I am advised by the Revenue Commissioners that the total identifiable costs to the Exchequer of all income tax credits and reliefs available to individuals are set out in the following table for the income tax years 2002, 2003, 2004 and 2005, the most recent year for which the necessary detailed information is available except where otherwise stated. Relevant notes relating to items in the table are also set out below.
Projections for income tax receipts are based on assumed movements in macro-economic parameters and not by reference to the costs of individual tax reliefs. Accordingly, I am not in a position to provide the data requested by the Deputy for the years 2006 to 2009 in relation to the above mentioned reliefs.
The numbers availing represent income earners who were in a position to absorb at least some of the tax relief and thereby give rise to an Exchequer cost. They do not include the numbers of potential claimants whose entitlements to other tax reliefs were sufficient to reduce their liability to tax to nil without reference to the specific relief. The numbers availing are rounded to the nearest hundred as appropriate.
A married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit.
Cost of Income Tax Credits, Allowances and Reliefs for 2002, 2003 2004 and 2005
|
2002
|
2003
|
2004
|
2005
|
|
Tax Relief Provision
|
Estimated cost1
|
Estimated cost1
|
Estimated cost1
|
Estimated cost1
|
|
INCOME TAX
|
€m
|
Numbers
|
€m
|
Numbers
|
€m
|
Numbers
|
€m
|
Numbers
|
|
Exemption limits:
|
|
|
|
|
|
|
|
|
|
General Exemption (2)
|
0.0
|
0
|
0.0
|
0
|
0.0
|
0
|
0.0
|
0
|
|
Child Addition (2)
|
1.0
|
2,900
|
1.3
|
2,800
|
0.3
|
900
|
0.3
|
1,000
|
|
Age Exemption (2)
|
21.9
|
31,700
|
49.2
|
48,500
|
58.6
|
53,500
|
61.5
|
49,600
|
|
Married Person’s Credit (3)
|
1805.1
|
629,400
|
1,820.6
|
631,000
|
2,015.5
|
698,200
|
2,268.9
|
756,500
|
|
Single Person’s Credit (3)
|
1552.8
|
1,169,600
|
1,612.4
|
1,209,800
|
1,655.1
|
1,228,300
|
1,854.3
|
1,330,100
|
|
Widowed Person’s Credit (3)
|
122.3
|
72,950
|
125.3
|
73,800
|
125.7
|
73,400
|
132.2
|
71,500
|
|
Additional Credit to Widowed Person in Year of Bereavement
|
6.1
|
4,000
|
4.9
|
4,000
|
4.9
|
4,000
|
4.7
|
4000
|
|
Additional Bereavement Credit to Widowed Parent
|
5.6
|
3,500
|
5.2
|
3,300
|
4.0
|
2,500
|
4.3
|
2,400
|
|
Additional Personal Credit for Lone Parent
|
137.8
|
102,700
|
149.3
|
109,200
|
150.8
|
101,700
|
194.1
|
124,900
|
|
Homecarer Credit
|
73.7
|
100,800
|
72.6
|
99,200
|
75.1
|
103,600
|
63.9
|
87,900
|
|
Additional Credit for Incapacitated Child
|
4.4
|
8,800
|
4.6
|
9,000
|
5.0
|
9,800
|
10.3
|
10,400
|
|
Employee (PAYE) Credit
|
917.2
|
1,257,800
|
1,141.5
|
1,311,900
|
1,512.7
|
1,372,400
|
2,030.8
|
1,493,300
|
|
Dependent Relative Credit
|
1.1
|
16,600
|
1.1
|
16,000
|
1.05
|
15,650
|
1.02
|
15,200
|
|
Person Taking Care of Incapacitated Taxpayer
|
0.6
|
600
|
0.9
|
1,000
|
1.3
|
870
|
1.8
|
660
|
|
Age Credit
|
19.3
|
68,100
|
18.3
|
64,500
|
19.4
|
65,100
|
20.6
|
68,800
|
|
Blind Person’s Credit
|
0.7
|
850
|
0.7
|
850
|
0.7
|
830
|
0.8
|
890
|
|
Medical Insurance Premiums (4)
|
161.7
|
859,000
|
190.6
|
909,700
|
218.2
|
941,300
|
229.6
|
1,073,400
|
|
Health Expenses
|
63.2
|
143,850
|
81.9
|
172,700
|
109.6
|
218,100
|
134.0
|
260,700
|
|
