Written Answers Nos. 150-170
150. Deputy Ged Nash asked the Minister for Finance the estimated yield from reducing the scale of agriculture and business capital gains tax relief respectively from 90% to 50% of the taxable value of the relevant assets and capping the relief at €3 million. [38655/22]
View answer153. Deputy Ged Nash asked the Minister for Finance the yield to the Exchequer from capital gains tax for the previous three years; the estimated yield to the Exchequer from reducing the CAT class A threshold to €250,000, the class B threshold to €25,000 and reducing the class C threshold to €13,000 at a rate of 33%, 36% and 40% respective in tabular form; and if he will make a statement on the matter. [38658/22]
View answer178. Deputy Ged Nash asked the Minister for Finance the yield gained from an increase in the initial once-off 6% charge to 20% with respect to the on discretionary trust tax; and if he will make a statement on the matter. [38691/22]
View answerI propose to take Questions Nos. 150, 153 and 178 together.
It is assumed the Deputy is referring to Capital Acquisitions Tax (CAT) rather than Capital Gains Tax (CGT) as the reliefs and tax mentioned relate to CAT.
I am advised that the annual CAT receipts are published on the Revenue website at:
https://www.revenue.ie/en/corporate/information-about-revenue/statistics/receipts/receipts-taxhead.aspx
I am further advised that the Revenue Ready Reckoner, can be used to estimate the yield from the proposed changes to CAT reliefs, thresholds and rates, by extrapolating from the information on pages 15 to 17. The Ready Reckoner is available at:
https://www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf.
Revenue advise that a breakdown of CAT receipts for recent years, including the yield from discretionary trust tax, is published at: https://www.revenue.ie/en/corporate/documents/statistics/receipts/cat-receipts.pdf.
Regarding an increase in the rate of discretionary trust tax from 6% to 20% would likley give rise to significant behavioural changes that are not possible to model. Therefore, there is no basis on which to provide an estimate of the yield from such a change.
Finally I am advised by Revenue that the yield from capping business and agricultural relief at €3 million and introducing a limit of 50% for both of these reliefs is tentatively estimated at €58 million for Business Relief and €64 million for Agricultural Relief.
151. 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. [38656/22]
View answerThe 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.
I am advised by Revenue that the total value of approved and pending Help To Buy (HTB) claims for 2021 is €193.8m. The equivalent figure for the period from 1 January to 30 June 2022 is €94.4m.
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. However, although it does not take account of any potential changes in taxpayer behaviour, the above costs can be assumed to be broadly indicative of the annual saving if the HTB scheme was abolished.
The Deputy may wish to note that work by external consultants, Mazars, on the review of HTB is nearing completion. The outcome of this review will help to inform decisions on the future of the scheme beyond its current sunset date of 31 December 2022. However, this is a matter that will fall to be considered by Government in the context of the Budget 2023 process and it would not be appropriate for me to offer comment further at this time.
152. 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. [38657/22]
View answerI am advised by Revenue that the removal of the Employee Tax Credit and the Earned Income Tax Credit for individuals with incomes above €100,000 would have yielded an estimated €170 million and €205 million on a first and full-year basis respectively in 2019, the latest year for which fully-analysed data are available.
These estimates do not take account of any potential changes in taxpayer behaviour resulting from the proposed change; for example, a taxpayer on an income of €101,000 would have a lower after-tax pay than a taxpayer on an income of €100,000. The estimates are also based on assumptions on the distribution of credits within taxpayer units.
154. 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 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. [38659/22]
View answerI welcome the research that the ESRI has undertaken on options for tax revenue raising in Ireland. The report provides significant insights into the exchequer, distributional and income effects of an array of potential tax changes, all of which are important considerations for budgetary policy. Among these, a number of wealth taxes were considered.
While I understand the background to calls for a specific wealth tax in Ireland, it is not the case that wealth in Ireland is untaxed, as taxes on wealth are already in place here.
These wealth taxes include Capital Gains Tax, Capital Acquisitions Tax and Local Property Tax, which between them, according to Revenue’s Annual Report for 2021, raised some €2.77 billion net. last year.
Any revenue raised from a new wealth tax may not therefore be additional to the existing forms of wealth taxation, as revenues from those taxes could be affected by the introduction of such a new tax.
As to the projected yield that might be derived from the wealth tax outlined by the Deputy in his question, I would note that 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.
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. 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 (https://www.esri.ie/news/scenarios-and-distributional-implications-of-a-household-wealth-tax-in-ireland), 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. While the scenarios may not fully capture the parameters outlined in his question the Deputy I hope he will find them informative.
