Tuesday, 27 Jul 2021

Written Answers Nos. 344-360

Tax Data

Questions (344, 450)

Gerald Nash

Question:

344. Deputy Ged Nash asked the Minister for Finance the estimated saving to the Exchequer that would accrue from abolishing the help to buy scheme; and if he will make a statement on the matter. [39898/21]

Pearse Doherty

Question:

450. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be generated in 2022 by removing the help to buy scheme. [41359/21]

Written answers

Minister for Finance

I propose to take Questions Nos. 344 and 450 together.

The Help to Buy (HTB) incentive is a scheme to assist first-time purchasers with a deposit they need to buy or build a new house or apartment. The incentive gives a refund on Income Tax and Deposit Interest Retention Tax (DIRT) paid in the State over the previous four years, subject to limits outlined in the legislation. Section 477C Taxes Consolidation Act (TCA) 1997 outlines the definitions and conditions that apply to the HTB scheme.

Bearing in mind that HTB is a demand-led scheme which is subject to a broad range of variables, including housing completion rates and prices, it is not possible to provide a reliable estimate of the savings that would arise from abolition of the scheme.

According to Revenue data, as of end June 2021, since the inception of the scheme the estimated total value of approved HTB claims to date is in the order of €453 million.

The table below summarises the value of approved HTB claims for each year since the inception of the scheme until end-June 2021.

Year	2017*	2018	2019	2020	2021 (Year to end June)	Total
Value (€m)	69	73	102	126	83	453

*The 2017 figure includes approved retrospective claims made in 2017 in respect of the period 19 July 2016 to end 2016, as provided for in the relevant legislation.

Tax Data

Questions (345)

Gerald Nash

Question:

345. Deputy Ged Nash asked the Minister for Finance the estimated yield from removing the PAYE and earned income tax credits, which reduce final income tax liabilities, from taxpayers with incomes above €100,000 per year; and if he will make a statement on the matter. [39899/21]

Written answers

Minister for Finance

I am advised by Revenue that the removal of the Employee Tax Credit and Earned Income Tax Credit for individuals with an income above €100,000, in the manner outlined by the Deputy, would yield an estimated €152m and €186m on a first and full year basis, respectively.

These estimates are based on tax returns for 2018 (the latest available year) and, in analysing the gross incomes of taxpayer units at individual level, a range of assumptions were necessarily made in relation to the distribution of credits (in such units). As such, were such a change implemented, it may lead to outcomes which vary from the above estimates.

I would also note that the removal of tax credits in a manner as set out by the Deputy could have broader implications, such as resulting in disincentives to work. For example, the removal of the tax credit for a taxpayer on an income of €101,000 would result in a lower after tax pay for that taxpayer compared to a taxpayer on an income of €100,000.

Question No. 346 answered with Question No. 343.

Tax Data

Questions (347)

Gerald Nash

Question:

347. Deputy Ged Nash asked the Minister for Finance the estimated yield from a 1% levy applied to wealth in excess of €1 million for a single adult, double that for a couple; his views on the contention in a recent report (details supplied) that such a levy on wealth would raise approximately €248 million for the Exchequer; and if he will make a statement on the matter. [39901/21]

Written answers

Minister for Finance

At the outset the Deputy should note that wealth can be taxed in a variety of ways, some of which are already in place in Ireland. Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT) are, in effect, taxes on wealth, in that they are levied on an individual or company on the disposal of an asset (CGT) or the acquisition of an asset through gift or inheritance (CAT). Deposit Interest Retention Tax (DIRT) is charged at 33%, with limited exemptions, on interest earned on deposit accounts. Local Property Tax (LPT) introduced in 2013 and recently amended is a tax based on the market value of residential properties.

In order to estimate the potential revenue from a wealth tax, it would first be necessary to identify the wealth held by individuals. I am informed by the Revenue Commissioners that they currently have no statistical basis for compiling 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 financial assets in the State, nor is it recorded in a manner that would allow analysis of the implications of an overarching wealth based tax. Therefore I cannot provide you with what the estimated yield from a 1% levy applied to wealth in excess of €1m for a single adult, or for a couple.