Contributions Under Permanent Health Benefit Schemes, after Deduction of Tax on Benefits Received (5)
|
1.7
|
20,000
|
2.0
|
20,300
|
2.5
|
21,300
|
3.2
|
21,600
|
Cost of Income Tax Credits, Allowances and Reliefs for 2002, 2003 2004 and 2005 —continued
|
2002
|
2003
|
2004
|
2005
|
|
Tax Relief Provision
|
Estimated cost1
|
Estimated cost1
|
Estimated cost1
|
Estimated cost1
|
|
INCOME TAX
|
€m
|
Numbers
|
€m
|
Numbers
|
€m
|
Numbers
|
€m
|
Numbers
|
|
Employees’ Contributions To Approved Superannuation Schemes (6)
|
|
|
|
|
|
|
430.0
|
569,200
|
|
Employers’ Contributions To Approved Superannuation Schemes (6)
|
|
|
|
|
|
|
90.0
|
296,700
|
|
Exemption of Investment Income and Gains of Approved Superannuation Funds (7)* (12)
|
|
|
|
|
|
|
1,050.0
|
N/A
|
|
Exemption of employers’ contributions from employee BIK (6)
|
|
|
|
|
|
|
370.0
|
296,700
|
|
Tax Relief on “tax free” lump sums (6)
|
|
|
|
|
|
|
120.0
|
N/A
|
|
Retirement Annuity Premiums
|
250.9
|
110,600
|
264.0
|
109,500
|
318.9
|
115,000
|
357.7
|
121,200
|
|
Personal Retirement Savings Accounts (8)
|
N/A
|
N/A
|
6.0
|
2,440
|
13.7
|
6,300
|
42.2
|
32,900
|
|
Interest paid:
|
|
|
|
|
|
|
|
|
|
Loans relating to Principal Private Residence
|
192.8
|
430,000
|
220.7
|
443,800
|
231.5
|
477,400
|
279.0
|
587,800
|
|
Other (9)
|
15.6
|
5,260
|
19.5
|
5,100
|
19.6
|
5,500
|
22.2
|
4,800
|
|
Rent Paid in Private Tenancies
|
26.4
|
97,400
|
28.1
|
102,400
|
33.0
|
118,500
|
48.07
|
144,500
|
|
Expenses Allowable to Employees under Schedule E
|
153.8
|
866,420
|
111.5
|
866,600
|
122.1
|
867,300
|
65.0
|
908,800
|
|
Third Level Education Fees
|
6.9
|
17,500
|
8.6
|
21,900
|
11.1
|
26,600
|
14.3
|
29,900
|
|
Exemption of Certain Earnings of Writers, Composers and Artists
|
23.9
|
1,600
|
22.5
|
1,700
|
32.1
|
1,970
|
34.8
|
2,220
|
|
Dispositions (Including Maintenance Payments made to Separated Spouses)
|
12.8
|
5,900
|
15.0
|
6,000
|
17.1
|
6,000
|
18.9
|
6,100
|
|
Exemption of Interest on Savings Certificates, National Instalment Savings & Index Linked Savings Bonds
|
108.8
|
N/A
|
140.1
|
N/A
|
150.1
|
N/A
|
129.5
|
N/A
|
|
Rent a Room
|
1.8
|
1,440
|
2.6
|
2,000
|
2.7
|
2,330
|
3.3
|
2,820
|
|
Exemption of Income of Charities, Colleges, Hospitals, Schools, Friendly Societies, etc. (10)
|
23.4
|
N/A
|
19.9
|
N/A
|
19.3
|
N/A
|
19.8
|
N/A
|
|
Donations to Approved Bodies
|
16.3
|
25,600
|
28.6
|
38,450
|
25.9
|
42,900
|
34.0
|
63,800
|
|
Donations to Sports Bodies (11)
|
0.1
|
140
|
0.3
|
300
|
0.2
|
380
|
0.2
|
430
|
Cost of Income Tax Credits, Allowances and Reliefs for 2002, 2003 2004 and 2005 —continued
|
2002
|
2003
|
2004
|
2005
|
|
Tax Relief Provision
|
Estimated cost1
|
Estimated cost1
|
Estimated cost1
|
Estimated cost1
|
|
INCOME TAX
|
€m
|
Numbers
|
€m
|
Numbers
|
€m
|
Numbers
|
€m
|
Numbers
|
|
Retirement Relief for certain Sports Persons (11)
|
N/A
|
N/A
|
0.1
|
17
|
0.2
|
41
|
0.25
|
42
|
|
Exemption of Irish Government Securities where owner not ordinarily resident in Ireland (12) *
|
130.1
|
N/A
|
142.8
|
N/A
|
199.7
|
N/A
|
169.3
|
N/A
|
|
Exemption of Statutory Redundancy Payments
|
25.1
|
25,100
|
42.5
|
25,800
|
76.9
|
25,300
|
72.8
|
22,000
|
|
Service Charges
|
5.2
|
124,900
|
8.2
|
169,300
|
12.7
|
229,600
|
17.2
|
304,700
|
|
Top Slicing Relief — Reduced Tax Rate for Payments in Excess of Exemption Amounts Made as Compensation for Loss of Office
