Written Answers Nos. 411-425
411. Deputy Paul Murphy asked the Minister for Finance if he will provide a breakdown of the amount of residential rental profits and income from residential rents for each of the past five years and to date in 2022; if he will provide the same information specifically for corporate residential rental profits and incomes; and if he will make a statement on the matter. [41523/22]
View answerI am advised by Revenue that the figures requested by the Deputy are set out in the tables below. In relation to Form 11 tax returns, the following table sets out the gross income and taxable income, net of deductible expenses, recorded in relation to residential properties in the years 2016, the first year for which residential and commercial properties were recorded separately, up to 2019, the latest year for which data are currently available.
|
Year |
Gross income €m |
Taxable Income €m |
|
2019 |
3,202 |
2,043 |
|
2018 |
3,043 |
1,933 |
|
2017 |
2,849 |
1,803 |
|
2016 |
2,621 |
1,591 |
In relation to Corporate tax returns, the following table sets out the gross and taxable incomes for the years 2017 (the first year for which residential and commercial properties were recorded separately) up to 2020 (the latest year for which data are currently available).
|
Year |
Gross income €m |
Taxable Income €m |
|
2020 |
402 |
209 |
|
2019 |
390 |
211 |
|
2018 |
350 |
200 |
|
2017 |
359 |
194 |
412. Deputy Paul Murphy asked the Minister for Finance if he will provide a breakdown of total gross profits and net profits after tax for the past five years and to date in 2022; if he will provide the same information broken down by industry or sector and by company size; and if he will make a statement on the matter. [41524/22]
View answerI am advised by Revenue that the summary information in relation to trading profits and net trading income is available on the Revenue website at: www.revenue.ie/en/corporate/information-about-revenue/statistics/income-distributions/stats/Distribution-of-Incomes-and-Tax.aspx.
More detailed sectoral information is contained in Table 7 of the annual Corporation Tax research paper on the Revenue website. The latest publication can be accessed at: www.revenue.ie/en/corporate/documents/research/ct-analysis-2022.pdf.
Information from 2020 corporation tax returns is the most recent available. 2021 data will become available in 2023.
413. Deputy Richard Boyd Barrett asked the Minister for Finance the estimated full-year revenue that would be generated by increasing the corporate tax rate to 20%; and if he will make a statement on the matter. [41550/22]
View answerIreland’s corporate tax regime has been built on certainty and predictability, and the 12.5% corporation tax rate on trading income has been a cornerstone of that regime for almost 20 years. This stability has enabled companies to plan long-term investments in Ireland, generating employment and increasing economic activity. The Deputy will be aware that Ireland signed up to the OECD Two Pillar agreement in October 2021, including the agreement of a global minimum effective rate of 15% for in-scope entities. Before joining the OECD Two Pillar agreement in 2021, I ensured that Ireland would continue to be able to offer a 12.5% rate for businesses out of scope of the agreement, i.e. businesses with revenues less than €750m. This means that over 95% of companies operating in Ireland are outside of the scope of the global minimum effective tax rate of 15% and they will continue to be taxed at the 12.5% rate.On a straightforward, mathematical basis there would be a large theoretical yield from increasing the 12.5% trading rate of corporation tax to 20%. However, as has been demonstrated in research published by my Department and the ESRI, it is likely that such changes would lead to lower levels of economic activity and behavioural changes in the investment decisions of multinational companies. It is likely that this would result in lower employment in the multinational sector, leading to reductions in tax revenues across a number of tax heads. Therefore, it is not possible to accurately or robustly estimate the potential yield from an increase in the corporation tax rate as proposed by the Deputy.
414. Deputy Richard Boyd Barrett asked the Minister for Finance the estimated full-year revenue that would be generated by imposing a minimum effective corporate tax rate of 15% on pre-tax gross trading profits before deductions, reliefs and allowances and assuming no behavioural change; and if he will make a statement on the matter. [41551/22]
View answerAs signatories to the OECD Two Pillar agreement, Ireland is now working towards the introduction of the 15% global minimum effective corporation tax rate by end 2023. While this will increase the tax rate for in-scope companies, it is important to recognise that this is only one element of the Two Pillar agreement. Any projected changes to corporation tax yields following implementation must therefore also take into account Pillar One, which provides for a reallocation of certain profits to market jurisdictions. My Department’s current estimate of the cost of joining this agreement is in the region of €2 billion annually, albeit that it remains very difficult to accurately estimate the impact at this stage.
