Dáil Éireann Debate, Thursday - 1 June 2023
165. Deputy Pearse Doherty asked the Minister for Finance the revenue raised by removing tax personal, PAYE and earned income tax credits on a tapered basis from individual incomes between €100,000 and €140,000 (at a rate of 2.5% per €1,000 above €100,000), in first- and full-year terms. [27011/23]
View answerI am advised by Revenue that their micro-simulation modelling tool, Tax Modeller, is built to model scenarios on a taxpayer unit basis (i.e. including jointly assessed couples as one taxpayer unit). As such, it does not generate any outputs on an individualised basis, and it is therefore not possible to estimate changes to tax credits on an individual basis for a projected tax year.
However, incomes recorded on historic tax returns can be used to estimate the potential yield and/or cost associated with the adjustment of tax credits. As 2020 is the latest year for which full tax return data is currently available to be analysed, Revenue has undertaken estimates in relation to the 2020 tax year for the tapering of the tax credits referred to by the Deputy to provide an estimated yield that may arise from this proposal.
It should be noted that although the values of the personal tax credit, employee tax credit and the earned income credit have increased since 2020, (as provided for in Budget 2022 and 2023), the 2020 values for the credits were utilised for consistency purposes in preparing these estimates.
Based on this, I am advised by Revenue that the yield in 2020 from tapering the credits as outlined by the Deputy would have been an estimated €285 million and €340 million on a first and full year basis respectively.
