Tax Reliefs Abolition

Ceisteanna (105)

Seán Fleming

Ceist:

105. Deputy Sean Fleming asked the Minister for Finance the reduction in tax expenditure that would be achieved by phasing out rent relief over three years rather than by 2017 as currently proposed; and if he will make a statement on the matter. [49269/12]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

Section 473 of the Taxes Consolidation Act, 1997 provides tax relief at the standard rate to individuals who pay for private rented accommodation that is used as their sole or main residence. The level of rent qualifying for rent relief depends on an individual’s marital status and age. In Budget 2011, it was announced that rent relief was being withdrawn on a phased basis. No new claimants were allowed from 7 December 2010 but existing claimants will continue to receive the relief, on a reducing basis, with a complete cessation of the relief from 2018. This is in line with the schedule proposed for the withdrawal of mortgage interest relief. The scheduled withdrawal of rent relief is set out in the following table.

Tax Year

Reduction %

2011

20%

2012

20%

2013

10%

2014

10%

2015

10%

2016

10%

2017

10%

2018

10% to 0%

To phase out the remaining 60% of the relief over the next 3 years i.e. 2013 – 2015, would result in the following yields based on the 2010 costs of the scheme. A standard level of reduction of 20% per annum on the remaining maximum levels of relief is assumed.

Tax Year

Reduction %

Total Yield

€M

Increase in yield over existing reduction

€M

2013

20%

49.7

8.3

2014

20%

66.2

16.5

2015

20% to 0

82.8

24.8

Tax Yield

Ceisteanna (106)

Seán Fleming

Ceist:

106. Deputy Sean Fleming asked the Minister for Finance the reduction in tax expenditure that would be achieved by reducing the ceiling on the tax exempt earning of artists from €40,000 to €30,000; and if he will make a statement on the matter. [49270/12]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

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.

Tax Yield

Ceisteanna (107)

Seán Fleming

Ceist:

107. Deputy Sean Fleming asked the Minister for Finance the reduction in tax expenditure that would be achieved by abolishing tax relief for medical expenses; and if he will make a statement on the matter. [49271/12]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am advised by the Revenue Commissioners that the estimated full year cost to the Exchequer of income tax relief for medical expenses is €127 million in respect of the income tax year 2010, the latest year for which the relevant information is available. On this basis, the full year yield to the Exchequer of abolishing this relief would be of the same order.

Tax Yield

Ceisteanna (108)

Seán Fleming

Ceist:

108. Deputy Sean Fleming asked the Minister for Finance the saving that would be achieved by reducing the age exemption limit from €18,000 for a single person, €36,000 for a married couple, to €17,000 for a single person and €34,00 for a married couple; and if he will make a statement on the matter. [49272/12]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am advised by the Revenue Commissioners that the full year yield to the Exchequer, estimated by reference to 2013 incomes, of reducing the age exemption limits by €1,000 and €2,000 for single and married respectively would be of the order of €24 million. This figure is an estimate from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. It is, therefore, provisional and may be revised.

Tax Yield

Ceisteanna (109)

Seán Fleming

Ceist:

109. Deputy Sean Fleming asked the Minister for Finance the saving that would be achieved by ending the exemption from PRSI and universal social charge for save as you earn schemes; and if he will make a statement on the matter. [49273/12]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I assume the Deputy is referring to the bonus or interest payable under a savings arrangement in connection with a certified contractual savings scheme. Any such bonus or interest payable qualifies for exemption from income tax and is also exempt from PRSI and USC. These schemes in general have restrictive conditions and generate very small bonuses or interest payments and as such any removal of the exemption would be expected to yield relatively small amounts of PRSI and USC.

I am informed by the Revenue Commissioners that, based on the bonuses and interest paid in 2011, the potential savings would be in the order of €75,000.

The Deputy will be aware that any gain realised by individuals on the exercise of share options under these schemes is already liable for employee PRSI and USC. In addition, any subsequent disposal of the shares may also give rise to a capital gains tax liability depending on movements in the market value of the relevant shares.

Tax Reliefs Abolition

Ceisteanna (110)

Seán Fleming

Ceist:

110. Deputy Sean Fleming asked the Minister for Finance the saving that would be achieved from abolishing building heritage relief; and if he will make a statement on the matter. [49274/12]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am advised by the Revenue Commissioners that the estimated full year cost to the Exchequer of income tax relief for expenditure on significant buildings and gardens is €3.9 million in respect of the income tax year 2010, the latest year for which all the relevant information is available. In Finance Act 2010 however, the relief available to passive investors under the scheme was abolished with transitional arrangements applying for the 2010 and 2011 tax years. Therefore with effect from the current tax year, the actual cost of the relief, and therefore the potential yield from its abolition, is expected to be somewhat lower than the €3.9 million cost in 2010 .

