Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

In October 2016, the Department of Finance published a report on tax expenditures, which included a review of the treatment for tax purposes of trade union subscriptions and professional body fees. The review found that a scheme of tax reliefs for trade union subscriptions would fail to meet the evaluation threshold laid down by the Department's tax expenditure guidelines. The reinstatement of this tax relief would have no justifiable policy rationale and would not express a defined policy objective.Given that individuals join trade unions largely for the benefits of membership and that the potential value of the relief to an individual would, in most cases, amount to approximately €1 per week, the scheme would have little or no incentive effect on the numbers choosing to join. It is worth noting that while the relief equates to a small sum at an individual level, the cost to the Exchequer at its peak in 2009 was approximately €26.7 million.

The 2016 review conducted by the Department of Finance estimated, on the basis of ICTU membership data that, if reinstated, the relief could cost the Exchequer over €39.5 million. This figure would likely be higher again if the relief was reintroduced in the context of improving employment rates.

The Minister receives many requests for tax reliefs. While there may be merit in the requests, we must be mindful of the many competing demands upon the Exchequer. I am not convinced there is specific market failure that needs to be addressed by such a scheme. In my view, it consists largely of dead weight. Additionally, broad income tax relief of this kind could be targeted at those most in need. Those on lower incomes may not benefit at all in this case. Our highly-progressive tax regime ensures that such individuals pay proportionally less tax than those on higher incomes.

A report with varied terms of reference as suggested by the Senator would neither be within the Minister's purview as Minister for Finance or Minister for Public Expenditure and Reform nor within the scope of the Bill. For example, the working family payment is entirely a matter for the Minister for Employment Affairs and Social Protection. Given the fact that the Department of Finance has relatively recently carried out a review of the tax treatment of trade union subscriptions, I do not propose to accept the recommendation.