Wednesday, 18 Jan 2023

Written Answers Nos. 328-346

Tax Code

Questions (328)

Richard O'Donoghue

Question:

328. Deputy Richard O'Donoghue asked the Minister for Finance if he will clarify whether accessories associated with defibrillators are also exempt from VAT from 1 January 2023 (details supplied). [1075/23]

Written answers

Minister for Finance

The Deputy should note that the supply of an automated external defibrillator is subject to the zero rate of VAT from 1 January 2023.  The zero rate also applies to parts, components, or accessories used solely or principally with the automated external defibrillator and this includes paddles, batteries, and the heated case that the defibrillators are housed in.

Tax and Social Welfare Codes

Questions (329)

Mark Ward

Question:

329. Deputy Mark Ward asked the Minister for Finance the reason that cohabiting partners cannot be jointly assessed as cohabitants for tax purposes in the same way that a married couple would be in view of the fact that they are assessed jointly for social protection entitlements; and if he will make a statement on the matter. [1168/23]

Written answers

Minister for Finance

Where a couple is cohabiting, rather than married or in a civil partnership, they are treated as separate and unconnected individuals for the purposes of income tax. Each partner is a separate entity for tax purposes, therefore, cohabiting couples cannot file joint assessment tax returns or share their tax credits and tax bands in the same manner as married couples.  

The basis for the current tax treatment of couples derives from the Supreme Court decision in Murphy vs. Attorney General (1980), which held that it was contrary to the Constitution for a married couple, both of whom are working, to pay more tax than two single people living together and having the same income as the married couple.

The treatment of cohabiting couples for the purposes of social welfare is primarily a matter for the Minister for Social Protection. However, it is based on the principle that married couples should not be treated less favourably than cohabiting couples. This was given a constitutional underpinning following the Supreme Court decision in Hyland v Minister for Social Welfare (1989) which ruled that it was unconstitutional for the total income a married couple received in social welfare benefits to be less than the couple would have received if they were unmarried and cohabiting.

To the extent that there are differences in the tax treatment of the different categories of couples, such differences arise from the objective of dealing with different types of circumstances while at the same time respecting the constitutional requirements to protect the institution of marriage. Cohabitants do not have the same legal rights and obligations as a married couple or couple in a civil partnership which is why they are not accorded similar tax treatment to couples who have a civil status that is recognised in law. Any change in the tax treatment of cohabiting couples can only be addressed in the broader context of social and legal policy development in relation to such couples.

Business Supports

Questions (330)

Éamon Ó Cuív

Question:

330. Deputy Éamon Ó Cuív asked the Minister for Finance if it is intended to release further funding to the Strategic Bank Corporation of Ireland to further aid the development of suitable projects; if so, when a decision will be made on same; and if he will make a statement on the matter. [1191/23]

Written answers

Minister for Finance

The Strategic Banking Corporation of Ireland (SBCI) began lending in March 2015. By the end of June 2022, the SBCI had supported lending of €3.2 billion to more than 50,000 SMEs, from all sectors of the Irish economy and across a wide geographical spread, utilising a mix of low cost liquidity and guarantees.

The SBCI has a number of schemes launched and in development to help release further funding for suitable projects.

These include the Growth and Sustainability Loan Scheme, the Energy Efficiency Loan Scheme, the Ukraine Credit Guarantee Scheme and the Retrofit Scheme.

Growth and Sustainability Loan Scheme

On 9 November 2022, Government approved the establishment of a €500 million Growth and Sustainability Loan Scheme. This Scheme will be a successor scheme to the Future Growth Loan Scheme (FGLS), as a longer-term loan guarantee scheme to enable investment.   

The FGLS scheme is fully subscribed and new applications are no longer being accepted.  An independent review of that scheme provided strong evidence of positive economic benefits for many SMEs that accessed finance through that scheme, including increases in employment and turnover. The review of the FGLS also confirmed that there is continued demand by SMEs for appropriate longer-term external finance for investment purposes.