Tax Yield

Ceisteanna (111)

Seán Fleming

Ceist:

111. Deputy Sean Fleming asked the Minister for Finance if he will set out in tabular form the tax revenue from income tax, the income levy, health levy, universal social charge and corporation tax for each year from 2007 to 2011; and if he will make a statement on the matter. [49275/12]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am informed by the Revenue Commissioners that the net receipts of tax revenue from income tax, the income levy, health contribution, universal social charge and corporation tax for each of the years from 2007 to 2011 inclusive is as set out in the following table. I would like to make the Deputy aware that Revenue net receipts can differ marginally from Exchequer receipts for reasons of accounting and timing:

Taxhead

2007

2008

2009

2010

2011

-

€m

€m

€m

€m

€m

Income Tax

13,582.2

13,195.1

10,701.5

9,819.9

10,515.6

Income Levy

Not Applicable

Not Applicable

1,137.9

1,445.7

184.2

Health Contribution

1,298.2

1,326.7

1,755.8

2,017.7

Not Applicable

Universal Social Charge

Not Applicable

Not Applicable

Not Applicable

Not Applicable

3,114.5

Corporation Tax

6,393.4

5,071.5

3,889.5

3,943.6

3,500.4

Income Levy was introduced in 2009 and Universal Social Charge was introduced in 2011. The Health Levy ceased to exist in 2011 due to the introduction of the Universal Social Charge.

Tax Yield

Ceisteanna (112)

Seán Fleming

Ceist:

112. Deputy Sean Fleming asked the Minister for Finance the revenue that would be raised from increasing the universal social charge for PAYE earners by 1%, 2% and 3% respectively for earnings above €80,000; and if he will make a statement on the matter. [49277/12]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am advised by the Revenue Commissioners that the full year yield, estimated by reference to 2013 incomes, of a 1, 2, and 3 percentage point increase in the rate of Universal Social charge (USC) applying to the incomes of PAYE income earners exceeding €80,000 would be of the order of €34 million, €68 million and €102 million respectively. The Universal Social Charge is an individualised charge and as such, the estimated yields are based on individual incomes of more than €80,000. The estimated yields are based on confining the 1, 2 and 3 percentage point increases to the portion of income which is in excess of €80,000, that is, the increase is not applied to the portion of total income earned up to €80,000.

The figure is an estimate from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. It is, therefore, provisional and likely to be revised.

Tax Yield

Ceisteanna (113)

Seán Fleming

Ceist:

113. Deputy Sean Fleming asked the Minister for Finance the revenue that would be raised from increasing the universal social charge for PAYE earners by 1%, 2% and 3% respectively for earnings above €90,000; and if he will make a statement on the matter. [49278/12]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am advised by the Revenue Commissioners that the full year yield, estimated by reference to 2013 incomes, of a 1, 2, and 3 percentage point increase in the rate of Universal Social charge (USC) applying to the incomes of PAYE income earners exceeding €90,000 would be of the order of €28 million, €56 million and €85 million respectively. The Universal Social Charge is an individualised charge and as such, the estimated yields are based on individual incomes of more than €90,000. The estimated yields are based on confining the 1, 2 and 3 percentage point increases to the portion of income which is in excess of €90,000, that is, the increase is not applied to the portion of total income earned up to €90,000.

The figure is an estimate from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. It is, therefore, provisional and likely to be revised.

Tax Yield

Ceisteanna (114)

Seán Fleming

Ceist:

114. Deputy Sean Fleming asked the Minister for Finance the revenue that would be raised from increasing the universal social charge for PAYE earners by 1%, 2% and 3% respectively for earnings above €100,000; and if he will make a statement on the matter. [49279/12]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am advised by the Revenue Commissioners that the full year yield, estimated by reference to 2013 incomes, of a 1, 2, and 3 percentage point increase in the rate of Universal Social charge (USC) applying to the incomes of PAYE income earners exceeding €100,000 would be of the order of €24 million, €47 million and €71 million respectively. The Universal Social Charge is an individualised charge and as such, the estimated yields are based on individual incomes of more than €100,000. The estimated yields are based on confining the 1, 2 and 3 percentage point increases to the portion of income which is in excess of €100,000, that is, the increase is not applied to the portion of total income earned up to €100,000.

The figure is an estimate from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. It is, therefore, provisional and likely to be revised.

Tax Yield

Ceisteanna (115)

Seán Fleming

Ceist:

115. Deputy Sean Fleming asked the Minister for Finance the revenue that would be raised from increasing the universal social charge for PAYE and self-employed earners by 1%, 2% and 3% respectively for earnings above €100,000; and if he will make a statement on the matter. [49280/12]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am advised by the Revenue Commissioners that the full year yield, estimated by reference to 2013 incomes, of a 1, 2 and 3 percentage point increase in the rate of Universal Social charge (USC) applying to the incomes of all income earners exceeding €100,000 would be of the order of €67 million, €134 million and €201 million respectively. The Universal Social Charge is an individualised charge and as such, the estimated yields are based on individual incomes of more than €100,000. The estimated yields are based on confining the 1, 2 and 3 percentage point increases to the portion of income which is in excess of €100,000, that is, the increase is not applied to the portion of total income earned up to €100,000.