I note the recent ESRI report that the Deputy refers to which examines the issue of a wealth tax. What is clear from this report is that in order for a wealth tax to raise a significant amount of revenue it would have to contain few exemptions and apply from a relatively low level of wealth. For instance in order to raise the €248m referred to in the question there would be a need to include principal private residences, farms, businesses and pensions. This would therefore include a lot of illiquid assets which would be subject to annual taxation. The report also notes that the use of exemptions has the potential to create distortionary effects on how people save.

The Government has no plans to introduce a wealth tax, although all taxes and potential taxation options are of course constantly reviewed.

Tax Data

Questions (348)

Gerald Nash

Question:

348. Deputy Ged Nash asked the Minister for Finance the estimated yield from raising the VAT rate for the tourism and hospitality sector from 9% to 13.5% in 2022; and if he will make a statement on the matter. [39902/21]

Written answers

Minister for Finance

The most recent estimate for extending the application of the 9% VAT rate on Tourism and Hospitality related items from 1 January 2022 until 31 August 2022 is that it will cost the exchequer €350m. If a 13.5% rate applied across these sectors for all of 2022 our estimate is that the yield to the exchequer would be approximately €525.

Tax Data

Questions (349)

Gerald Nash

Question:

349. Deputy Ged Nash asked the Minister for Finance the estimated savings that would be made by ending the refundable element of the research and development tax credit from 1 January 2022; and if he will make a statement on the matter. [39903/21]

Written answers

Minister for Finance

I am advised by Revenue that is not possible to accurately predict the yield from ending the payable element of the Research and Development (R&D) tax credit, as information in respect of the future payments of the credit, which is dependent on both the future profitability of claimant companies as well as their level of qualifying R&D activity, cannot be known in advance.

However, I am advised by Revenue that information in respect of the R&D tax credit is available at: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/r-and-d-tax-credits.aspx. This includes the cost of payable tax credits for recent years. The most recent year for which returns information is available presently is 2019.

Tax Data

Questions (350)

Gerald Nash

Question:

350. Deputy Ged Nash asked the Minister for Finance the expected yield from introducing a digital services tax on the same basis as France, Italy and Spain with a 3% tax rate (details supplied); and if he will make a statement on the matter. [39904/21]

Written answers

Minister for Finance

Although the Digital Services Taxes introduced in France, Italy, and Spain are not precisely the same as each other, all three share substantial overlaps with the Digital Services Tax proposed by the European Commission in 2018. When making its proposal, the Commission estimated that an EU-wide Digital Services Tax could yield €5 billion per annum, to be shared between all EU Member States, based on levels of activity in Member States.

It would be reasonable to assume that Ireland’s share of that estimated yield could be calculated in proportion to the population of Ireland as a share of the population of the EU overall. Eurostat has estimated the population of Ireland to be 0.9% of the total population of the EU. Applying this to the Commission’s overall estimated yield would mean that Ireland could collect approximately €45 million from introducing a Digital Services Tax of the type mentioned. The net yield would be reduced to the extent that deductions from company profits for Digital Services Tax paid would reduce corporation tax receipts.

The European Commission’s proposal was based on (1) a €750 million global revenue threshold and (2) an EU-wide €50 million revenue from in-scope services threshold. Based on available data, it is not possible to estimate the potential yield of a Digital Services Tax with different thresholds. It should be noted also that the ongoing Pillar One work of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting will provide for the removal of Digital Service Taxes and other similar measures across the world. I have expressed support for that Pillar.

Tax Data

Questions (351, 418)

Gerald Nash

Question:

351. Deputy Ged Nash asked the Minister for Finance the estimated cost of reintroducing tax relief at the standard rate on trade union subscriptions on the same basis as applied up to its abolition in 2011; and if he will make a statement on the matter. [39906/21]

Richard Boyd Barrett

Question:

418. Deputy Richard Boyd Barrett asked the Minister for Finance the estimated cost of restoring tax relief for trade union subscriptions. [41157/21]

Written answers

Minister for Finance

I propose to take Questions Nos. 351 and 418 together.