Similar to its predecessor scheme, the Growth and Sustainability Loan Scheme will provide for loans ranging from €25,000 to €3 million; for terms of 7 to 10 years.  Loans of up to €500,000 can be unsecured. The Growth and Sustainability Loan Scheme will be available to SME’s, including farmers and fishers, with maximum loans to mid-caps limited to €937,500 due to De Minimis State Aid restrictions.

Under the scheme, 70% of the lending volume will be provided for investment in business growth and sustainability, while a minimum of 30% of lending volume will be directed to investment in environmental sustainability. The SBCI will deliver the scheme on behalf of the Minister for Enterprise, Trade and Employment and the Minister for Agriculture, Food and the Marine. This scheme will be underpinned by a counter-guarantee from the European Investment Fund/European Investment Bank Group (EIF/EIBG). It is anticipated that this scheme will launch in Q2 2023.

Energy Efficiency Loan Scheme

The Energy Efficiency Loan Scheme (EELS), launched in July 2022, is a 10-year loan guarantee scheme focused on improving businesses’ sustainability and increasing investments in energy efficiency measures, including heat pumps, solar panels, LED lightning and other energy-saving technology.

This scheme is designed to help SMEs, farmers and fishers reduce their energy costs and transition to more sustainable business models. Borrowers can benefit from reduced interest rates, as low as 4%, and finance amounts ranging from €10,000 to €150,000 over terms of up to 10 years.

Ukraine Credit Guarantee Scheme

In recent years, a number of State-backed guarantee schemes have been developed to support SMEs impacted by Brexit and Covid-19 and delivered through the SBCI. The S.I. in relation to the Ukraine Credit Guarantee Scheme (UCGS) was signed on 08 December 2022 to unlock up to €1.2 billion of low-cost, unsecured working capital for SMEs, small Mid-Caps, and primary producers affected by the Ukraine crisis.

In order to qualify for the scheme, the borrower will have to declare that costs have increased by a minimum of 10% on their 2020 figures and that the loan is being sought specifically as a result on difficulties being experienced due to the Ukraine crisis. Loan facilities ranging from €10,000 to €1 million will be available. Loans of up to €250,000 can be unsecured, which can be used for overdrafts, working capital and term loan facilities.

Retrofit Scheme

A residential retrofit loan guarantee scheme for homeowners and small landlords is currently being developed by the SBCI on behalf of the Department of Environment, Climate and Communications. The scheme has a proposed lending capacity of €500 million.

Tax Yield

Questions (331)

Catherine Murphy

Question:

331. Deputy Catherine Murphy asked the Minister for Finance the estimated full-year yield if the licence for amusement machines for up to three months increased from €38 to €60 based on 2022 figures; and the estimated full-year yield if the licence for amusement machines for up 12 months increased from €125 to €190 based on 2022 figures. [1210/23]

Written answers

Minister for Finance

I am advised by Revenue that, based on the numbers of amusement machine licences issued in 2022, the estimated full year yields from an increase from €38 to €60 for High Season Amusement Machine Licences (three months) and an increase from €125 to €190 for Annual Amusement Machine Licences are as outlined below.

Licence Type	Issued 2022	Receipts 2022 €	Estimated full year Yield based on suggested increases €
High Season (3 Month)	227	8,626	13,620
Annual (12 Month)	6,107	763,375	1,160,330

Revenue Commissioners

Questions (332)

Catherine Murphy

Question:

332. Deputy Catherine Murphy asked the Minister for Finance the number of appointments that were made to the grade of assistant principal officer from 2017 to 2022 by Revenue Commissioners within Dublin; and the manner in which the appointments were filled. [1219/23]

Written answers

Minister for Finance

I am advised by Revenue that in the period from January 2017 to December 2022, there were 299 Revenue appointments to posts in the Assistant Principal Officer grade, in Dublin. This comprised 105 appointments from Public Appointments Service or Revenue open competitions; 55 from interdepartmental competitions; and 139 from Revenue internal promotion competitions. In addition, there were 108 Revenue assignments at Assistant Principal Officer grade on transfer within Revenue or from another department or organisation; on secondment, or on return from Career Break.

