Richard Bruton
Ceist:228 Mr. R. Bruton asked the Minister for Finance the cost of reducing the standard rate of tax from 20% to 15%. [19548/01]
Written Answers. - Tax Code.
I am advised by the Revenue Commissioners that the cost to the Exchequer, estimated by reference to 2001 incomes, of the change mentioned by the Deputy is £1,139 million in a full year. This assumes that the value of the personal tax credits are maintained at their current level, that is £1,500 for a single person which is £7,500 at 20%.
If the value of the personal tax credits were to be reduced pro rata to take account of the reduction in the standard rate of tax, that is decreased from £1,500 to £1,125 for a single person, then the cost would be £627.7 million in a full year.
Both estimates take account of a provision for a pro rata reduction in tax relief for expenditures such as mortgage interest relief and medical insurance which are allowable for tax purposes at the standard rate of tax. This estimate is provisional and is likely to be revised.
Richard Bruton
Ceist:229 Mr. R. Bruton asked the Minister for Finance the cost of introducing a new rate of 15% tax to apply to an amount of income equal to half of the income range to which the 20% rate now applies with 20% continuing to apply to the remainder. [19549/01]
I am advised by the Revenue Commissioners that the cost to the Exchequer, estimated by reference to 2001 incomes, of the change mentioned by the Deputy is £751 million in a full year assuming that the value of the personal tax credits remains the same, that is £1,500 for a single person or £7,500 at 20%.
If the value of the personal tax credits were to be recalculated to take account of this new tax rate, that is reduced to £1,125 for a single person or £7,500 at 15%, the cost would be £287.1 million in a full year. This estimate takes account of a provision for a pro rata reduction in tax relief for expenditures such as mortgage interest relief and medical insurance which are allowable for tax purposes at the standard rate of tax.
This estimate is provisional and is likely to be revised.
Richard Bruton
Ceist:230 Mr. R. Bruton asked the Minister for Finance the cost of restoring equality of treatment on tax bands to the married couple with one person earning an income. [19550/01]
I am informed by the Revenue Commissioners that increasing the band for married couples with one earning by £11,000 and allowing full transferability between spouses of the £40,000 band available to married couples with two earning would cost approximately £237 million in a full year. This estimate is based on 2001 incomes data and reflects a revision to an estimated cost of £290 million which was previously provided for this change. The revision is a consequence of further refinements being applied to the costing model from which the original estimate emerged.
The difference of £11,000 between married couples with one earner and two earners arises from the Government's policy of band widening to provide each income earner with his or her own standard rate band. In the 2001 budget I increased the standard rate band for married one earning couples to £29,000 and the combined standard rate band for married two earning couples to £40,000, with up to £29,000 transferable between the spouses.