Tax relief for Trade Union subscriptions was previously provided for under section 472C of the Taxes Consolidation Act 1997. The relief was introduced in 2001 and abolished from 2011 onwards.

A review of the appropriate treatment for tax purposes of trade union subscriptions and professional body fees was carried out by my Department in 2016 and included in the 2016 report on tax expenditures published on Budget day 2016. The review may be found at the following link:

(http://www.budget.gov.ie/Budgets/2017/Documents/Tax_Expenditures_Report%202016_final.pdf)

The review concluded that:

"analysis of the scheme using the principles laid down by the Department’s Tax Expenditure Guidelines shows that it fails to reach the evaluation threshold to warrant introduction in this manner.

The reinstatement of this tax relief would have no justifiable policy rationale and does not express a defined policy objective. Given that individuals join trade unions largely for the well-known benefits of membership, and the potential value of the relief to an individual would equate to just over €1 per week, this scheme would have little to no incentive effect on the numbers choosing to join. There is no specific market failure that needs to be addressed by such a scheme, and it would consist largely of deadweight."

In 2020, my Department carried out a further analysis which took stock of where matters stand in relation to the issue of tax relief for trade union subscriptions and set out a number of policy options for consideration. This exercise suggested that, based on certain assumptions about numbers of beneficiaries, the measure could cost at least €36.9 million if reintroduced at the same level of support as existed in 2010. However, it also drew attention to the potentially significant deadweight element which would accompany the measure. That analysis was published with the 2020 Tax Strategy Group papers at the following link: https://assets.gov.ie/86995/006fad3c-ebb5-4b0e-b067-92f8102d6e43.pdf .

The following table sets out details of the cost of the tax relief for trade union subscriptions in the seven years immediately prior to its end, including 2010 (in which year, the measure cost some €26 million):

Year	Cost (€ million)	No. of Claims
2004	10.7	248,300
2005	11.8	272,100
2006	19.2	294,300
2007	20.7	316,300
2008	26.4	341,900
2009	26.7	345,800
2010	26.0	337,500

Tax Data

Questions (352)

Gerald Nash

Question:

352. Deputy Ged Nash asked the Minister for Finance the estimated cost to reintroduce a relief for rent credit as existed up to 2010 but without any age bands and available to all tax payers at the standard rate of income tax for amounts of rent paid (details supplied); and if he will make a statement on the matter. [39907/21]

Written answers

Minister for Finance

The previous tax relief in respect of rent paid, was abolished in Budget 2011, and it is no longer available to those that commenced renting for the first time from 8 December 2010. The ending of the relief followed a recommendation in the 2009 report by the Commission on Taxation that rent relief should be discontinued. The view of this independent commission was that, in the same manner in which mortgage interest relief increases the cost of housing, rent relief increases the cost of private rented accommodation.

At the time of its restriction, the rental tax relief cost the Exchequer up to €97m per annum. On certain assumptions, it is likely that the annual cost of the measures set in the details supplied out would be higher. However, I am advised by Revenue that it does not have sufficient data on which to accurately calculate the expected costs of the measures (including the number of tax-payers who could avail of the relief and their individual capacities to absorb the various proposed credits).

Tax Data

Questions (353)

Gerald Nash

Question:

353. Deputy Ged Nash asked the Minister for Finance the yield to Exchequer from the betting duty in each of the past three years; the anticipated yield that would accrue to the Exchequer from increasing the betting duty from 2% to 3% and increasing the duty of 25% on commissions earned by betting intermediaries to 30%; and if he will make a statement on the matter. [39908/21]

Written answers

Minister for Finance

I am advised by Revenue that the Ready Reckoner, which is published on the Revenue website, shows on page 26, the estimated yield from changes to the Betting Duty rate. I am further advised that an estimate for the increase in the duty on commissions is not presently available. However, a tentative estimate for the increase to 30% is approximately €1 million.