Question No. 333 answered with Question No. 307.

Question No. 334 answered with Question No. 325.

Question No. 335 answered with Question No. 311.

Primary Medical Certificates

Questions (336, 356, 357, 365, 370, 372, 373, 374, 382)

Paul Kehoe

Question:

336. Deputy Paul Kehoe asked the Minister for Finance if he will provide an update on the Primary Medical Certificate Board; and if he will make a statement on the matter. [1293/23]

Eoin Ó Broin

Question:

356. Deputy Eoin Ó Broin asked the Minister for Finance if he will provide an update on the recruitment of a new Primary Medical Certificate Appeals Board; the timeframe in which the review of the primary medical certificate scheme will be concluded; and when the scheme will reopen for applications. [1713/23]

Bernard Durkan

Question:

357. Deputy Bernard J. Durkan asked the Minister for Finance when the issue regarding primary medical certificates will be resolved in order to facilitate those whose cases are in abeyance for some time in the first instance and to meet the requirements of persons with disabilities who have mobility problems; and if he will make a statement on the matter. [1783/23]

Mark Ward

Question:

365. Deputy Mark Ward asked the Minister for Finance the current position in regard to the Disabled Drivers Medical Board of Appeal (details supplied). [1944/23]

Louise O'Reilly

Question:

370. Deputy Louise O'Reilly asked the Minister for Finance when he expects the Primary Medical Certificates Appeals Board to be reconstituted and begin hearing appeals; his plans to address the backlog in appeals made to the Primary Medical Certificates Appeals Board; and if he will make a statement on the matter. [2076/23]

Emer Higgins

Question:

372. Deputy Emer Higgins asked the Minister for Finance the current position in regard to the Disabled Drivers Medical Board of Appeal; if new members have been appointed; if so, the date from which they were appointed; and if he will outline their terms and conditions of engagement. [2110/23]

Emer Higgins

Question:

373. Deputy Emer Higgins asked the Minister for Finance the number of appeals that have been heard to date by the Disabled Drivers Medical Board of Appeal; the total number of appeals that are on hand waiting to be heard; and if he will make a statement on the matter. [2111/23]

Emer Higgins

Question:

374. Deputy Emer Higgins asked the Minister for Finance the legal basis for the secretary and secretariat of the Disabled Drivers Medical Board of Appeal, in the absence of a DDMBA Chair and Board; and if he will make a statement on the matter. [2112/23]

Noel Grealish

Question:

382. Deputy Noel Grealish asked the Minister for Finance further to Parliamentary Question No. 213 of 13 October 2022, if there is an update regarding the Disabled Drivers Medical Board of Appeal; and if he will make a statement on the matter. [2324/23]

Written answers

Minister for Finance

I propose to take Questions Nos. 336, 356, 357, 365, 370, 372 to 374, inclusive, and 382 together.

The Disabled Drivers and Disabled Passengers Scheme provides relief from Vehicle Registration Tax and VAT on an adapted car, as well as an exemption from motor tax and an annual fuel grant.

The Scheme is open to severely and permanently disabled persons as a driver or as a passenger and also to certain charitable organisations. In order to qualify for relief, the applicant must hold a Primary Medical Certificate issued by the relevant Senior Area Medical Officer (SAMO) or a Board Medical Certificate issued by the Disabled Driver Medical Board of Appeal. To qualify for a Primary Medical Certificate an applicant must be permanently and severely disabled, and satisfy at least one of the six medical criteria.

It is expected that the Board will be established shortly. The background is that following the resignation of all members of the previous Disabled Drivers Medical Board of Appeal, effective from 30th November 2021, two Expression of Interest campaigns have been held, seeking suitable candidates for the Board. The Department of Health has led on all actions and tasks with respect to the Expression of Interest Campaigns. Department of Finance officials have provided support to the Department of Health in this matter.