The figure is an estimate from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. It is, therefore, provisional and likely to be revised.

Tax Yield

Ceisteanna (116)

Seán Fleming

Ceist:

116. Deputy Sean Fleming asked the Minister for Finance the revenue that would be raised from increasing the universal social charge for PAYE and selfemployed earners by 1%, 2% and 3% respectively for earnings above €120,000; and if he will make a statement on the matter. [49281/12]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am advised by the Revenue Commissioners that the full year yield, estimated by reference to 2013 incomes, of a 1, 2, and 3 percentage point increase in the rate of Universal Social charge (USC) applying to the incomes of all income earners exceeding €120,000 would be of the order of €56 million, €112 million and €168 million respectively. The Universal Social Charge is an individualised charge and as such, the estimated yields are based on individual incomes of more than €120,000. The estimated yields are based on confining the 1, 2 and 3 percentage point increases to the portion of income which is in excess of €120,000, that is, the increase is not applied to the portion of total income earned up to €120,000.

The figure is an estimate from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. It is, therefore, provisional and likely to be revised.

Tax Yield

Ceisteanna (117)

Seán Fleming

Ceist:

117. Deputy Sean Fleming asked the Minister for Finance the revenue that would be raised from increasing the universal social charge for PAYE and self-employed earners by 1%, 2% and 3% respectively for earnings above €150,000; and if he will make a statement on the matter. [49282/12]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I am advised by the Revenue Commissioners that the full year yield, estimated by reference to 2013 incomes, of a 1, 2, and 3 percentage point increase in the rate of Universal Social charge (USC) applying to the incomes of all income earners exceeding €150,000 would be of the order of €45 million, €90 million and €135 million respectively. The Universal Social Charge is an individualised charge and as such, the estimated yields are based on individual incomes of more than €150,000. The estimated yields are based on confining the 1, 2 and 3 percentage point increases to the portion of income which is in excess of €150,000, that is, the increase is not applied to the portion of total income earned up to €150,000.

The figure is an estimate from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. It is, therefore, provisional and likely to be revised.

Tax Yield

Ceisteanna (118, 119)

Seán Fleming

Ceist:

118. Deputy Sean Fleming asked the Minister for Finance the revenue that would be raised from reducing the annual earnings limit along with age-related percentage limits for maximum tax relievable contributions for pension purposes from €115,000 to €100,000, €90,000, €80,000, €70,000 and €60,000 respectively; and if he will make a statement on the matter. [49283/12]

Amharc ar fhreagra

Seán Fleming

Ceist:

119. Deputy Sean Fleming asked the Minister for Finance if he will set out in tabular form the revenue that would be raised from reducing the annual earnings limit along with age-related percentage limits for maximum tax relievable contributions for pension purposes from €115,000 to €100,000, €90,000, €80,000, €70,000 and €60,000 respectively if tax relief is granted at the marginal rate; the maximum rate of tax relief is reduced to 34%; the maximum rate of tax relief is reduced to 30%; the maximum rate of tax relief is reduced to 30%; the tax relief is reduced to 20%; and if he will make a statement on the matter. [49284/12]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 118 and 119 together.

I assume that the Deputy is referring to the current annual earnings cap of €115,000 which operates to limit the level of tax-relieved personal pension contributions in any one year. The annual earnings cap acts, in conjunction with age-related percentage limits of annual earnings, to put a ceiling on the annual amount of tax relief an individual taxpayer can obtain on pension contributions. A breakdown of the cost of tax relief on employee contributions to occupational pension schemes is not available by income tax rate, as tax returns by employers to the Revenue Commissioners of employee contributions to such schemes are aggregated at employer level. An historical breakdown is available by tax rate of the tax relief claimed on contributions to personal pension plans — Retirement Annuity Contracts (RACs) and Personal Retirement Savings Accounts (PRSAs) — by the self-employed and others, to the extent that the contributions have been included in the personal tax returns of those taxpayers. There is, therefore, only a limited statistical basis for providing definitive figures.

However, by making certain assumptions about the available information, the Revenue Commissioners inform me that the estimated full year yield to the Exchequer from reducing the current annual earnings cap of €115,000 to the thresholds outlined in the question, and at the various specified marginal tax rates, in respect of individual contributions to occupational pension schemes, RACs and PRSAs would be as shown in the following table.

Exchequer Yield

Exchequer Yield

Reduced Earnings Cap

(below €115,000)

Reduction in Relief Allowable at specified

Marginal Tax Rates

Current Rate

34%

30%

20%

€100,000

€35m

€155m

€244m

€490m

€90,000

€65m

€165m

€274m

€510m

€80,000

€95m

€210m

€300m

€535m

€70,000

€130m

€240m

€329m

€555m

€60,000

€175m

€265m

€354m

€580m