Revenue has confirmed that Betting Duty receipts from traditional, remote and betting intermediaries is available for 2018 and 2019 on the Revenue website.

The breakdown of the 2020 receipts is provided in the table below.

Licence Type	Receipts €m
Traditional	38.7
Remote	44.5
Intermediary	3.6

Tax Data

Questions (354)

Gerald Nash

Question:

354. Deputy Ged Nash asked the Minister for Finance the estimated additional yield from a 25 cent increase per pack of 20 cigarettes with an additional 50% for RYO and a 50c increase with an additional 50% for RYO in tabular form; and if he will make a statement on the matter. [39909/21]

Written answers

Minister for Finance

I am advised by Revenue that the ‘Ready Reckoner’, which is published on the Revenue website, shows on page 25, the estimated yield from changes in duties on cigarettes. These estimates assume pro-rata increases in other tobacco products.

The table below provides estimated yield for increases to roll your own tobacco (with the assumption of no change in behaviour by smokers).

Product	Increase	Yield
Fine Cut including other tobacco	25c + Additional 50%	€4.2m
Fine Cut including other tobacco	50c + Additional 50%	€8.5m

Tax Data

Questions (355)

Gerald Nash

Question:

355. Deputy Ged Nash asked the Minister for Finance if a costing pathway with first year yield for equalisation of diesel and petrol excise rates over four years in tabular form will be provided; and if he will make a statement on the matter. [39913/21]

Written answers

Minister for Finance

Mineral oil tax (MOT) which comprises a carbon and non-carbon component is applied to auto diesel and petrol. There is a lower non carbon component charge applied to auto diesel. The non-carbon charge applied to auto diesel is 42.572 cents per litre while the equivalent charge on petrol is 54.184. As diesel emits more carbon dioxide when combusted, the application of the carbon tax results in a higher carbon charge on auto diesel; the carbon charge is 7.752 cents per litre of petrol and 8.966 cents per litre of diesel.

The overall rate of MOT (carbon and non-carbon charge combined) is 61.936 for petrol and 51.538 for auto diesel.

The difference in the non-carbon charge, commonly referred to as an Excise Gap, is 11.6 cents. Increasing the charge on diesel by 3 cents annually would equalise the rates over a four year period as set out in the table below. It should be noted that as per the trajectory of carbon tax rate increases legislated for in Finance Act 2020, the carbon component charge of MOT will increase annually out to 2030. The pathway below includes the impact of the carbon tax rate increases which results in a higher overall rate of MOT applied to auto diesel in this scenario by 2025.

Excise Pathway to Equalisation by 2025 (by adding 3 cent annually)

Petrol (cent per litre)

Diesel (cent per litre)

Non Carbon Charge	Carbon Charge	Total MOT	Carbon Tax Rate (€/t CO2)	Year	Non Carbon Charge	Carbon Charge	Total MOT
54.184	7.752	61.936	33.50	2021	42.572	8.966	51.538
54.184	9.487	63.671	41.00	2022	45.572	10.974	56.546
54.184	11.223	65.407	48.50	2023	48.572	12.981	61.553
54.184	12.959	67.143	56.00	2024	51.572	14.989	66.561
54.184	14.694	68.878	63.50	2025	54.572	16.996	71.568

The ready reckoner which can be accessed at the website address below, indicates that a 3 cent increase in the rate of auto diesel would yield €83 million in a full year.

https://www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf

Tax Code

Questions (356, 358)

Gerald Nash

Question:

356. Deputy Ged Nash asked the Minister for Finance the estimated yield minus costs of prioritising anti-fraud powers in Finance (No. 2) Act 2013 as set out in a comprehensive review of expenditure 2014 (details supplied); and if he will make a statement on the matter. [39914/21]

Gerald Nash

Question:

358. Deputy Ged Nash asked the Minister for Finance the estimated yield minus costs of a compliance project using merchant acquirer data as set out in a comprehensive review of expenditure 2014 (details supplied); and if he will make a statement on the matter. [39916/21]

Written answers

Minister for Finance

I propose to take Questions Nos. 356 and 358 together.