155. 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 2023; and if he will make a statement on the matter. [38660/22]
View answerAs the Deputy will be aware, the VAT rate applying to the tourism and hospitality sectors are due to revert to 13.5% on 1 March 2023. The additional VAT receipts in 2023 as a result of this increase are estimated to be in the region of €195m. This accounts for the VAT periods to end October. The returns for Nov/December trading will be received in January 2024.
The estimated additional yield from raising the VAT rate for these sectors on 1 January 2023 instead of 1 March 2023 is €88 million.
Please note that in-year policy measures do not form part of the Budget package for next year. The carryover cost of the reduced rate of VAT for the hospitality sector in the first months of 2023 will be accounted for in my Department’s fiscal projections but will not impact on the overall Budget package.
156. Deputy Ged Nash asked the Minister for Finance the estimated cost to the Exchequer from decreasing the headline rate of VAT by 1% for 12 months; and if he will make a statement on the matter. [38661/22]
View answerThe Deputy should note that Revenue have advised me that the estimated cost of decreasing the standard rate of VAT by 1% for 12 months is €542 million.
157. Deputy Ged Nash asked the Minister for Finance further to Parliamentary Question No. 260 of 17 May 2022, if he will specify the proposed levy percentage on the construction industry which is intended to raise in the region of €80 million a year; and if he will make a statement on the matter. [38662/22]
View answerAs set out in my reply to a PQ asked by the Deputy on 17 May this year, one which he references in this PQ, work on this determining all aspects of the proposed new levy, including, but not confined to, the rate at which it will apply, is an ongoing process. My officials, with the assistance of colleagues in other Departments and agencies, as well as from Revenue, are continuing to work on a range of options in regards to such a levy. Therefore, given the need for this policy development work to progress in a confidential manner, I cannot provide an indication of the progress or direction on this matter at this time.
158. 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 2023; and if he will make a statement on the matter. [38663/22]
View answerThe Research & Development (R&D) Tax Credit provides a 25% tax credit for qualifying R&D expenditure. In the first instance, the credit reduces the CT liability of the company for the accounting period in which the relevant R&D expenditure is incurred. Any excess credit can be carried back to the preceding accounting period. Following this, any remaining excess credit can be carried forward indefinitely for use against future CT liabilities, or can be claimed as a repayable credit.
The company may apply for a refundable credit in three instalments, over 33 months. The first instalment to be paid will amount to 33% of the excess amount. The remaining balance of the excess amount will then be carried forward and used to reduce the company’s Corporation Tax liability of the next accounting period and then, if any of the excess amount still remains, a second instalment amounting to 50% of that remaining balance will become payable. Any remaining credit is again carried forward for offset against the company’s Corporation Tax liability of the following accounting period, and if any part of the excess R&D credit still remains, that amount will become payable not earlier than 24 months after the corporation tax pay and file date for the accounting period in which the R&D expenditure was incurred.
I am advised by Revenue that It is not possible to estimate the yield from ending the repayable element of the R&D tax credit, as information in respect of the future payments of the credit, which is dependent on the future profitability of claimant companies and on their level of qualifying R&D activity, is not known in advance.
Furthermore, as excess credit can be carried forward indefinitely for offset against future corporation tax liabilities, the elimination of the refundable element of the credit would in theory be largely a timing issue and not a net saving to the Exchequer. However it should be noted that behavioural changes could be expected from businesses if such a change were to be made, given the important role that the credit plays in incentivising and supporting innovative research in Ireland.
The Deputy may wish to note that information on the cost of the R&D tax credit for recent years is available on the Revenue website at the following link, and this includes a breakdown of the credit cost each year between offsets and repayable credits:
www.revenue.ie/en/corporate/documents/statistics/tax-expenditures/r-and-d-tax-credit-statistics.pdf.
159. 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 in which a digital interface is provided and advertising services are based on user’s data with a €750 million global revenue threshold and a domestic revenue threshold of €25 million and €5 million; and if he will make a statement on the matter. [38664/22]
View answerAlthough the Digital Services Taxes which were introduced in France, Italy, and Spain were not precisely the same as each other, all three shared 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. Around the time of the proposal, Eurostat estimated the population of Ireland to be approximately 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 that Pillar One of the two-pillared solution to address the tax challenges brought about by the digitalisation of the economy, agreed last October by the OECD/G20 Inclusive Framework on BEPS, provides for the standstill and removal of Unilateral Measures such as Digital Services Taxes.
I firmly believe that Pillar’s One and Two of the agreement will be successfully implemented, in a manner which is faithful to the agreement. I am devoting considerable resources to this process. My officials, along with officials from the Revenue Commissioners, are engaged in intensive discussions with their counterparts from around the world at OECD working parties to ensure that Ireland's interests are protected.
