Joanna Tuffy
Ceist:51. Deputy Joanna Tuffy asked the Minister for Finance for an update on the income tax yield from a flat rate of income tax (details supplied); and if he will make a statement on the matter. [35404/15]
Amharc ar fhreagraTuesday, 13 October 2015
Ceisteanna (51)
Freagraí scríofa
I am informed by the Revenue Commissioners that the yield to the Exchequer of replacing the current income tax structure (including the Universal Social Charge) with a flat rate of 23% on all incomes is estimated to be in the order of €672 million in a full year. This estimate is based on the removal of all income tax credits including the PAYE, Personal and Homecarers credits. The percentage of the total tax yield from gross incomes in excess of €100,000 would be in the order of 23%.
These figures are estimates from the Revenue tax forecasting model using latest actual data for the year 2013, adjusted as necessary for income, self-employment and employment trends in the interim. They are estimated by reference to 2016 incomes and are provisional and may be revised.
Assuming no changes other than the replacement of the income tax and universal social charge systems with a flat income tax rate of 23%, the OECD progressivity measure of the ratio of the average tax wedge at 167% and 67% of the average wage for Ireland in 2014 would fall from 1.79 to 1. In terms of Ireland's OECD ranking on this progressivity measure, Ireland would move from 2nd in the OECD in 2014 to the bottom of the rankings, jointly with Hungary.