The first campaign closed on 29th April. As there were insufficient suitable candidates arising from the first campaign, a second round was issued with a closing date of 5th July 2022. From these, three suitable candidates have successfully completed Garda vetting. Five members are legislatively required for a functional Board with a quorum of three needed for any appeal hearing. Two other candidates have very recently been deemed suitable and are in the process of being Garda vetted. All five candidates have been nominated by the Minister of Health pending successful completion of Garda vetting.

Once Garda vetting is completed for the two aforementioned candidates, I will then be in a position to appoint them to the Board. I am hopeful that the new Board will be up and running in the next few weeks, and once operational, it will consider the best way of ensuring outstanding appeals are addressed as quickly as possible. 

As of 31st December 2022, there are currently 759 people awaiting an appeal hearing with 382 of those dating back to 2021 and the remaining 377 people applying for an appeal in 2022. The below table outlines the number of appeals heard by the Disabled Drivers Medical Board of Appeal and of those, that were successful and unsuccessful since 2018.

-	2018	2019	2020	2021	2022
New appeals	674	684	204	382	377
Number of Appeals Assessed	386	424	116	148	n/a
Number of Successful Appeals	20	9	4	12	n/a
Number of Unsuccessful Appeals	366	415	112	136	n/a

*260 appeals outstanding at 01/2017

**Appeal hearings were lower than usual for 2020 due to both public health considerations and the Supreme Court Case in June 2020. Appeal hearings resumed in early 2021 following an amendment to the Finance Bill to provide for the existing medical criteria in primary legislation which, following the approval of the Finance Act 2020, allowed assessments to recommence.

***2021 appeal hearings have also been impacted by the Covid-19 pandemic.

Requests for appeal hearings can be sent to the DDMBA secretary in the National Rehabilitation Hospital (NRH). The NRH provides clinical facilities and staffing (including a secretary) to facilitate the DDMBA in carrying out its remit, and costs incurred are reimbursed to the NRH annually by DFIN. It should be noted that there is no legal basis for the secretary of the Disabled Drivers Medical Board, but in the absence of such a role, the scheme could not operate effectively.

Appeal hearing dates for the outstanding appeals will be issued once the new Board is in place. In this regard, it should be noted that the appeals that will be heard by the Board can only be assessed against the medical criteria contained in the Finance Act 2020.

Assessments for the primary medical certificate, by the HSE, are continuing to take place. Applicants deemed not to have met one of the six eligibility criteria required for a PMC can request another PMC assessment six months after an unsuccessful PMC assessment.

Finally, as the Deputy is aware, my predecessor Minister Donohoe committed to a comprehensive review of the DDS under the auspices of a broader review of mobility supports. In order to achieve this objective, Minister O’Gorman agreed in September 2021 that the DDS review should be incorporated into the work of the National Disability Inclusion Strategy (NDIS) Transport Working Group (TWG). 

The Working Group, under the Chairpersonship of Minister of State Anne Rabbitte, held a number of meetings across 2022. A draft report was considered at its final meeting on 8th December 2022, and is currently being finalised. It is expected that it will be published soon. 

Tax Reliefs

Questions (337, 339)

Denise Mitchell

Question:

337. Deputy Denise Mitchell asked the Minister for Finance his plans on extending the tax relief for renters to RAS tenants; and if he will make a statement on the matter. [1306/23]

Aodhán Ó Ríordáin

Question:

339. Deputy Aodhán Ó Ríordáin asked the Minister for Finance his views on extending the tax relief for renters to those on RAS and other tenancies; and if he will make a statement on the matter. [1336/23]

Written answers

Minister for Finance

I propose to take Questions Nos. 337 and 339 together.

Finance Act 2022 introduced a new Rent Tax Credit.   The credit is available for the tax years 2022 to 2025 (inclusive) with a maximum value of €1,000 per year in the case of a jointly assessed married couple or civil partners, and €500 in all other cases.

The credit is broadly available in the following three circumstances:

1) where the claimant makes a qualifying payment in respect of his or her principal private residence,

2) where the claimant makes a qualifying payment in respect of a ‘second home’ which he or she uses to facilitate his or her attendance at, or participation in, his or her employment, office holding, trade, profession or an approved course, and

3) where the claimant makes a qualifying payment in respect of a property used by his or her child to facilitate the latter’s attendance at, or participation in, an approved course. 