It should also be noted that in a joint statement published last October, the U.S. Treasury and its counterparts in Austria, France, Italy, Spain, and the United Kingdom announced an agreement for the unwinding of Digital Services Taxes in return for the US dropping planned retaliatory trade sanctions on these countries.
It is important that any proposal avoids raising trade tensions and does not undermine the ongoing implementation of the OECD agreement. Implementation of the agreement will bring much needed stability to the international tax framework after the turbulence and uncertainty of the last couple of years. Throughout this process, I have remained convinced that a global approach under Pillar One of the OECD agreement is preferable to unilateral measures like a Digital Services Tax.
160. 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. [38665/22]
View answerTax 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 onward.
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: https://assets.gov.ie/181475/91f597c2-bd98-41d8-998e-19f14c099eea.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 dead weight element which would accompany the measure. That analysis was published with the 2020 Tax Strategy Group papers at the following link: assets.gov.ie/86995/006fad3c-ebb5-4b0e-b067-92f8102d6e43.pdf.
I am advised by Revenue that there are no current data available from tax returns on the number of taxpayers with trade union subscriptions and the costs of those trade union subscriptions. Therefore, there is no basis on which a cost can be estimated for the proposed measure.
However, the cost of the tax relief for trade union subscriptions in the seven years immediately prior to its end is published on Revenue's website. The following table sets out the cost and number of claims in each year from 2004 to 2010:
|
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 |
161. Deputy Ged Nash asked the Minister for Finance the estimated cost to re-introduce a relief for rent credit as existed up to 2010 but without any age bands and available to all taxpayers at the standard rate of income tax for the following amounts of rent paid €2,000; €4,000 or €8,000 in tabular form; and if he will make a statement on the matter. [38666/22]
View answerThe 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 to calculate the estimated costs of the proposed measures, including the number of taxpayers who could avail of the relief, the amount of rent being paid by those taxpayers, and their individual capacities to absorb the various proposed credits.
162. Deputy Ged Nash asked the Minister for Finance the estimated yield to Exchequer from the betting duty in the past three years; the anticipated yield that would accrue to the exchequer from increasing the betting duty for in-store and online betting to 3% and increasing the duty of 25% on commissions earned by betting intermediaries to 30% in tabular form; and if he will make a statement on the matter. [38667/22]
View answerI am advised by Revenue that information on Betting Duty receipts from traditional, remote and betting intermediaries is available for 2019 and 2020 on the Revenue website.
The breakdown of the 2021 receipts is as follows:
|
Licence Type |
Receipts €m |
|
Traditional |
24.4 |
|
Remote |
60.5 |
|
Intermediatory |
4.2 |
I am also advised that Revenue’s Ready Reckoner shows the estimated yield from the proposed changes to the Betting Duty rate and to the Betting Intermediary Duty Commission rate, on page 26. The Ready Reckoner is available on the Revenue website.
163. 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 roll your own, a 50-cent increase with an additional 50% for roll your own in tabular form; and if he will make a statement on the matter. [38668/22]
View answerI am advised by Revenue that the estimated additional yield from a 25 cent and 50 cent increase per 20 cigarettes, with an additional 50% for roll your own, is shown in the following table.
|
Increase per pack of 20 cigarettes |
Yield €m |
Additional for 50% on RYO €m |
Total Yield €m |
|
25c |
27.3 |
1.3 |
28.6 |
|
50c |
54.3 |
2.2 |
56.5 |
164. Deputy Ged Nash asked the Minister for Finance if he will provide a costing pathway with the first-year yield for equalisation of diesel and petrol excise rates over four years in tabular form; and if he will make a statement on the matter. [38672/22]
View answerMineral oil tax (MOT) which comprises a carbon and non-carbon component is applied to auto diesel and petrol. As the Deputy will be aware, I introduced temporary reductions on the non carbon component of MOT applying to auto diesel and petrol earlier this year. These reductions are legislated to apply until 11 October 2022. The current rates of MOT applying to auto diesel and petrol are set out in the table below. The table also includes the MOT rates that would apply had the temporary cuts not been introduced.
|
Product |
MOT non Carbon Component (per 1000 Litres) |
MOT Carbon Component (per 1000 Litres) |
Mineral Oil Tax (per 1000 Litres) |
|
Petrol (reduced rate) |
€371.11 |
€94.87 |
€465.98 |
|
Petrol (without reduction) |
€541.84 |
€94.87 |
€636.71 |
|
Auto diesel (reduced rate) |
€295.64 |
€109.74 |
€405.38 |
|
Auto diesel (without reduction) |
€425.72 |
€109.74 |
€535.46 |
I assume that the Deputy is referring to the difference in the non carbon component of MOT between petrol and diesel which applies in ordinary circumstances (without the reduction), commonly referred to as the Diesel Excise Gap. This excise gap amounts to 11.6 cents per litre. Increasing the non carbon charge on diesel by 3 cents annually with a final increase of 2.612 cents in 2026 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 2026.
