the total cost of production of the film

- €70,000,000.

The minimum amount that must be spent on the production is €250,000 and the minimum eligible expenditure amount to qualify is €125,000.

The Scheme is intended to act as a stimulus to the creation of an indigenous film industry in the State, creating quality employment opportunities and supporting the expression of the Irish culture.  There is no requirement for production companies to hire Irish actors in order to qualify for the section 481 tax credit.  However, as noted above, the credit is available only in respect of eligible expenditure which, in broad terms, encompasses payments for goods, services, and facilities in Ireland, including the employment of individuals by the producer company on the production of the film.  Such employments include the film crew, in addition to actors. 

A number of significant changes were made to the credit as part of 2018 Finance Bill process. In recognition of the nature of the production cycle and the long lead in times needed for productions to be undertaken, the credit was extended from its original end date of 31 December 2020 to 31 December 2024. Additionally, it was legislated to require production companies to apply for payment of the tax credit under the self-assessment system. Finance Bill 2018 also provided for a new short-term, tapered regional uplift, commencing at 5%, for productions being made in areas designated under the State aid regional guidelines.  The regional uplift was introduced subject to State aid approval and the notification process is currently under way.

The application process has also been divided between the Revenue Commissioners and the Department of Culture, Heritage and the Gaeltacht. This provides an opportunity for earlier engagement on the training requirements associated with the credit, including the quality of training to be provided.

Insurance Coverage

Questions (175)

Louise O'Reilly

Question:

175. Deputy Louise O'Reilly asked the Minister for Finance if his attention has been drawn to the situation regarding adults with autism being denied life insurance; his plans to address same to ensure that all persons can access life insurance; and if he will make a statement on the matter. [21743/19]

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Written answers (Question to Finance)

At the outset, the Deputy should note that as Minister for Finance, I am responsible for the development of the legal framework governing financial regulation.  Neither I nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept.  This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products.  Consequently, I am not in a position to direct insurance companies as to the pricing level that they should apply to particular categories of individuals, nor am I in a position to direct them to provide cover to such individuals. 

It is my understanding that insurers use a combination of rating factors in making their individual decisions on whether to offer life insurance cover and what terms to apply.  These factors can include age, health, family medical history, occupation and lifestyle.  In addition, these may be determined or linked to the length of time with which such a policy may last.  Furthermore, my understanding is that insurers do not all use the same combination of rating factors, and as a result prices and availability of cover varies across the market, and that they will price in accordance with their own past claims experience.  

In relation to life insurance cover generally, I am informed by Insurance Ireland that life insurance operates on the principle of the pooling of risks and that policyholders whose state of health is below average and who therefore have a higher than average chance of claiming from the pool pay a higher than average contribution.  When applying for life assurance, a customer will be asked on the application form detailed health questions and other questions about occupation, hazardous hobbies and previous insurance history. Thus, the insurance company obtains a very complete picture of the individual’s state of health which would include physical and mental health.  Each application is considered individually and the decision on whether to offer cover and on what terms depends on the facts of that particular case.  In cases where an individual applies for cover and is turned down, or is offered cover at an increased premium (or subject to special conditions), then he/she can request that the insurer's Chief Medical Officer write to his/her doctor to explain the reason for the underwriting decision.  They also state that the process of underwriting life insurance policies seeks to identify and assess all aspects of an individual’s physical and mental health which may be relevant to the cover being applied in order to ensure that the underwriting decision is a fair one to the individual in question.

VAT Rate Application

Questions (176)

Micheál Martin

Question:

176. Deputy Micheál Martin asked the Minister for Finance if there is a policy regarding VAT on public projects within his Department; if it applies to all Departments; if it is up to each Department to decide themselves; and if he will make a statement on the matter. [21832/19]

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Written answers (Question to Finance)

VAT is chargeable on supplies made to Public Bodies as a matter of course.  In general, public bodies are not taxable persons and their activities are therefore outside the scope of VAT and, therefore, they have no entitlement to VAT deductibility on their inputs even though VAT will have been charged on any invoices issued to them.  While the activities of a public body are generally outside the scope of VAT, there are circumstances whereby a public body will be a taxable person in respect of some of its activities and accordingly, those activities will then come within the scope of VAT.  Irrespective of the above, public bodies are regarded as taxable persons in respect of certain specific activities where those activities are carried out on a more than negligible scale.  Schedule 6 to the VAT Consolidation Act 2010 contains an exhaustive list of these activities and they include Telecommunication services, Supply of water, gas, electricity and thermal energy, Transport of goods, Passenger transport, etc. 