Ireland signed up to the OECD Two Pillar agreement in October 2021 in the knowledge that there would be a net cost in terms of reduced tax revenues. However, the agreement will have broader benefits in bringing stability to the international tax framework after the turbulence and uncertainty of recent years, allowing companies the certainty to plan investments and focus on core business activities.
With regard to effective rates of tax, analysis undertaken by the Department of Finance (co-authored by an independent academic); a separate report undertaken by the Comptroller and Auditor General; and Revenue’s annual analyses of corporation tax payments and returns, all using the most appropriate methodology, confirm that the overall effective rate of corporation tax paid by corporations in Ireland is between 10% and 11%. While this percentage is lower than the 12.5% headline rate, this can be attributed to the availability of a small number of targeted tax measures that may lower the effective rate of corporation tax paid in Ireland.
On a straightforward, mathematical basis there would be a theoretical yield from introducing a 15% minimum effective corporation tax rate for all companies. However, as has been demonstrated in research published by my Department and the ESRI, it is likely that such changes would lead to lower levels of economic activity, investment and employment creation by businesses, which in turn would be expected to result in reductions in tax revenues across a number of tax heads. It is for this reason that, before joining the OECD Two Pillar agreement, I ensured that Ireland would continue to be able to offer a 12.5% rate for businesses out of scope of the agreement, i.e. businesses with revenues less than €750m. This means that over 95% of companies operating in Ireland are outside of the scope of the global minimum effective tax rate of 15% and they will continue to be taxed at the 12.5% rate.
Therefore, it is not possible to accurately or robustly estimate the potential yield from an effective rate increase as proposed by the Deputy.
415. Deputy Richard Boyd Barrett asked the Minister for Finance the latest available figures for the total pre-tax gross corporate trading profits for 2021; and if he will make a statement on the matter. [41552/22]
View answerI am advised by Revenue that the information on trading profits for 2021 requested by the deputy is not yet available. However, information in relation to 2020, the latest year available, is published in Table 7 of the annual Corporation Tax research paper, available on the Revenue website at: www.revenue.ie/en/corporate/documents/research/ct-analysis-2022.pdf.
Further summary information in relation to trading profits and net trading income is available on the Revenue website at: revenue.ie/en/corporate/information-about-revenue/statistics/income-distributions/ct-calculation.aspx.
Information from 2020 corporation tax returns is the most recent available. 2021 data will become available in 2023.
416. Deputy Richard Boyd Barrett asked the Minister for Finance the estimated full-year revenue that would be generated by imposing a financial transaction tax of 0.1% on shares and securities and 0.01% on derivatives; and if he will make a statement on the matter. [41553/22]
View answerThis question appears to refer to the model of Financial Transactions Tax proposed by the European Commission, initially in 2011 and then revised under the EU’s enhanced cooperation procedure in February 2013. The proposed rate on exchanges of shares was 0.1% and the proposed rate for derivative transactions was 0.01%.
Ireland already has a tax on financial transactions, a Stamp Duty on transactions in shares, stocks and marketable securities that currently stands at 1%.
I am advised by Revenue that the yield from this tax was €425.3m in 2017, €413.5 million in 2018, €383.6 million in 2019, €506.5 million for 2020, and €371.4 million in 2021. Instruments used in the financial services industry such as derivatives are generally exempt from stamp duty, unless they relate to immovable property in Ireland or shares in Irish registered companies.
Based on the data currently held by the Revenue Commissioners or my Department it is not possible to accurately estimate the yield of a Financial Transactions Tax modelled on that proposed by the EU, i.e. a tax of 0.1% on share and bond transactions and 0.01% on derivative products. Consideration would also need to be given as to whether the existing Stamp Duty regime could co-exist with any Financial Transactions Tax proposal which might be implemented.
For additional information, in relation to a possible Financial Transactions Tax as an own resource for the EU budget, leaders agreed as part of the July 2020 Multi-annual Financial Framework (MFF) agreement that a Financial Transactions Tax may form part of a package of new own resources to finance the EU budget.
