Louise O'Reilly
Ceist:365. Deputy Louise O'Reilly asked the Minister for Finance the estimated cost of restoring tax relief for trade union membership on the same basis as professional association fees. [28896/22]
Amharc ar fhreagraTuesday, 14 June 2022
Ceisteanna (365)
Freagraí scríofa
Tax relief for Trade Union subscriptions was previously provided for under section 472C of the Taxes Consolidation Act 1997 (TCA). The relief was introduced in 2001 and abolished from 2011 onwards.
Professional membership fees are deductible under section 114 TCA where those fees are incurred wholly, exclusively and necessarily by an individual in the performance of the duties of his or her employment.
A review of the appropriate treatment for tax purposes of trade union subscriptions and professional body fees was carried out by my Department in 2016 and included in the 2016 report on tax expenditures published on Budget day 2016. The review may be found at the following link: https://assets.gov.ie/181475/91f597c2-bd98-41d8-998e-19f14c099eea.pdf.
In respect of the relief for trade union subscriptions, the review concluded that:
"... analysis of the scheme using the principles laid down by the Department’s Tax Expenditure Guidelines shows that it fails to reach the evaluation threshold to warrant introduction in this manner.
The reinstatement of this tax relief would have no justifiable policy rationale and does not express a defined policy objective. Given that individuals join trade unions largely for the well-known benefits of membership, and the potential value of the relief to an individual would equate to just over €1 per week, this scheme would have little to no incentive effect on the numbers choosing to join. There is no specific market failure that needs to be addressed by such a scheme, and it would consist largely of deadweight ."
In 2009 the Commission on Taxation recommended that the relief be discontinued as “membership of a trade union is likely to be influenced by the benefits of membership and may be a condition of employment. The value of the tax credit is unlikely to be a factor. Having regard to the significant element of deadweight associated with the tax relief, we consider that the relief should be discontinued” .
In 2020, my Department carried out a further analysis which took stock of where matters stand in relation to the issue of tax relief for trade union subscriptions and set out a number of policy options for consideration. This exercise suggested that, based on certain assumptions about numbers of beneficiaries, the measure could cost at least €36.9 million if reintroduced at the same level of support as existed in 2010. However, it also drew attention to the potentially significant deadweight element which would accompany the measure. That analysis was published with the 2020 Tax Strategy Group papers at the following link: assets.gov.ie/86995/006fad3c-ebb5-4b0e-b067-92f8102d6e43.pdf.
On the particular issue of the tax treatment of trade union subscriptions versus the tax treatment of fees paid by individuals to professional bodies, the review concluded that there is a fundamental difference between membership of a professional body which is required to practice a profession and membership of a trade union, which is essentially, a personal choice. A tax deduction for fees paid to professional bodies is available where, for example, there is a statutory requirement for membership of a professional body or where there is a requirement for a practicing certificate or license. A person cannot be refused the right of employment for failure to join a trade union, however, a person can be refused the right of employment as a solicitor, for example, if they fail to hold a practicing certificate.
I am advised by Revenue that there are no current data available from tax returns on the number of taxpayers with union subscriptions or the cost of their individual union subscriptions. Therefore, there is no basis for Revenue on which to estimate a cost for the measure (whether on the previous flat rate basis or on the same basis as professional fees). However, the following table sets out details of the cost of the tax relief for trade union subscriptions in the seven years immediately prior to its end, including 2010 (in which year, the measure cost some €26 million):
|
Year |
Cost (€ million) |
No. of Claims |
|
2004 |
10.7 |
248,300 |
|
2005 |
11.8 |
272,100 |
|
2006 |
19.2 |
294,300 |
|
2007 |
20.7 |
316,300 |
|
2008 |
26.4 |
341,900 |
|
2009 |
26.7 |
345,800 |
|
2010 |
26.0 |
337,500 |