Paul McGrath (Westmeath, Fine Gael)
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Question 513: To ask the Minister for Finance the cost of introducing a flat income tax rate of 20% while allowing the first €17,000 of a single person's income and the first €34,000 of a couple's income to be tax free; and if he will make a statement on the matter. [25220/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners that the full year cost to the Exchequer, based on projected 2006 incomes, of the changes mentioned by the Deputy is tentatively estimated to be in the region of €4 billion to €5 billion per annum. This tentative estimate is based on the assumption that a full flat tax system is introduced and that the existing income tax structure would be replaced in its entirety by the system outlined by the Deputy. In such an event, the personal tax credits and allowances and tax reliefs in general would no longer apply. This is normally a feature of flat tax systems. For example, contributions to approved superannuation schemes would no longer attract tax relief and mortgage interest relief and medical insurance relief which are provided at source would cease to apply. Other schemes and reliefs which it is assumed would be abolished for the purpose of this costing include capital allowances, property reliefs generally, the various savings related tax reliefs, tax relief on redundancy payments, the business expansion scheme and film relief. The statutory exemption in respect of tax on child benefit payments would also be removed. To the extent that any of these reliefs were continued, the costs would be higher.