|
5.7
|
1,300
|
0.1
|
1,500
|
12.2
|
1,420
|
11.1
|
1,480
|
|
Revenue Job Assist allowance
|
0.9
|
1,700
|
0.6
|
900
|
0.4
|
550
|
0.4
|
550
|
|
Allowance for seafarers
|
0.2
|
120
|
0.3
|
150
|
0.4
|
230
|
0.4
|
200
|
|
Trade Union Subscriptions
|
11.0
|
229,600
|
6.5
|
232,100
|
10.7
|
248,300
|
11.8
|
272,100
|
|
Exemption From Tax of Certain Social Welfare Payments:
|
|
|
|
|
|
|
|
|
|
Child benefit *
|
266.4
|
336,300
|
327.3
|
337,100
|
404.9
|
344,200
|
366.6
|
373,500
|
|
Maternity allowance *
|
8.4
|
9,600
|
9.4
|
10,600
|
9.7
|
10,400
|
9.6
|
10,800
|
|
Exemption of Pensions, Benefits or Gratuities Payable to Veterans of the War of Independence, their Widows or Dependents
|
0.09
|
1,400
|
0.08
|
1,200
|
0.08
|
1,000
|
0.08
|
900
|
|
Approved Profit Sharing Schemes *
|
42.0
|
55,100
|
29.9
|
49,900
|
43.5
|
47,400
|
55.7
|
53,000
|
|
Savings-Related Share Option Schemes*
|
0.09
|
N/A
|
7.3
|
N/A
|
1.7
|
N/A
|
6.2
|
N/A
|
|
Approved Share Option Schemes*
|
N/A
|
N/A
|
Neg.
|
31
|
0.03
|
91
|
0.4
|
464
|
|
Employee Share Ownership Trusts* (Income Tax only)
|
1.5
|
17,800
|
0.9
|
7,900
|
0.1
|
234
|
1.2
|
6,500
|
|
Investment in Corporate Trades (BES)
|
20.2
|
2,300
|
16.7
|
2,100
|
21.1
|
2,600
|
16.1
|
1,650
|
|
Investment in Seed Capital
|
1.4
|
72
|
2.3
|
89
|
2.7
|
106
|
1.3
|
42
|
|
Stock Relief *
|
1.9
|
N/A
|
1.9
|
N/A
|
1.9
|
N/A
|
2.0
|
N/A
|
|
Relief for expenditure on significant buildings and gardens
|
3.7
|
54
|
2.1
|
70
|
2.5
|
66
|
3.3
|
84
|
Cost of Income Tax Credits, Allowances and Reliefs for 2002, 2003 2004 and 2005 —continued
|
2002
|
2003
|
2004
|
2005
|
|
Tax Relief Provision
|
Estimated cost1
|
Estimated cost1
|
Estimated cost1
|
Estimated cost1
|
|
INCOME TAX
|
€m
|
Numbers
|
€m
|
Numbers
|
€m
|
Numbers
|
€m
|
Numbers
|
|
Donation of Heritage items
|
4.2
|
5
|
5.8
|
8
|
5.2
|
3
|
5.8
|
7
|
|
Special Savings Incentive Scheme
|
433.0
|
1,143,400
|
531.9
|
1,113,900
|
548.0
|
1,094,300
|
597.4
|
1,083,600
|
|
Total Capital Allowances: (Income Tax only) (14)
|
546.9
|
N/A
|
560.4
|
245,549
|
663.6
|
260,781
|
734.4
|
249,379
|
|
Rented Residential Relief — Section 23 *(15)
|
N/A
|
N/A
|
69.4
|
1,952
|
182.2
|
3,578
|
239.7
|
4,126
|
|
Double Taxation Relief (Income Tax only)
|
49.7
|
8,680
|
56.2
|
10,010
|
29.1
|
10,800
|
30.7
|
12,740
|
|
Investment in Films*
|
21.6
|
2,240
|
24.6
|
2,400
|
19.5
|
1,900
|
15.7
|
1,500
|
NOTES ON TABLE
(1) Figures accompanied by an asterisk * are particularly tentative and subject to a considerable margin of error.
(2) The cost figures for the exemption limits are based on the excess of the exemption limits over the basic personal tax credits. They include the cost of marginal relief for taxpayers whose incomes are not greatly in excess of the exemption limits.
(3) The figures shown for the basic personal tax credits (married, single and widowed) are the costs of these tax credits as if all other tax credits and the exemption limits did not apply. They do not include individuals who are not on Revenue records because their incomes are below the income tax thresholds.
(4) Arising from the change over to Tax Relief at Source the figures relate to the number of policies issued. These include policies where subscriptions were paid by businesses on behalf of their employees.