The fact that a public body acts in its capacity as a public body when it carries out an activity does not in itself mean that the public body is regarded as a non-taxable person in respect of that activity.  To determine the public body’s status as a non-taxable person, it is necessary to carry out a further assessment of the commercial circumstances in which the activity is provided.  Regard must be had as to whether the public body is in competition with private operators when it carries out that activity and it will not be treated as a non-taxable person in respect of that activity where to do so would result in a signification distortion of competition.

National Broadband Plan Implementation

Questions (177)

Michael McGrath

Question:

177. Deputy Michael McGrath asked the Minister for Finance if the Irish Fiscal Advisory Council was consulted on the budgetary impacts of the national broadband plan. [21857/19]

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Written answers (Question to Finance)

Under the Fiscal Responsibility Act 2012, the Irish Fiscal Advisory Council (IFAC) has been assigned the monitoring and assessment functions required of an independent national fiscal institution under the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union. The Act requires IFAC to “provide an assessment of whether the fiscal stance for the year or years concerned is, conducive to prudent economic and budgetary management”.

In addition, as part of the Council’s so-called ‘endorsement function IFAC provides an independent assessment of the official macroeconomic forecasts of the Department of Finance, upon which the Stability Programme Update (SPU) and Budgets are based. Accordingly, the Council’s role is to assess the overall fiscal stance as well as the forecasts underpinning the SPU and Budget publications. Therefore, the impact of all government expenditure, including that on the National Broadband Plan, is assessed by the Council in this context.

Brexit Preparations

Questions (178)

Lisa Chambers

Question:

178. Deputy Lisa Chambers asked the Minister for Finance the number of additional customs officials that will be hired due to Brexit; the number of additional hires to date; and the number expected to be in place by 31 October 2019; and if he will make a statement on the matter. [21865/19]

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Written answers (Question to Finance)

In the context of extensive and detailed Brexit preparedness and contingency work across all Government Departments and Agencies, Revenue determined that in a ‘Central Case’ scenario (i.e. an orderly withdrawal of the UK from the EU, to include a transition period until the end of 2020), an additional 600 Revenue staff would be required. In September 2018, the Government granted approval in principle for the phased recruitment of an additional 600 Revenue staff to meet the challenges posed by Brexit.

Since the start of 2019, Revenue has appointed over 500 staff from open recruitment, interdepartmental and internal competitions. The majority of these have been assigned to customs roles or to backfill positions from which existing Revenue staff are assigned to customs duties. As serving staff are taking up their new Brexit-related positions, Revenue is backfilling the vacancies created, from panels of candidates established in its general recruitment activity.

In preparation for Brexit, Revenue has assigned over 450 additional staff to customs related roles.  These additional staff have been deployed across a range of functions, with the majority assigned to import and export trade facilitation activities and policy and operational roles. Revenue will continue to adjust its recruitment and training plans in response to business needs, including Brexit-related developments.

Tax Code

Questions (179, 180)

Pearse Doherty

Question:

179. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be raised by increasing capital gains tax by 3% on passive gains only excluding active gains through the sale of an active business for example. [21928/19]

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Pearse Doherty

Question:

180. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be raised by increasing capital gains tax by 3%. [21929/19]

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Written answers (Question to Finance)

I propose to take Questions Nos. 179 and 180 together.

I am advised by the Revenue Commissioners that because data from tax returns do not provide a basis for compiling separate figures of the amount of Capital Gains Tax (CGT) liability associated with passive activity, there is no basis to provide an estimate of the yield that could be raised by increasing the rate (on passive gains) by 3%.

Regarding the estimated revenue that would be raised by increasing capital gains tax by 3%, the Revenue Ready Reckoner, available at www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf shows the yield from changes to the overall CGT rate.

While the Ready Reckoner does not show the specific costing requested by the Deputy, the yield from a 3% increase can be estimated on a pro-rata or straight-line basis from those shown.

