Thursday, 4 Oct 2012

Written Answers Nos. 61-66

Proposed Legislation

Ceisteanna (61)

Pearse Doherty

Ceist:

61. Deputy Pearse Doherty asked the Minister for Finance the date on which the Finance (Property tax) Bill 2012 will be published. [42258/12]

Freagraí scríofa

Minister for Finance (Deputy Michael Noonan)

It is intended to publish the Finance (Local Property Tax) Bill on Budget Day.

Tax Yield

Ceisteanna (62)

Catherine Murphy

Ceist:

62. Deputy Catherine Murphy asked the Minister for Finance if he will provide figures for the total corporation tax receipts broken down by sector and industry for the years 1990 to date in 2012; if he will provide details of the various rates of corporation tax for the same period; if figures are available for the effective corporation tax take by sector and industry for the past eight years including to date in 2012; if he will outline the projected corporate tax profile by sector and industry by 2015; and if he will make a statement on the matter. [42243/12]

Freagraí scríofa

Minister for Finance

I am informed by the Revenue Commissioners that the relevant information on total corporation tax receipts broken down by sector for the years 2007, 2008, 2009 and 2010 are available from the Revenue Statistical Reports which are accessible on the Revenue website at www.Revenue.ie. The information is located in Table TR6, under the main chapter heading of Total Revenue. That table provides a percentage breakdown of the net receipt of PAYE, VAT, Income Tax, Corporation Tax and Capital Gains Tax by trade sector. The corresponding figures for 2011 will be included as soon as possible in the Statistical Report for 2011. Corresponding figures for earlier years and projections for later years are not available on a similar basis.

The information requested by the Deputy of the various rates of corporation tax for the period 1990 to 2012 is shown in the following table:

Year	Standard Rate of Corporation Tax applicable to profits earned in the year
1990	43%
1991	43% & 40%
1992	40%
1993	40%
1994	40%
1995	38% & 40%
1996	38%
1997	38% & 36%
1998	32%
1999	28%
2000	24%
2001	20%
2002	16%
2003	12.5%
2004	12.5%
2005	12.5%
2006	12.5%
2007	12.5%
2008	12.5%
2009	12.5%
2010	12.5%
2011	12.5%
2012	12.5%

Note: Where two tax rates are shown for a year it denotes a rate change applying during the year.

I assume that when the Deputy refers to effective corporation tax she is referring to the effective corporation tax rate. In that regard I wish to advise the Deputy that companies operating in Ireland over the past eight years have been chargeable to corporation tax at the 12.5% rate on their trading profits. A higher 25% rate applies in respect of investment, rental and other non-trading profits and profits from certain petroleum, mining or land dealing activities. Companies’ capital gains are effectively chargeable at the capital gains tax rate and the rate was increased:

- from 20% to 22% for disposals on or after 15 October 2008;

- to 25% for disposals on or after 8 April 2009 and

- to 30% for disposals on or after 7 December 2011.

The 10% corporation tax rate for profits from manufacturing expired at the end of 2010 and the 12.5% rate now applies to such profits.

There are different ways of measuring the effective rate of corporation tax depending on the variables that are used. As there is no single internationally agreed comparative measure in place, I am not in a position to provide such a measure for the period referred to by the Deputy. However, I mentioned previously that an effective rate of corporation tax of 11.9% was estimated for Ireland in a Paying Taxes study produced by the World Bank and PricewaterhouseCoopers in 2011 as part of an annual Doing Business report. The study includes a measurement of effective tax rates across 183 countries based on the tax obligations of a standardised company operating in each country and using standard assumptions regarding exemptions, deductions and allowances. Projected corporation tax profiles are not produced at the disaggregated level requested by the Deputy.

Tax Code

Ceisteanna (63)

Brendan Griffin

Ceist:

63. Deputy Brendan Griffin asked the Minister for Finance following the recent public consultation process, if he will reform tax residence rules with a view to boosting State revenue; his views on whether the current regime is too lenient in favour of tax exiles; and if he will make a statement on the matter. [42244/12]

Freagraí scríofa

Minister for Finance

The Programme for Government indicated that, as part of its fiscal policy, the Government will ensure that “tax exiles” make a fair contribution to the Exchequer. In Budget 2012 I abolished the “citizenship condition” for payment of the Domicile Levy to ensure that individuals could not avoid the levy by renouncing their citizenship. I also stated that I intend to keep the contentious issue of the tax treatment of “tax exiles” (which is linked to the tax residence rules) under constant review.

The Programme for Government update in March 2012 confirmed the commitment to undertake a consultation process on residence issues in 2012 to inform preparation for possible further changes in 2013. I launched the process in May this year, wherein I invited interested parties to make submissions on possible revisions to the current residence rules for the taxation of individuals.