Full details of how to claim the tax credit and the conditions that apply are set out in the relevant Tax and Duty Manual (Part 15-01-11A) available on the Revenue website at the following link: 

www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-credit/index.aspx. 

From the outset, the measure was intended to assist those who do not get any other housing supports from the State.  This was made clear in my predecessor's Budget address last year and it is also the position approved by the Oireachtas during the Finance Bill 2022 process which concluded last month. 

Under the newly enacted legislation (section 473B of the Taxes Consolidation Act 1997), the claimant must not be a ‘supported tenant’.  This means that the claimant cannot be in receipt of State housing support in respect of a tenancy for which they are seeing the rent tax credit. 

There are no plans at the present time to extend the measure to those who fall within the definition of "supported tenant". 

Revenue Commissioners

Questions (338)

Robert Troy

Question:

338. Deputy Robert Troy asked the Minister for Finance if he will address the delay that solicitors are having acquiring capital acquisitions certificates from the Office of the Revenue Commissioners, Capital Acquisitions Tax Unit, Government Buildings, Millennium Centre, Dundalk, County Louth (details supplied). [1322/23]

Written answers

Minister for Finance

I am advised by Revenue that there are no delays in the processing of Capital Acquisitions Tax (CAT) certificates, where all relevant information is received at the time of application. In some instances, Revenue may require additional information in support of the application and any delay in responding to those requests may lead to a delay in the processing of certificates.

Revenue have confirmed that the certificate for the person concerned, originally issued to the solicitor acting on 23 February 2021 and was re-issued on 22 April 2022. Revenue was not aware that the second certificate had not been received and will now arrange to re-issue the certificate again.

Question No. 339 answered with Question No. 337.

Tax Reliefs

Questions (340)

Éamon Ó Cuív

Question:

340. Deputy Éamon Ó Cuív asked the Minister for Finance the changes that occurred on 1 January 2023 in the way that benefit-in-kind for company cars is assessed for income tax purposes; the reasons for these changes; the savings to the Exchequer as a result; the estimated number of taxpayers affected; and if he will make a statement on the matter. [1367/23]

Written answers

Minister for Finance

Recent Government policy has focused on strengthening the environmental rationale behind company car taxation. Until the changes brought in as part of the Finance Act 2019, Ireland’s vehicle benefit-in-kind regime was unusual in that there was no overall CO2 rationale in the regime. This is despite a CO2 based vehicle BIK regime being legislated for as far back as 2008 (but never having been commenced).

In Finance Act 2019, a CO2-based BIK regime for company cars was legislated for from 1 January 2023. From that date the amount taxable as BIK is determined by the car’s original market value (OMV) and the annual business kilometres driven, while new CO2 emissions-based bands determines whether a standard, discounted, or surcharged rate is taxable. The number of mileage bands has reduced from five to four.

In certain instances, this new regime will provide for higher BIK rates, for example in relation to above average emissions and high mileage cars. It should be noted, however, that the rates remain largely the same in the lower to mid mileage ranges for the average lower emission car. Additionally, EVs benefit from a preferential rate of BIK, ranging from 9 – 22.5% depending on mileage. Fossil-fuel vehicles are subject to higher BIK rates, up to 37.5%. This new structure with CO2-based discounts and surcharges is designed to incentivise employers to provide employees with low-emission cars. 

I am aware there have been arguments surrounding the mileage bands in the new BIK structure, as they can be perceived as incentivising higher mileage to avail of lower rates, leading to higher levels of emissions. The rationale behind the mileage bands is that the greater the business mileage, the more the car is a benefit to the company rather than its employee (on average); and the more the car depreciates in value, the less of a benefit it is to the employee (in years 2 and 3) as the asset from which the benefit is derived is depreciating faster. Mileage bands also ensure that cars that are more integral to the conduct of business receive preferential tax treatment.

