Dáil Éireann Debate, Wednesday - 7 November 2018
51. Deputy Thomas P. Broughan asked the Minister for Finance if consideration will be given to the establishment of a high pay and wealth commission to assemble data to review the levels of high pay, bonuses, dividend and other incomes in the property, financial, information technology, pharma and other industries and the accumulation of wealth resulting from these payments; and if he will make a statement on the matter. [46048/18]
Amharc ar fhreagraAs the Deputy may be aware, there is already considerable work undertaken in the area of high wealth individuals and high income earners.
In terms of policy measures to support equity in the tax system, Finance Act 2011 outlined a ‘super tax’ on banking bonuses in the aftermath of the financial crises. A tax rate of 89 per cent is applied to any variable remuneration in the banking sector which is not regular salary, including remuneration awarded in shares. While this restriction on banking bonuses remains in place, I have committed my Department to tender for an external evaluation to determine whether the remuneration policy remains fit for purpose.
In addition, a high income individual’s restriction (HYIR) has been in place since Budget 2007, limiting the use of certain tax reliefs and exemptions by high income earnings individuals. Its aim is to balance the promotion of tax equity in relation to those on high incomes with the incentive effect of specified tax reliefs. The restriction works by limiting the total amount of specified reliefs that a high income individual can use to reduce their tax liability in any one tax year. A recent report on its operation in 2016, published by the Revenue Commissioners signals that the measure continues to work as intended. The declining levels of tax revenue associated with the restriction signify that the amount of income being sheltered from tax (and as a result falling within the HYIR) continues to fall. Those on incomes over €400,000 (149 individuals) face an effective tax rate of 30 per cent, with average tax rates rising to 40.9 per cent once the USC is included. Some 372 individuals on incomes between €125,000 and €400,000 paid an average tax rate of 28.6 per cent once USC was included.
From a wealth monitoring perspective, the Revenue Commissioners have a dedicated High Wealth Individuals (HWI) unit within their Large Cases Division, which has been in operation since 2003. This is supported by an Anti-Avoidance function allowing for the specialised focus highlighted by the 2009 OECD report Engaging with High Wealth Individuals on tax compliance . As of June 2018, this unit which is responsible for profiling, risk assessment and tax compliance, was actively monitoring 480 high wealth individuals with wealth in excess of €50 million. A sectorial decomposition of these individuals reveals a third are predominantly active in the real estate sector, with just 4 per cent active in the financial and insurance sector. The operations of this unit were reviewed in 2007 and again in 2015 with no change recommended.
Furthermore, the Controller & Auditor General’s Report on the Accounts of the Public Services 2017 outlines the State’s management of high wealth individuals tax liabilities and notes the relatively high effective tax rate on income earned by HWIs who face a rate of 39 percent, compared to an average rate of 16.3 per cent for all tax payers.
As regards transparency of information, from a data collection perspective the CSO publish earnings by NACE sector, including the Information and Communication, the Professional, Scientific and Technical, and the Financial Insurance and Real estate sectors. This forms part of the Earnings Hours and Employment Costs Survey (EHECS). Data are published on irregular earnings (bonuses), non-statutory social contributions (i.e. employer contributions to pension funds, life assurance and income continuance insurance), and benefits-in-kind (covering for example stock options, share purchase schemes, voluntary health insurance and company cars).
As regards data on wealth, the Central Bank publish a quarterly net worth of Irish households series. In addition, the CSO conduct the Household Finance and Consumption Survey (HFCS 2013), compiling comprehensive data on Irish household wealth. The net wealth Gini coefficient - a commonly used measure of inequality (where a figure of 100 indicates that one household holds all the wealth and 0 indicates that wealth is evenly divided among all households) indicates that wealth inequality in Ireland was lower (64) than the euro area average (69). The HFCS results also indicate that wealth in Ireland was less concentrated at the top of the distribution than the euro area average.