(5) Part of the cost of contributions to Permanent Health Benefit Schemes is not identifiable as a result of the move to a "net pay" basis for contributions by PAYE taxpayers from 6 April 2001.
(6) See the following table "Green Paper on Pensions" for background commentary and cost figures for 2006.
(7) Arising from the work on the "Green Paper on Pensions" (2007) the basis for costing this item has been changed and is not directly comparable with the figures for earlier years. See also the following table "Green Paper on Pensions" for more recent figures.
(8) The figures shown for Personal Retirement Savings Accounts for 2004 are derived from personal tax returns and are understated because they do not include contributions made by employers or by employees through their employers. See 2005 and the following table "Green Paper on Pensions" for more complete figures.
(9) "Other" relates to borrowings for purposes such as acquiring an interest in a company or partnership or to pay death duties.
(10) The cost of exempting the income of charities, colleges, hospitals, schools, friendly societies, etc. from income tax includes the sums repaid in respect of tax credits and income tax deducted at source (certain dividends, other investment income and payments received under covenant), donations made by the PAYE sector to approved bodies but does not include income tax relief in respect of donations made by the self-employed. It also includes the cost of exempting certain bodies from the deduction on income arising from government securities. Information is not available about other income received gross.
(11) The cost figures for relief for donations to Approved Sports Bodies and for certain Sports Persons are based on self assessment returns.
(12) In the absence of other information, tax has been assumed at the standard rate of income tax even though a different rate might be appropriate in many cases.
(13) The cost shown for capital allowances does not include any cost associated with "unused capital allowances", that is, capital allowances which are not absorbed by a company in the accounting period in which they arise because they exceed the amount of the company's profits of that accounting period which are available for offset. Unused capital allowances can be offset as losses against taxable profits arising in the previous accounting period and against certain profits arising in future accounting periods and can be offset against the profits of another company in the same group of companies. It is estimated that €3500 million of unused capital allowances were claimed in respect of 2005 accounting periods but as the proportion of this item which is included in previous years losses and in group relief is not separately identifiable a reliable estimate of the cost of the capital allowance element cannot be provided.
(14) The tax cost shown for section 23 type relief is the estimated ultimate tax cost relating to the total allowable expenditure in respect of claims made in 2004 and 2005 tax returns for the first time. The cost shown is for income tax cases only.
Green Paper on Pensions — updated estimates of cost for 2006
As part of the work on the Green Paper on Pensions, a review was carried out of the current regime of incentives for supplementary pension provision with a view to developing more comprehensive and reliable estimates of the cost of reliefs in this area. The review examined, among other things, the current reliefs and incentives for investment in supplementary pensions and the data available on which to base reliable estimates of the costs in revenue foregone to the Exchequer.
The review drew on newly available 2006 aggregate data on contributions to pension schemes by employers and employees arising from a P35 initiative introduced on foot of provisions that were included in Finance Act 2004 with a view to improving data quality. Arising from the review, estimates of the cost of tax for private pension provision for 2006 have been made. As similar data sources would not be available for previous years, it is not possible to provide costings on a similar basis for those years except in the case of 2005 for which tentative estimates have been compiled.
Estimate of the cost of tax and PRSI reliefs for private pension provision 2006
|
Estimated costs
|
Numbers*
|
|
€million
|
|
|
Employees’ Contributions to approved Superannuation Schemes
|
540
|
680,000
|
|
Employers’ Contributions to approved Superannuation Schemes
|
120
|
362,000**
|
|
Estimated cost of exemption of employers’ contributions from employee BIK
|
510
|
362,000
|
|
Exemption of investment income and gains of approved Superannuation Funds
|
1,200
|
Not available
|
|
Retirement Annuity Contracts (RACs)
|
380
|
Not available for 2006
|
|
Personal Retirement Savings Accounts (PRSAs)
|
120
|
71,500
|
|
Estimated cost of tax relief on “tax-free” lump sum payments
|
130
|
|
|
Estimated cost of PRSI and Health Levy relief on employee and employer contributions
|
220
|
Not available
|
|
Gross cost of tax relief
|
3,220
|
|
|
Estimated tax yield from payment of pension benefits
|
320
|
|
|
Net cost of tax relief
|
2,900
|
|
*Numbers as included in P35 returns from employers to Revenue for 2006. Figures are as verified to date but may be understated and subject to revision.
**This is numbers of employees for whom employers are contributing to occupational pension funds as included in P35 returns to Revenue for 2006. Figures are as verified to date but may be understated and subject to revision.
The breakdown and make-up of these estimated costs of reliefs differ from presentations of costs in this area for previous years in a number of respects and are not directly comparable. For further details on the cost of tax and other reliefs and the changes in the methodology, refer to pages 106 and 107 of the Green Paper on Pensions which is available at www.pensionsgreenpaper.ie.