I believe that better value for money for the taxpayer is achieved by curtailing the amount of subsidies available and building an environmental rationale directly into the BIK regime. It was determined in this context that reforming the BIK system to include emissions bands provides for a more sustainable environmental rationale than the continuation of the current system with exemptions for electric vehicles (EVs). This brings the taxation system around company cars into step with other CO2-based motor taxes as well as the long-established CO2-based vehicle BIK regimes in other member states.

In addition to the above and in light of government commitments on climate change, Budget 2022 extended the preferential BIK treatment for EVs to end 2025 with a tapering mechanism on the vehicle value threshold. This BIK exemption forms part of a broader series of very generous measures to support the uptake of EVs, including a reduced rate of 7% VRT, a VRT relief of up to €5,000, low motor tax of €120 per annum, SEAI grants, discounted tolls fees, and 0% BIK on electric charging.

It should be noted that this new BIK charging mechanism was legislated for in 2019 and was announced as part of Budget 2020. I am satisfied that this has provided a sufficient lead in time to adapt to this new system before its recent implementation.

Additionally, it is not possible from the data submitted to Revenue in respect of benefit-in-kind to identify specific statistics solely in relation to BIK on employer-provided vehicles, as the information submitted is not itemised based on the type of benefit granted.

Question No. 341 answered with Question No. 307.

Tax Code

Questions (342, 385)

Pearse Doherty

Question:

342. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of extending the 9% rate of VAT applicable to electricity and gas from 28 February to end-March and end-June 2023, respectively. [1399/23]

Pearse Doherty

Question:

385. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of extending the reduced 9% VAT rate applicable to electricity and gas from beginning of March 2023 to end-June 2023 and end-2023 respectively. [2401/23]

Written answers

Minister for Finance

I propose to take Questions Nos. 342 and 385 together.

I am advised by Revenue that traders are not required to identify the VAT yield generated from the supply of specific goods and services on their VAT returns. Therefore, it is not possible to provide a costing for the measures outlined above using information provided on tax returns.

However, tentative estimates using third-party data sources and the most recently available consumer price indices for electricity and gas are provided below. These estimates do not account for any behavioural changes and are subject to revision should the volatility in gas and electricity prices continue over the short to medium term.

-	Estimated cost for  1 March – 31 March 2023	Estimated cost for 1 March – 30 June 2023	Estimated cost for 1 March – 31 Dec 2023
Electricity	€12.0m	€44.4m	€113.2m
Gas	€5.4m	€17.5m	€37.3m
Total	€17.4m	€61.8m	€150.5m

Tax Code

Questions (343, 344, 345, 384)

Pearse Doherty

Question:

343. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of extending the reduced rate of excise duty that applies to petrol from end-February to end-March and end-June 2023 respectively. [1402/23]

Pearse Doherty

Question:

344. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of extending the reduced rate of excise duty that applies to diesel from end-February to end-March and end-June 2023 respectively. [1403/23]

Pearse Doherty

Question:

345. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of applying a zero rate of excise duty to home heating oil from 1 February to end-March and end-June, and from 1 March to end-March and end-June 2023 respectively. [1404/23]

Pearse Doherty

Question:

384. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of reducing the rate of excise applicable to home heating to €0 per 1,000 litres in line with the Energy Tax Directive from 1 March to end-June and end-2023 respectively. [2347/23]

Written answers

Minister for Finance

I propose to take Questions Nos. 343 to 345, inclusive, and 384 together.

I am advised by Revenue that the estimated cost of extending the reduced Mineral Oil Tax (MOT) rates for the periods outlined, in respect of petrol and diesel, are shown in the following tables.

-			Petrol
Period	MOT €m	VAT €m	Total €m
1 March to 31 March 2023	13.4	3.1	16.5
1 March to 30 June 2023	54.4	12.5	67.0

-			Diesel
Period	MOT €m	VAT €m	Total €m
1 March to 31 March 2023	40.1	2.9	43.0
1 March to 30 June 2023	161.6	11.9	173.5

 

In relation to Questions 1404/23 and 2347/23, I am advised by Revenue that the Mineral Oil Tax charge on heating kerosene is comprised of a non-carbon component currently set at €0.00 and a carbon component, currently set at €103.83 per 1,000 litres and scheduled to increase to €122.83 in May. The cost of reducing the carbon component to zero cents per 1,000 litres for the timeframes set out in the question are contained in the following table.

