asked the Minister for Finance if, in view of the disproportionate tax burden carried by the PAYE sector, he will outline the plans the Government has to ensure that other sectors make a fair tax contribution; and if he will make a statement on the matter.
Written Answers. - PAYE Sector.
58.
I am very conscious of the heavy burden of taxation which has been borne by PAYE taxpayers and I have already taken significant steps to address the issue. The income tax reliefs in the 1988 and 1989 budgets, including the reduction in the rates of tax that I brought in this year, will have a cumulative cost over the period of the Programme for National Recovery of over £700 million. The PAYE sector benefited significantly from the general reliefs and of course that sector has benefited also from the specific increases in the PAYE and PRSI allowances which, as the Deputy is aware, are not available to self-employed taxpayers.
In tandem with these reliefs we have introduced an unprecedented range of measures aimed at improving the effectiveness of the tax collection and enforcement system, so as to broaden the tax base and thus ensure a fairer distribution of the tax burden. The most notable measures have been: the introduction of self-assessment procedures for self-employed and corporate taxpayers; the granting of a power to the Revenue Commissioners to attach the financial assets of defaulters; the introduction of a withholding tax on payments made by specified State bodies and by health insurers for certain professional services and the 1988 tax amnesty which brought about a significant reduction in arrears, particularly amongst the self-employed including farmers, and has had an ongoing knock-on effect in ensuring better compliance and enabling the Revenue to concentrate resources more effectively on tax default. All of these measures have increased the tax yield from the non-PAYE sector.
As regards future progress, I would point out to the Deputy that the Programme for Government includes a commitment to further reduce the standard rate of income tax, to 25 per cent by 1993, and to move towards a single higher rate of tax; and also to make further improvements in the tax exemption limits, in order to provide targeted help for part-time workers and the lower paid, especially those with families. These reliefs will be funded, in part, by a further broadening of the tax base including an increased tax yield from the corporate sector.
The detailed implementation of the programme commitments will of course be a matter for the annual budgets.