Tax Code

Questions (181, 182, 183, 184)

Pearse Doherty

Question:

181. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would raised by introducing a wealth tax at a rate of 1% set at a personal threshold of €1 million of net wealth with no asset exemptions. [21932/19]

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Pearse Doherty

Question:

182. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue the would be raised by introducing a wealth tax at a rate of 1% set at a personal threshold of €1 million of net wealth with no asset exemptions with a rising rate of 1% at each additional €500,000 wealth threshold (details supplied). [21933/19]

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Pearse Doherty

Question:

183. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be raised by introducing a wealth tax at a rate of 1% set a personal threshold of €1 million of net wealth with asset exemptions for voluntary pensions and farms. [21934/19]

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Pearse Doherty

Question:

184. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be raised by introducing a wealth tax at a rate of 1% set at a personal threshold of €1 million of net wealth with asset exemptions for voluntary pensions and farms with a rising rate of 1% at each additional €500,000 wealth threshold (details supplied). [21935/19]

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Written answers (Question to Finance)

I propose to take Questions Nos. 181 to 184, inclusive, together.

As there have been no subsequent developments in this area, the position remains the same as in my response to the Deputy's PQs regarding the same scenarios on 19 June 2018 which is as follows:

In order to estimate the potential revenue from a wealth tax, it is necessary to identify the wealth held by individuals. As there is currently no such wealth tax in operation in Ireland, the Department understands that the Revenue Commissioners have no basis or requirement to compile the data needed to produce estimates in relation to a potential wealth tax. Although an individual's assets and liabilities are declared to the Revenue in a number of specific circumstances (for example, after a death), this information is not a complete measure of assets and liabilities in the State, nor is it recorded in a manner that would allow analysis of the implications of an overarching wealth based tax.

However, in 2013 the Central Statistics Office conducted the first comprehensive survey of household wealth in Ireland (the Household Finance and Consumption Survey (HFCS)). The survey provides information on the ownership and values of different types of assets and liabilities along with more general information on income, employment and household composition.

During 2016, my Department, jointly with the Economic and Social Research Institute (ESRI), conducted a research project into the distribution of wealth in Ireland and the potential implications of a wealth tax using the HFCS. The research formed part of an on-going joint-research programme with the ESRI on the Macro-Economy and Taxation. The research paper, available on the ESRI website, presented results on the composition of wealth across both the wealth and income distributions in Ireland. A number of wealth tax scenarios were then applied to the Irish data (wealth tax regimes from other jurisdictions and hypothetical scenarios). In each case, the associated tax bases and revenue yields, the number of liable households across the income distribution, and the characteristics of the households affected are outlined.

The wealth tax scenarios in the research paper that are closest to the wealth taxes outlined by the Deputy in his questions are the high threshold-large exemptions scenario (which best matches the scenario set out in PQ 21934/19), and the high threshold-no exemptions scenarios (which best matches the scenario outlined in PQ 21932/19) in Table 5 of the Department of Finance/ESRI study.

The first of these scenarios (high threshold-large exemption) has a personal threshold of €1.0 million (doubled if married and a €500,000 increase per child), applies a 1% tax rate and excludes farms, the household main residence, business and pension assets. This scenario, given the distribution of household wealth in Ireland in 2013, is estimated to raise €53 million as outlined in Table 8 of the Department of Finance/ESRI study. The research notes that its tax revenue estimates are static; in other words, no behavioral response to the tax is modeled. The estimate of €53 million, therefore, is likely to be an upper estimate of the revenue that could be raised.

The second scenario (high threshold-no exemption), applies a 1% tax rate but allows for no exclusions. This scenario, given the distribution of household wealth in Ireland in 2013, is estimated to raise €248 million as outlined in Table 8 of the Department of Finance/ESRI study. Again, the research notes that its tax revenue estimates are static; in other words, no behavioral response to the tax is modeled. The estimate of €248 million, therefore, is also likely to be an upper estimate of the revenue that could be raised.

Given that the above scenarios are not identical to those outlined in the Deputy's questions, care should be taken in interpreting the revenue estimates.

In order to estimate the yield from a tax with the precise parameters as outlined in the Deputy's questions, it would be necessary to seek the agreement of the CSO to revisit its original survey data for this specified purpose. This would be a significant undertaking that would take considerable time and resources to complete. It is also noted that the HFCS does not include specific data on the global assets for those domiciled or ordinarily resident and the domestic assets for those resident for tax purposes. As such, any estimate on the yield obtained from HFCS data would not fully capture the parameters outlined in the Deputy's question.

However, there are a number of additional scenarios set out in the paper which the Deputy may find informative.