In relation to Question No. 356 , the anti-fraud powers contained in the Finance (no.2) Act of 2013 considerably strengthened Revenue’s capacity to address Excise related risk, including in regard to the use of Marked Gas Oil (MGO). I am advised that Revenue has conducted extensive compliance programmes since that time designed both to deter and detect abuses in this area and to measure the level of illegitimate activity in the market.

Revenue’s subsequent analysis of the impact of the combined measures confirm a very significant reduction in the abuse of MGO. Extrapolating pre-2013 trends against current Excise data strongly suggests that Revenue's compliance activities may have been responsible for reducing fraudulent MGO usage (product that might otherwise have been laundered) and increasing legitimate diesel usage by over 245 million litres per annum. This translates into more than €150 million annually in additional taxes and duties. There has also been a significant fall in the level of so-called ‘fuel laundering’ activity i.e. the removal of markers from duty rebated fuel.

In relation to Question No. 258, I am advised by Revenue that the recorded yield from an initial pilot compliance project, based solely on the use of merchant acquirer data was €2.78m. I am further informed that this initial project established the value of the use of merchant acquirer data, which is now fully integrated into Revenue risk systems and used alongside other information sources to select and appraise cases for compliance interventions. This approach enables Revenue to focus on risk cases while minimising compliance costs for legitimate businesses. Given the integrated nature of Revenue’s approach to a wide range of risk data, it is not possible to accurately attribute individual intervention yields to specific data elements, such as merchant acquirer data, which form part of an overall profile of a taxpayer.

Tax Code

Questions (357)

Gerald Nash

Question:

357. Deputy Ged Nash asked the Minister for Finance the estimated yield minus costs of developing systems and structure to support the new EU VAT mini one stop shop initiative as set out in a comprehensive review of expenditure 2014 (details supplied); and if he will make a statement on the matter. [39915/21]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that new EU VAT rules came into effect on 1 January 2015, changing the place where VAT is chargeable in respect of all supplies of telecommunications, broadcasting and electronic services to consumers. VAT on these services is now chargeable where the consumer is located instead of where the supplier is located. This ensures that VAT is payable in the Member State where the services are consumed and removes the incentive for businesses in these sectors to locate in low-VAT rate Member States. As a result of the change, EU and non-EU businesses are required to register and account for VAT in every Member State in which they supply these services to consumers. As an alternative, they can avail of an optional special scheme known as the Mini One Stop Shop (MOSS).

The MOSS scheme is a simplification which allows a business engaged in these supplies to register in a single Member State, to file a single quarterly return and pay its VAT liability for all Member States through a web portal in the Member State of registration. This enables suppliers to avoid having to register and account for VAT in all the Member States to which they make such supplies. The Irish Revenue web portal for MOSS was developed in advance of 2015 with Ireland being the first Member State to make it available to business to register with MOSS. This was successfully promoted by Revenue through engagement with national and international businesses, representative bodies, and with international business media. As a result, the VAT receipts via the MOSS portal exceeded expectations as many businesses supplying these services opted to register under the Irish MOSS portal. The initial estimate of yield for Ireland was €10 million but the actual yield to date is almost €1.2 billion due to the success in promoting the scheme in Ireland as well as to the significant increases in the electronic services market.

Transitional rules for the period 2015-2018 provided that the Member State of registration would retain a percentage of the VAT collected for other Member States, with the retention percentage being 30% in 2015 and 2016, and 15% for 2017 and 2018. The amount retained by Ireland was €805 million in respect of the four-year period 2015-2018 and, to date, an additional €385 million has been transferred to Ireland by other Member States.

The total IT development cost for VAT MOSS was €1.93m, with €1.05m expended in 2014, the remainder being spent in 2015.

The Deputy might also be interested to know that the MOSS scheme, which has worked so well since 2015, has been extended and turned into a One-Stop Shop (OSS) since 1 July 2021. Retention is not part of this extended scheme.

Question No. 358 answered with Question No. 356.

