Dáil Éireann Debate, Tuesday - 16 April 2024
224. Deputy Alan Kelly asked the Minister for Finance the estimated revenue that would be raised to the end of January 2025 by tapering personal PAYE and earned income tax credit at a rate of 2% per €1,000 for individuals' income between €180,000 and €300,000, effective from 1 May 2024. [16407/24]
View answerFollowing consultation with the Deputy, I understand that the question relates to reducing the personal, PAYE and earned income tax credits of taxpayers by 2 per cent in respect of each €1,000 of income in excess of €180,000 and not exceeding €230,000, such that those on incomes in excess of €230,000 have no entitlement to those credits.
I 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, i.e. the tax year 2024.
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 2021 is the latest year for which full tax return data is currently available to be analysed, Revenue has undertaken estimates in relation to the 2021 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. This estimate is based on gross income.
It should be noted that although the values of the personal tax credit, PAYE tax credit and the earned income credit have increased since 2021, (as provided for in Budget 2022, 2023 and 2024), the 2021 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 2021 from tapering the credits as outlined by the Deputy would have been an estimated €130 million. This estimate relates to the yield if the tapering of tax credits was implemented for the full year 2021.
