It is assumed that the imposition of a cap of €30,000 would have the effect of withdrawing the tax exemption from all qualifying income in excess of €30,000. The full year yield to the Exchequer, estimated by reference to the tax year 2010, the latest year for which the necessary detailed information is available, is approximately €1.3 million. However, this figure does not take account of the application of the high income individuals’ restriction to specified reliefs, including the artists' exemption and thus the actual yield could be lower. The restriction was originally provided for in Finance Act 2006 and was significantly tightened in Finance Act 2010. Individuals are now subject to the restriction where they have adjusted income of €125,000 and claim specified tax reliefs of €80,000 or more. Those subject to the full restriction now pay an effective income tax rate of 30% in addition to PRSI and Universal Social Charge.
In addition, it must be stressed that this estimate assumes no significant behavioural change on the part of the affected taxpayers. Moreover, the application of income tax to this income source could also lead to additional claims being made for expenses and allowances by persons currently exempt.