Michael Noonan (Limerick City, Fine Gael)

I am introducing a number of measures that will meet that objective. I am increasing the current rate of capital acquisitions tax from 25% to 30%; increasing capital gains tax from 25% to 30%; reducing the group A tax free threshold for capital acquisitions tax from €332,084 to €250,000; increasing DIRT from 27% to 30%, as we do not need to incentivise savings when the savings ratio has reached a phenomenal 14%; broadening the base for PRSI through the removal of the remaining 50% employer PRSI relief on employee pensions, therein following the example of the Government last year, which removed the first tranche; and further broadening the base for PRSI to cover rental, investment and other forms of income. I will introduce this measure, but it will not become effective until 2013, as we need some time to prepare. We are also increasing the rate of notional distribution on the highest value approved retirement funds, ARFs, and similar products to 6%. When the pension levy was introduced, many Members of the Opposition argued that this should have been done. It will be introduced via the finance Bill. We are increasing the rate of tax on the transfer of an ARF on someone's death to a child over 21 years from 20% to 30%, which is intended to bring all capital taxes into line at the 30% rate.

I am abolishing the citizenship condition for payment of the domicile levy so as to ensure tax exiles cannot avoid it by renouncing their citizenship. I intend to keep the contentious issue of the tax treatment of tax exiles under constant review.

As a consequence of these measures, the rate of tax applying to capital, interest and earnings, through the high earners' restriction, will all be aligned at 30%.

Carbon Tax

I propose to increase the carbon tax on fossil fuels introduced in budget 2010 from the equivalent of €15 per tonne to €20 per tonne. The increase will be applied to petrol and auto diesel from midnight. However, in view of the impact this increase will have on home heating costs during the winter months, the increase on other fuels will not take effect until May 2012. This increase is half of that proposed in the previous Government's four year plan for budget 2012. Since I am not going to apply the carbon tax to solid fuels, there will be no increases in the case of peat or coal, be it a bale of briquettes, a bag of blocks, etc.

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