However, at this point, no such proposal has been put forward by the Commission. If and when this happens, we will examine the proposal based on its merits and ensure it meets the criteria of fairness and equity.
417. Deputy Richard Boyd Barrett asked the Minister for Finance the estimated full-year revenue that would be generated by disallowing historic losses (losses forward) as tax deductions for banks and insurance companies; and if he will make a statement on the matter. [41554/22]
View answerI am informed by Revenue that the annual research paper on Corporation Tax includes the most recent information in respect of losses forward and is published on its website at www.revenue.ie/en/corporate/documents/research/ct-analysis-2022.pdf.
As shown in Figure 5 of the publication, the amount of losses forward used for all companies in the financial and insurance sector is €1.3 billion for 2020 with an estimated tax cost of c.€165 million. It is not possible to provide a further sectoral breakdown between banks and insurance companies.
As the Deputy is aware, loss relief for corporation tax is a long-standing feature of the Irish corporate tax system and a standard feature of corporation tax systems in most OECD countries. It recognises the fact that a business cycle runs over several years and that it would be unfair to tax income earned in one year and not allow relief for losses incurred in another. Loss relief works by allowing a deduction for losses incurred in one accounting period against profits earned in another period.
It is not possible to quantify the estimated additional corporation tax revenue which could accrue from the introduction of a restriction on loss relief for banks and insurance companies, because it would require predictions about their future profitability. Changes to tax law are also generally made on a prospective basis, so any losses already in the corporation tax system would not typically be affected.
Should such a restriction be introduced, it could have knock-on implications for the cost of lending and deposits, and for the cost of insurance for consumers and businesses in Ireland. It could also be expected to decrease the value of the State’s remaining shareholdings in the banks, because tax losses forward are included as a “deferred tax asset” on a company’s balance sheet and any restriction would lead to write-downs in the value of those assets.
As regards Irish banks, it should also be noted that they do currently pay some Irish corporation tax, as the tax losses forward do not shelter profits made in all their corporate entities.
The Deputy may recall that, in 2018, Department of Finance officials produced a detailed technical note for the Committee on Finance, Public Expenditure and Reform, and Taoiseach on the subject of both bank losses and corporation tax losses more generally. This paper is available online at www.gov.ie/en/publication/436ff7-technical-note-on-the-potential-consequences-of-changes-to-the-treat/). It was further updated and re-circulated to members during the 2019 Finance Bill process.
418. Deputy Richard Boyd Barrett asked the Minister for Finance the estimated full-year revenue that would be generated by introducing a 4% levy on profits of pharmaceutical companies and private health companies; and if he will make a statement on the matter. [41555/22]
View answerI am advised by Revenue that, on the basis of information included in the Corporation Tax returns filed for the tax year 2020, the potential yield from imposing a 4% levy on the profits of private human health and pharmaceutical companies, including nursing homes and home care agencies, is tentatively estimated to be in the region of €900 million, with over 99% of this from pharmaceutical companies.
It has been assumed that the levy would apply to the taxable profits of pharmaceutical companies, nursing homes and home care agencies, but would not apply to medical practices or private hospitals. The potential yield assumes no behavioural change on the part of these companies.
As the Deputy will be aware, the trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%. Some of the main features of the current regime are its simplicity and that it applies to a broad base.
Imposing additional taxes on certain sectors would involve increased complexity and could change the attractiveness of Ireland's corporate tax regime. While it is possible that imposing such taxes could lead to theoretical gains, there is a risk of such taxes leading to lower levels of economic activity and to companies passing the additional tax burden onto their suppliers or consumers.
It should be noted that Ireland’s corporation tax regime has been undergoing a process of significant reform in recent years. The Deputy will be aware that, on 8 October 2021, Ireland joined over 130 other member jurisdictions of the OECD/G20 Inclusive Framework in reaching an historic two-pillar agreement to address the BEPS-related tax challenges that have arisen from globalisation and digitalisation.
In consideration of the need for certainty regarding our corporation tax regime, and acknowledgment of the significant international corporate tax developments underway, I do not believe it is appropriate to introduce any additional taxes or levies on companies at this time.
