asked the Minister for Finance the amount of extra value-added tax that would need to be imposed to collect the same amount of revenue if direct taxation on personal incomes were abolished.
Ceisteanna—Questions. Oral Answers. - Value-Added Tax.
168.
Mr. Kenny
As the yields from personal income taxation and value-added tax in the calendar year 1974 are estimated to be £240 million and £154 million, respectively, the replacement of personal income taxation by value-added tax would require an increase of about 160 per cent in the current yield from value-added tax.
The increase in VAT rates necessary to collect the extra tax, even allowing for the fact that consumer expenditure would be likely to rise as a result of the abolition of personal income taxation, would be so great that major changes in the present pattern of consumer spending might arise. It is, therefore, extremely difficult to estimate what new rates of VAT would be necessary in those circumstances. If, however, no change in the volume of spending or in its present pattern is assumed and if the necessary increase were spread proportionately over the existing rates of 6.75, 19.5 and 36.75 per cent these rates would have to go up to 17.5, 51 and 95.5 per cent, respectively.