This consultation process has now concluded. A total of eight submissions have been received and these will be published in due course, as indicated when the consultation was announced. My officials are considering the submissions and will be advising me on possible further changes as part of the preparations for Budget 2013.

As to whether our current regime is too lenient, while the application of the rules in particular circumstances is being considered, the taxation of individuals in the State is broadly in line with the system prevailing in most other OECD jurisdictions, that is to say —

(a) individuals who are resident in the State for tax purposes are taxable here on their worldwide income; and

(b) individuals who are not resident for tax purposes pay tax here only on income arising in the State and on income derived from working here.

European Stability Mechanism

Ceisteanna (64, 65)

Thomas Pringle

Ceist:

64. Deputy Thomas Pringle asked the Minister for Finance if he is concerned by the recent statement by the German, Dutch and Finnish foreign Ministers suggesting that the European Stability Mechanism should not be used to provide debt relief for past banking losses taken on by states such as Ireland; the implications that this has for Ireland's campaign for debt relief; and if he will make a statement on the matter. [42285/12]

Bernard Durkan

Ceist:

65. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he expects to garner support amongst fellow EU Eurozone Ministers for a meaningful review of this country's debt repayments arising from the bailout or other conditions with particular reference to the need to ensure that each member state is treated similarly in terms of interest and repayment conditions or requirements and keeping in mind individual members states' compliance with good practice and procedures to date and the agreement reached at the heads of Government meeting in June 2012; if he will further endeavour along with his EU colleagues to attempt to ensure solidarity and unity of purpose by all member states particularly those within the Eurozone in dealing with economic and fiscal instability; and if he will make a statement on the matter. [42281/12]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 64 and 65 together.

The statement by the three Finance Ministers from Germany, Netherlands and Finland on 25 September addresses issues already decided upon by Eurozone leaders when they met in Brussels on 29 June. The Heads of State or Government made two important decisions at that time. The first was to “affirm that it is imperative to break the vicious circle between banks and sovereigns.” The second was that “The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme. Similar cases will be treated equally.” The commitment to equal treatment is very important.

Apart from the various technical meetings with Troika members, Ireland continues to be fully engaged in the process by the Eurogroup and Heads of State or Government on how these commitments will be implemented. Apart from the various technical meetings with Troika members, we are pursuing a diplomatic offensive which has included officials from my Department travelling recently to several capitals; my own visits to Paris, Berlin, Rome and onto the Informal Ecofin in Cyprus; and the Taoiseach’s meeting with several colleagues at the level of Heads of Government. All our interlocutors agreed that the imperative is to move ahead urgently to implement all of the important decisions taken on 29 June.

In advancing our ideas, we are conscious that other member states will also put forward their proposals. In the nature of EU business, there may be differences of interpretation but these must be within the context of the over-arching principles agreed on 29 June. Ireland’s position is clear in this regard and work is continuing in line with the 29 June Summit agreement to break the link between banks and sovereign and the principle that similar cases will be treated equally. We have followed up on that basis as a matter of urgency following the latest developments.

We want to continue to work in a constructive spirit to enhance the sustainability of our debt. We have made strong solid progress in implementing the terms of our EU/IMF programme and have lived up to all of our commitments. The financial markets have recognized this and this is reflected in the reduction of our bond spreads in recent months. Let me be clear, the Heads of State or Government have made a decision on these issues and we continue to work within that framework to deliver the best possible outcome for the Irish taxpayer.

Budget 2012

Ceisteanna (66)

Dessie Ellis

Ceist:

66. Deputy Dessie Ellis asked the Minister for Finance the plans, if any, he has to conduct and publish analysis of the net effect on gross domestic product and gross national product of the measures taken in Budget 2012; the plans the Government has to conduct and publish any analysis of the output effects; and if he will make a statement on the matter. [42278/12]

Freagraí scríofa

Minister for Finance

The Government framed Budget 2012 in such a way as to make it as growth-friendly as possible. As I stated on Budget day last December, Budget 2012 balances the need to restore confidence in Ireland's fiscal position with the key objective of supporting economic growth that delivers jobs. Budget 2012 implemented the necessary corrections to keep Ireland on track with our fiscal targets to bring down the deficit and stabilise public debt. While the short-run impact of fiscal consolidation may see a reduction in economic output, over the medium term there can be positive effects such as increased confidence and a reduction in the risk premium as the deficit is reduced and debt is put on a declining path. In addition, it must be recalled that Ireland is a small, open economy with imports comprising a large share of final demand. This means that a substantial part of fiscal consolidation leaks out of the economy in the shape of lower imports.

Despite large consolidation efforts in recent years GDP growth of 1.4% was recorded in 2011 and almost all commentators are agreed that GDP will increase again in 2012. This performance is bringing benefits in the form of a fall in bond yields in recent months and successful re-engagement with the markets by the NTMA.

My Department will publish its next set of economic and fiscal forecasts later this month.