Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I thank Deputy McGrath. In his amendment, the Deputy is seeking to reduce the rate of DIRT to a rate equivalent to the taxpayer's marginal rate of tax, that is, 40%, 20% or 0%, if the person does not have a taxable income. The standard DIRT rate has increased significantly since 2008, as Deputy McGrath said. It has gone from 20% to 41% and is now 1% above the higher rate of tax. Up to budget 2009, the rate of DIRT was equal to the standard rate of income tax at 20%. The increases in recent years were introduced, as Deputies will appreciate, to generate additional yield and to encourage spending in the economy to stimulate both growth and employment.

Revenue estimates that the cost of charging DIRT at a rate equivalent to the individual's marginal income tax rate - in other words, 40% or 20% - would be of the order of €77 million for 2016, based on a forecasted DIRT yield of €298 million. This is a necessarily tentative estimate as it cannot, for instance, account for any individuals moving bands. This represents a substantial loss to the Exchequer, especially as under the terms of the Stability and Growth Pact Ireland may not introduce discretionary revenue reductions unless they are matched by other revenue increases or expenditure reductions. This means the Government must consider carefully any tax changes, as any reduction will have to be offset elsewhere. I am further advised that there would also be significant administrative issues, as in fairness the Deputy appreciates, and costs associated with such measures, both for Revenue and for financial institutions in such a development. In these circumstances, on this occasion I am not in a position to accept this amendment.

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