419. Deputy Richard Boyd Barrett asked the Minister for Finance the estimated full-year revenue that would be generated by abolishing the special assignee relief programme; and if he will make a statement on the matter. [41556/22]
View answerUnder section 825C to the Taxes Consolidation Act 1997, the Special Assignee Relief Programme (SARP) provides Income Tax relief for certain individuals assigned to work in the State during any of the tax years 2012 to 2022.
The aim of the relief is to reduce the cost to employers of assigning skilled individuals from foreign-based operations to take up positions in the Irish-based operations of their employer or an associated company, thereby facilitating the creation of jobs and the development and expansion of businesses in Ireland.
The latest annual costs available for SARP can be found in the 'Statistics on Special Assignee Relief Programme 2019' report which is published on the Revenue website at www.revenue.ie/en/corporate/documents/research/sarp-report-2019.pdf.
According to that report, the annual cost of SARP for 2012 to 2019 (the most recent year for which data are available) is as follows:
|
Year |
€m |
|
2012 |
0.1 |
|
2013 |
1.9 |
|
2014 |
5.9 |
|
2015 |
9.5 |
|
2016 |
18.1 |
|
2017 |
28.1 |
|
2018 |
42.4 |
|
2019 |
38.2 |
As the Deputy may be aware, following on from concerns I had regarding the increasing cost of the incentive, I amended the SARP legislation in Finance Bill 2018 to reinstate an upper salary threshold at the level of €1 million. This change came into effect for new entrants to the programme from 1 January 2019 and for existing beneficiaries from 1 January 2020 and, as a result, the 2019 annual cost indicates a sharp reversal in the growth in the overall cost of the scheme.
I am advised that Revenue does not maintain a projected future cost for SARP given the number of variables that would be involved in estimating with any degree of reliability. While abolishing SARP-related costs can be viewed as a saving to the Exchequer, likely losses resulting from lower employment levels (and related tax receipts) and other indirect effects within the activities that are supported by the Programme would also need to be factored into the equation. As such, it is not possible to estimate the likely savings which would accrue to the Exchequer in 2023 or in the years beyond that if SARP were abolished.
As matters stand, SARP is subject to a sunset clause whereby it is due to expire on 31 December 2022 and so the future of the scheme beyond that date will fall to Government to consider in the context of the Budget 2023 and Finance Bill 2022 process. The Deputy will be aware that it is a long-standing practice of the Minister for Finance not to comment in advance of the Budget on any matter that might be the subject of Budget decisions.
420. Deputy Richard Boyd Barrett asked the Minister for Finance the estimated full-year revenue that would be generated by establishing four new income tax bands of 50% on earnings between €100,000 and €150,000; 55% on earnings between €150,000 and €200,000; 60% on earnings between €200,000 and €275,000 and 65% on earnings over €275,000; and if he will make a statement on the matter. [41557/22]
View answerI am advised by Revenue that the estimated first and full year yield to the Exchequer of introducing the additional tax rates and tax bands as suggested by the Deputy is €1,970m and €2,505m respectively.
421. Deputy Richard Boyd Barrett asked the Minister for Finance the estimated full-year cost of reversing the 2022 carbon tax increase and postponing the 2023 increase; and if he will make a statement on the matter. [41571/22]
View answerI am advised by Revenue that the full-year cost of reversing the 2022 carbon tax increase is estimated at €148m in 2023, while that of postponing the Budget 2023 increase is estimated at €118m in 2023 and €151m in a full year.
422. Deputy Richard Boyd Barrett asked the Minister for Finance the estimated full-year cost of introducing three new bank holidays, including estimating increases in VAT and tax receipts that would increase due to increased activity, tourism and spending on these bank holidays; and if he will make a statement on the matter. [41572/22]
View answerAs the Deputy is aware, policy in relation to bank holidays is a matter for my colleague, the Tánaiste and Minister for Enterprise, Trade and Employment.
The Deputy will also be aware that the Government is introducing a new permanent bank holiday in February next year to celebrate Imbolc/St. Brigid’s day. This will see the first St. Brigid’s day public holiday take place on Monday 6th February 2023 and will raise the number of public holidays in Ireland to 10. However, while there are potential benefits to the economy in introducing an additional bank holiday, particularly in the tourism, entertainment and hospitality sectors, there are also costs involved.
