Tuesday, 10 December 2019

Questions (128, 129)

Pearse Doherty

Question:

128. Deputy Pearse Doherty asked the Minister for Finance the estimated first and full-year cost of increasing the income tax standard rate bands in line with projected core harmonised index of consumer prices, HICP, inflation in each of the years 2021 to 2025. [51133/19]

View answer

Pearse Doherty

Question:

129. Deputy Pearse Doherty asked the Minister for Finance the estimated first and full-year cost of increasing income tax credits in line with projected core HICP inflation in each of the years 2021 to 2025. [51134/19]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 128 and 129 together.

Page 10 of the Post-Budget 2020 Revenue Ready Reckoner includes a table that shows the estimated cost of a 1% indexation of credits, rate bands and exemption limits for Income Tax and the Universal Social Charge. As per this document, the total full year cost of a 1% increase in the personal tax credits (including the Home Carer Tax Credit) and the rate bands is estimated to be €129 million.

Revenue have advised that these figures are based on projected 2020 incomes as calculated on the basis of actual data for the year 2017, the latest year for which returns are available, adjusted as necessary for income, self-employment and employment trends in the interim. The figures are provisional and may be revised. Revenue does not provide cost estimates beyond the tax year 2020. The Ready Reckoner is available on Revenue’s website at https://www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf.

Increases greater than 1% can be estimated on a straight-line or pro-rata basis from the information given.

Table 7 on page 18 of the Department of Finance Budget 2020 Economic and Fiscal Outlook publication (available at http://budget.gov.ie/Budgets/2020/Documents/Budget/Budget%202020_Economic%20and%20Fiscal%20Outlook_B.pdf) contains the updated macroeconomic and fiscal forecasts for the period 2019-2024, including core Harmonised Index of Consumer Prices (HCIP). As the document sets out, core HCIP is forecast to be 1.5% for 2020.

Based on this figure and the information in the most recent Revenue Ready Reckoner, the estimated full year cost of increasing the personal tax credits (including the Home Carer Tax Credit) and the rate bands in line with core HICP inflation in 2020 would be €193.5 million.