-			Kerosene
Period	MOT €m	VAT €m	Total €m
1 February to 31 March 2023	25.7	3.3	28.9
1 February to 30 June 2023	39.1	5.1	44.1
1 March to 31 March 2023	11.0	1.4	12.4
1 March to 30 June 2023	24.4	3.2	27.6
1 March to 31 December 2023	84.2	10.9	95.1

These estimates are based on the most recent consumption data available and do not account for any behavioural changes.

Question No. 344 answered with Question No. 343.

Question No. 345 answered with Question No. 343.

Tax Code

Questions (346)

Carol Nolan

Question:

346. Deputy Carol Nolan asked the Minister for Finance if the tax benefits enjoyed by married couples are sufficient in order to incentivise couples to get married at the present time; if he proposes to further incentivise marriage through the taxation system; and if he will make a statement on the matter. [1427/23]

Written answers

Minister for Finance

Following clarification from the Deputy’s office, I understand that the purpose behind the question is to seek an update on the policy position with regard to individualisation of the personal income tax system.

Accordingly, it may be helpful first of all to summarise the background to the current position in relation to individualisation.   

Prior to 2000, the income tax system allowed for full joint assessment of married couples.  This meant that a married one earner couple could use the combined tax credits and standard rate band available to both individuals – i.e. double the personal tax credit and standard rate band available to a single earner.  As a result, where the primary earner of a married couple had sufficient income to use the available reliefs in full, the second earner faced the marginal rate of income tax from the first pound of income earned, which acted as a disincentive to workforce participation for second earners. 

A process of moving towards an individualised system of income taxation began in the tax year 2000/2001 with initial steps being taken to individualise the tax bands.  The stated economic objective behind the move was to increase labour force participation and reduce the numbers of workers paying the higher rate of income tax.  It should be noted that many European countries have made similar moves towards a partial or fully individualised income taxation system on the grounds that it improves equality and economic independence for women.   

As the Deputy may be aware, the policy of individualisation never advanced beyond the initial step outlined above.

The result is that we now have a hybrid system, which has been maintained for over 20 years. For example, up to €9,000 of the standard-rate band can be transferred between spouses and the married personal tax credit, can be allocated in full to one spouse. As the income tax system allows married couples and civil partners to choose whether to be jointly or individually assessed, there can be a difference between the tax liabilities incurred by married/civil partner one-earner couples compared to married/civil partner two-earner couples on the same household income, depending on the method of assessment chosen.

However, in lieu of fully transferable rate bands, a Home Carer Tax Credit may be claimed where one spouse works primarily in the home to care for a dependent person, such as a child. This credit was introduced in the context of the move towards individualisation, in recognition of the choices made by families where one spouse stays at home to care for children or the elderly.   In recent years, the value of the credit has been increased in line with a commitment in the Programme for Government and it now stands at €1,700 for the current tax year. 

It is also worth pointing out that both the PRSI and Universal Social Charge are already applied on an individualised basis.

The issue of tax individualisation was considered by the recent Commission on Taxation and Welfare (CoTW) and, it recommended a phased move towards individualisation of the Standard Rate Cut Off Point as a step towards addressing disparities in the income tax system, facilitating increased employment, and decreasing the gap in the employment rate between men and women.  Further details are set out in the Report of the Commission, located at the following link - www.gov.ie/en/publication/7fbeb-report-of-the-commission/. 

As signalled in the Budget, my Department has begun initial work on developing a medium-term roadmap for personal tax reform, taking account of the recent report of the CoTW, and considering a range of measures across income tax, USC and PRSI together with other related personal taxation issues.

All the above will help inform deliberations relating to aspects of the income tax system in the context of future Budgets.