As my colleague, the Tánaiste and Minister for Enterprise, Trade and Employment noted in a parliamentary question last month (PQ 28894/22- June 14th 2022 Question 163), previous analysis suggests the economic impact of an additional one-off public holiday could reduce annual gross national income by between 0.3% and 0.4%. Based on projections of modified gross national income for 2022 set out in the 2022 Stability Programme Update, this would suggest the economic cost of introducing a single new public holiday would be in the region of €0.7 billion to €1 billion. On a purely indicative basis, a proportional reduction in tax receipts would amount to a loss in revenue of somewhere in the range of €0.2 to €0.3 billion. This would, of course, not take into account the additional fiscal cost associated with holiday and premia pay for staff in sectors where services are provided on a 24/7 basis, such as the health sector and the Gardaí.
423. Deputy Richard Boyd Barrett asked the Minister for Finance the estimated full-year cost of abolishing the universal social charge, USC, for all earners and replacing it with a higher income social charge of 10% on all earnings over 100,000 per year; the revenue that would be generated by the introduction of this new higher income social charge; and if he will make a statement on the matter. [41573/22]
View answerThe Universal Social Charge (USC) was designed and incorporated into the Irish taxation system in 2011 to replace the Health and Income Levies. Its primary purpose was to widen the tax base and to provide a steady income to the Exchequer to provide funding for public services. The USC is an individualised tax, meaning that a person’s liability to the tax is determined on the basis of a person’s own individual income and personal circumstances. It is a more sustainable charge than those it replaced and is applied at a low rate on a wide base.
The USC has played a vital part in meeting the many expenditure demands placed on the Exchequer, and USC receipts have been central to the current stability of the public finances since March 2020, despite the challenges arising from the Covid-19 pandemic.
I am advised by Revenue that based on the 2021 yield, it is estimated that the full-year cost of abolishing the Universal Social Charge (USC) for all earners is €4.4bn. I am further advised that the revenue that would be generated in a full year from introducing a USC rate of 10% on all earnings over €100,000 per year is approximately €1.45bn. Therefore, the estimated annual cost of the combined measures proposed by the Deputy is in the order of €2.95bn.
Further, such a proposal would significantly narrow the income tax base and would expose our economy to significant risks in the event of a future economic downturn. A high income social charge could increase the marginal tax rate, which could create a clear disincentive to work and impact on the competitiveness of our tax code.
Ireland has one of the most progressive personal income tax systems in the world, which plays a crucial role in the process of income redistribution. Our redistributive tax system has been acknowledged by the IMF, the OECD and the ESRI. It is my view a broad-based, progressive income tax system, where the majority of income earners make some contribution but according to their means, is the most fair and sustainable income tax system in the long term.
As such, I have no plans to abolish the USC and replace it with a high income social charge.
424. Deputy Richard Boyd Barrett asked the Minister for Finance the number of property owners who are paying local property tax on one property; two properties; three properties; four properties; between five and ten; between ten and 20; between 20 and 50, between 50 and 100 and 100 or more, excluding local authorities and assisted housing bodies; and if he will make a statement on the matter. [41574/22]
View answerI am advised by Revenue that the available information in respect of local property tax and ownership in the LPT statistical updates published on the Revenue website, with the most recent being published on 14th of July at this link. www.revenue.ie/en/corporate/documents/statistics/lpt/lpt-stats-update-140722.pdf.
425. Deputy Richard Boyd Barrett asked the Minister for Finance the estimated full-year cost of abolishing the local property tax and introducing a tax on non-principal private residences as follows (details supplied); and if he will make a statement on the matter. [41575/22]
View answerI am advised by Revenue that the estimated full year cost of abolishing local property tax (LPT) is in the region of €490 million in a full year. Information in respect of introducing a charge on non-principal private residences (NPPRs) is included at page 29 in the ‘Ready Reckoner’, published at link: www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf.
This estimate is based on information for the LPT year of 2021 and does not include the impact of any possible behavioural change by property owners. Preliminary analysis of the LPT returns indicates that the number of NPPRs has increased. The Deputy may wish to note that Revenue has advised me that the Ready reckoner will be updated to reflect the 2022 LPT returns in the coming weeks.
