Shane McEntee (Meath, Fine Gael)
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Question 69: To ask the Minister for Finance the assumptions and methodology underpinning his estimate of the increase in revenue from capital taxes in 2006 (details supplied). [38846/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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My Department's forecasts for revenues in 2006 from capital taxes are as follows: capital gains tax —€2,035 million; stamp duties —€2,685 million; capital acquisitions tax —€260 million. These amounts represent forecast increases of 3.6%, 2.1% and 4%, respectively, on the projected outturns for capital gains tax, stamp duties and capital acquisitions tax in 2005.

The forecasts assume a lower rate of growth in tax revenues from these sources next year than the significant increases experienced this year. The forecasts still assume, however, a reasonably buoyant property market next year, both residential and commercial. It should also be noted with regard to stamp duties that the forecast for 2006 takes account of the ending of the specific contribution from the financial sector which was introduced in budget 2003. This contribution has yielded approximately €103 million in each of the past three years.

The methodology for forecasting tax revenues, generally, is based on forecasts of the level and composition of economic activity, which is determined by many factors and is subject to both national and international shocks. Forecasting economic activity on which forecasts of tax revenues are largely based is not an exact science. Moreover, capital taxes are more difficult to forecast than other taxes because they can be influenced by broader factors and considerations than the general level of economic activity.