Tax Code

Questions (359)

Gerald Nash

Question:

359. Deputy Ged Nash asked the Minister for Finance the estimated yield from increasing the bank levy rate to 100% or to 157% and 200% respectively in tabular form; and if he will make a statement on the matter. [39917/21]

Written answers

Minister for Finance

Section 126AA of the Stamp Duties Consolidation Act 1999 imposes an annual levy on banks for each of the years 2017 to 2021. Since the levy was introduced in 2003, it has been extended on several occasions and currently applies until the end of 2021. The levy is calculated by reference to the amount of Deposit Interest Retention Tax (DIRT) paid by the bank in a specified year referred to as the “base year”. The levy is designed to produce a fixed annual yield of €150m, which means that whenever the base year (and the amount of DIRT paid) changes, the rate of charge must also be adjusted to maintain this constant yield.

For the years 2019 and 2020, the levy was charged at a rate of 170% of DIRT payable by the bank in 2017 (2017 being the base year for 2019 and 2020). For the year 2021, the levy is chargeable at a rate of 308% of DIRT payable by the bank in 2019 (2019 being the base year for 2021).

There is currently no statutory basis in place for charging a bank levy for 2022. However, were the levy to be extended to 2022, amending the rate to 100% or to 157% and 200%, respectively, would lead to a reduction in overall yield from the levy. This is illustrated in tabular form below, using both 2019 and 2020 as possible base years. Were the levy to be extended to 2022 and the year 2020 used as the base year, it is estimated that the rate would have to be increased to 639% to maintain the annual yield of €150m. However, if 2019 continued to be used as the base year, then no rate change would be required.

Year Bank Levy Due	Base year	Total DIRT in base year	DIRT subject to levy (approx.)*	*Levy as % of DIRT	Estimated yield (m)
2021	2019	€64m	€49m	308% of DIRT	€150.92
2022	2019	€64m	€49m	100% of DIRT	€49
2022	2019	€64m	€49m	157% of DIRT	€76.93
2022	2019	€64m	€49m	200% of DIRT	€98
2022	2019	€64m	€49m	308% of DIRT	€150.92
2022	2020	€37m	€23.5m	100% of DIRT	€23.5
2022	2020	€37m	€23.5m	157% of DIRT	€36.9
2022	2020	€37m	€23.5m	200% of DIRT	€47
2022	2020	€37m	€23.5m	639% of DIRT	€150.16

* Certain DIRT payments, such as those by Credit Unions, are not included when calculating the levy

Cycling Policy

Questions (360)

Gerald Nash

Question:

360. Deputy Ged Nash asked the Minister for Finance the estimated cost of introducing a cycle to school scheme based on the cycle to work scheme by which a parent can claim back the cost of one bicycle per child through their salary; and if he will make a statement on the matter. [39918/21]

Written answers

Minister for Finance

As the Deputy will be aware, the current cycle to work scheme operates on a self-administration basis. Relief is automatically available provided the employer is satisfied that the conditions of their particular scheme meet the requirements of the legislation. There is no notification procedure for employers involved. This approach was taken with the deliberate intention of keeping the scheme simple and reducing administration on the part of employers.

Tax expenditure reports prepared by my Department have estimated the full year's cost at €4 million but have been clear that this figure was an estimate as separate returns are not required.

The potential cost of a cycle to school scheme would depend on uptake and the marginal rate of tax being paid by the parent and the threshold value allowed under such a scheme. CSO data from the Census in 2016 shows that 7,326 children aged between 5 and 12 years, and 7,282 students at school or college aged between 13 and 18 years used bicycles as their means of transport. This could give a potential uptake of 14,608 but each child would not get a new bicycle each year.

The cost per bicycle in the tax expenditure reports is estimated at €200 and it would not be unreasonable to make the same assumption for a cycle to school scheme. If one third of the number cycling got a new bicycle each year, this would give an annual cost of approximately €1 million.

I should add that including bicycles for use by children to cycle to school would add to the administrative burden on employers of participating in the scheme. Furthermore, I would expect considerable deadweight in such a proposal with people benefitting who would have purchased a bicycle in any event.