Dáil Éireann Debate, Wednesday - 8 November 2023
30. Deputy Alan Kelly asked the Minister for Finance the estimated revenue that would be raised to end of June 2024 by tapering a personal, PAYE and earned income tax credit rate of 1.5% per €1,000 for individuals on incomes between €175,000 and €250,000, effective from 1 December 2023. [48865/23]
Amharc ar fhreagraI am advised by Revenue that their micro-simulation modelling tool, Tax Modeller, is built to model scenarios on a taxpayer unit basis (i.e. including jointly assessed couples as one taxpayer unit). As such, it does not generate any outputs on an individualised basis, and it is therefore not possible to estimate changes to tax credits on an individual basis for a projected tax year.
However, incomes recorded on historic tax returns can be used to estimate the potential yield and/or cost associated with the adjustment of tax credits. As 2021 is the latest year for which full tax return data is currently available to be analysed, Revenue has undertaken estimates in relation to the 2021 tax year for the tapering of the tax credits referred to by the Deputy to provide an estimated yield that may arise from this proposal.
It should be noted that although the values of the personal tax credit, employee tax credit and the earned income credit have increased since 2021, the 2021 values for the credits were utilised for consistency purposes in preparing these estimates.
On this basis, I am advised by Revenue that the yield in 2021 from tapering the credits in the manner outlined by the Deputy is an estimated €100 million and €120 million on a first and full year basis respectively. These estimates are based on annual incomes in the full calendar year of 2021. Depending on the method of implementation, and subject to potential behavioural effects not accounted for, the estimated cost of this measure if it was implemented only for a portion of the year in 2021 may be estimated on a pro-rata basis.