Excise Pathway to Equalisation by 2026 (by adding 3 cent annually until 2025 and 2.612 cent in 2026)
Petrol (Cent per Litre) Diesel (Cent per Litre)
|
MOT Non Carbon Component |
MOT Carbon Component |
Total MOT |
Carbon Tax Rate €/TCO2 |
Year |
MOT Non Carbon Component |
MOT Carbon Component |
Total MOT |
|
54.184 |
9.487 |
63.671 |
41 |
2022 |
42.572 |
10.974 |
53.546 |
|
54.184 |
11.223 |
65.407 |
48.5 |
2023 |
45.572 |
12.981 |
58.553 |
|
54.184 |
12.959 |
67.143 |
56 |
2024 |
48.572 |
14.989 |
63.561 |
|
54.184 |
14.694 |
68.878 |
63.5 |
2025 |
51.572 |
16.996 |
68.568 |
|
54.184 |
16.43 |
70.614 |
71 |
2026 |
54.184 |
19.004 |
73.188 |
The ready reckoner which can be accessed at the website address below, indicates that a 3 cent increase in the MOT rate on auto diesel would yield €85 million in a full year.
www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf.
165. 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. [38674/22]
View answerAwaiting reply from the Department.
167. Deputy Ged Nash asked the Minister for Finance the estimated additional revenue that would be raised from an increase in the rate of stamp duty to apply where a person purchases ten or more houses within a 12-month period from 10% to 17% respectively in tabular form; the additional revenue that would be raised if these respective rates applied to both apartments and in cases where properties are renting to local authorities that is, the removal of exception; and if he will make a statement on the matter. [38678/22]
View answer168. Deputy Ged Nash asked the Minister for Finance the estimated yield which would accrue from a 1% increase in the rate of stamp duty on non-residential property; the further yield that would accrue if these rates were only subject to sales above €500,000 or €1,000,000 respectively in tabular form; and if he will make a statement on the matter. [38679/22]
View answer169. Deputy Ged Nash asked the Minister for Finance the estimated revenue which would be raised from increasing commercial stamp duty from 7.5% to 15%; and if he will make a statement on the matter. [38680/22]
View answerI propose to take Questions Nos. 167 to 169, inclusive, together.
I am advised by Revenue that the estimated yield from increasing the stamp duty rate from 10% to 17% for the purchase of 10 or more houses is in the region of €7 million annually. This estimate assumes that there would be no impact on the level of multiple property purchases due to this proposed increase.
It is not possible to estimate the additional yield if the higher Stamp Duty rates were extended to apartments and properties rented to local authorities, as the specific data is not available from the information on stamp duty returns provided to Revenue.
I am advised that pages 18 and 19 of Revenue’s Ready Reckoner can be used to estimate the yield from changes to the rate of Stamp Duty on property. The Ready Reckoner is available at the following link: www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf.
The Ready Reckoner can also be used to estimate the additional yield from the proposed 1% increase in the rate of Stamp Duty on all non-residential property and on sales above €500,000 only. The additional yield from a 1% increase in the rate on sales above €1,000,000 is estimated to be in the region of €58 million.
Finally, the Ready Reckoner can be used to extrapolate the estimated additional yield from increasing the commercial stamp duty rate to 15%. This estimated additional yield would be in the region of €555 million. However, it should be noted that this estimate does not take account of behavioral changes that would arise from changing the rate significantly.
170. Deputy Ged Nash asked the Minister for Finance the estimated additional yield from increasing the effective rate to 40% for all those earning in excess of €200,000; and if he will make a statement on the matter. [38681/22]
View answerI am advised by Revenue that taxpayer units on taxable incomes in excess of €200,000 had an effective tax rate of 42.1% in 2019. It is important to point out that this effective tax rate of 42.1% is in respect of income tax and Universal Social Charge and it does not include PRSI.
Therefore, it is assumed the Deputy is seeking the estimated additional yield from increasing the effective income tax rate to 40% on taxpayer units earning in excess of €200,000. On that basis, I am advised by Revenue that taxpayer units on taxable incomes in excess of €200,000 had a combined taxable income of €11,996m with a combined income tax liability of €4,137m, in 2019. As such, these taxpayers paid an average effective income tax rate of 34.5%. If the effective income tax rate applied to this income was 40%, the estimated increased amount of income tax collected would have been €660m approximately.
