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Tax Code.

Dáil Éireann Debate, Wednesday - 27 October 2004

Wednesday, 27 October 2004

Ceisteanna (107, 108, 109, 110, 111, 112)

Richard Bruton

Ceist:

211 Mr. R. Bruton asked the Minister for Finance his estimate of the increase in revenue from benefit in kind since he extended the scope of the tax and altered the treatment of company cars; and his views on whether the new rules are operating in an equitable manner. [26036/04]

Amharc ar fhreagra

Freagraí scríofa

Legislative provision was made in the Finance Acts and the Social Welfare Acts of 2003 and 2004 to put in place arrangements which require all taxable benefits in kind be put through the PAYE system and treated in the same way as normal wages and salaries for the purposes of income tax, PRSI and health levy charges. These new arrangements came into effect from 1 January 2004. Up until then, such benefits were liable for income tax but not PRSI or health levy charges.

The full year yield from the new arrangements was estimated at €40.5 million, comprising €30 million employer PRSI, €5.5 million employee PRSI and €5 million health levy. It was estimated that there would be a once-off cash flow gain of €8 million in income tax in relation to 2004 arising from moving the taxation of benefits in kind to a current year basis.

The actual Exchequer yield under the new arrangements will not be available until after the P35 end of year returns are received from employers and processed. These are due for filing in February 2005.

In relation to the taxation of the benefit to an employee of the availability of the private use of a company-provided car, Finance Act 2003 provided for a revised and simplified structure for determining the taxable value which, depending on the extent of business mileage, contains only four rates, where previously there were 17. It is estimated that this will cost the Exchequer €4 million annually. This simplification was aimed at making it easier for employers to operate the PAYE system in respect of company cars. Apart from the obvious benefits arising to employers from this simplification, it is estimated that, in the context of the impact of the change on employees, there will be more winners than losers in terms of income tax. Some employees will pay additional PRSI under the new arrangements if their cash remuneration is below the PRSI threshold of €42,160. Employees with company cars will also have an additional 2% health levy charge on the taxable value of the benefit. Overall, I am satisfied that the new treatment of benefits in kind is equitable in that it aims to treat all remuneration, in whatever form, in the same way for income tax, PRSI and health levy purposes.

Jack Wall

Ceist:

212 Mr. Wall asked the Minister for Finance when the tax situation of a person (details supplied) in County Kildare will be resolved. [26048/04]

Amharc ar fhreagra

I am advised by the Revenue Commissioners that the taxpayer's employer made the appropriate refund of emergency tax to her in her salary last week.

Paul McGrath

Ceist:

213 Mr. P. McGrath asked the Minister for Finance the annual percentage of PAYE taxpayers who paid income tax at the higher rate in each of the past ten years; the number of taxpayers in this category; and the estimated figure for the 2004 tax year. [26169/04]

Amharc ar fhreagra

Paul McGrath

Ceist:

214 Mr. P. McGrath asked the Minister for Finance the annual percentage of PAYE workers who were tax exempt in each of the past ten years; and the number of taxpayers in this category. [26170/04]

Amharc ar fhreagra

Paul McGrath

Ceist:

215 Mr. P. McGrath asked the Minister for Finance the annual percentage of PAYE taxpayers who paid income tax at the lower rate in each of the past ten years; and the number of taxpayers in this category. [26171/04]

Amharc ar fhreagra

I propose to take Questions Nos. 213, 214 and 215 together.

It is assumed that what the Deputy requires are the numbers in each category and the percentage they represent of all PAYE income earners on the tax record.

I am advised by the Revenue Commissioners that the information requested by the Deputy is as follows:

Percentage of PAYE earners in different tax bands 1994/95 to 2004

Tax Year

Exempt

Standard rate#

Higher rate

%

Numbers

%

Numbers

%

Numbers

1994/1995

24.61

274,200

46.16

514,300

29.23

325,700

1995/1996

23.20

267,500

47.38

546,300

29.42

339,200

1996/1997

23.96

289,200

47.10

568,600

28.94

349,400

1997/1998

24.64

319,700

46.09

598,000

29.27

380,000

1998/1999

24.57

340,700

44.35

615,100

31.09

431,200

1999/2000

27.36

399,000

38.71

564,600

33.93

494,900

2000/2001

28.02

436,000

40.50

630,200

31.48

489,800

2001†

29.35

464,200

40.24

636,500

30.41

481,200

2002*

32.85

530,200

40.17

648,200

26.98

435,400

2003*

32.83

541,600

37.13

612,500

30.05

495,700

2004*

33.77

563,800

33.29

555,900

32.94

549,900

# Includes taxpayers benefiting from marginal relief

† Short tax "year" from 6 April 2001 to 31 December 2001.

* Provisional and likely to be revised.

As will be seen from the preceding table, the percentage of those in the exempt category in the PAYE sector who are outside the tax net has increased significantly, for example, by over 45% since 1995-96 — from 23.2% of all PAYE income earners to 33.8% now. In numerical terms, the change has been even more notable. The figures are 267,500 in 1995-96 to 563,800 now, a provisional figure — an increase of over 110%.

For the years prior to 2002, the exempt figures shown in the above table are actual historical figures. For the years 2002 to date, they are estimates from the Revenue tax forecasting model of the numbers likely to be tax exempt using actual data for the year 2001 adjusted as necessary for income growth for the year in question.

Since 1995-96 also, the number of PAYE earners on the tax record increased significantly by over 516,000 from 1,153,000 to 1,670,000 now, provisional figure, an increase of almost 45%. This increase reflects the significant growth in employment over the period. In the same period, the higher rate of tax was reduced from 48% to 42% and the standard rate from 27% to 20%, thus reducing the tax burden greatly on all those in the tax net. The percentages in the table are expressed in terms of the numbers of all PAYE income earners on the income tax record. It should be noted that a married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit.

Paul Kehoe

Ceist:

216 Mr. Kehoe asked the Minister for Finance the reason a person (details supplied) in County Wexford is still on emergency tax; and when they can expect to return to the normal rates; and if he will make a statement on the matter. [26180/04]

Amharc ar fhreagra

I am informed by the Revenue Commissioners that incorrect employer details were provided with the original claim in this case and consequently a tax credit certificate issued to the wrong employer, albeit an employer within the same entity. The correct details have now been established and a tax credit certificate, to grant the taxpayer the appropriate credits and standard rate cut-off, issued to the taxpayer's employer on 22 October 2004. The employer will refund any tax deducted on the emergency basis.

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