Written answers

Tuesday, 24 October 2006

9:00 pm

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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Question 319: To ask the Minister for Finance the number of taxpayers analysed between PAYE taxpayers and other taxpayers who claimed tax relief or allowance in respect of charges for refuse collection in 2003, 2004, 2005 and based on information available to date in 2006; the number in each of these categories of taxpayers who received this relief at the 20% rate and the 42% rate; the cost in each of these categories; and the overall cost to the Exchequer. [34448/06]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I am informed by the Revenue Commissioners that the most recent year for which complete information on cost to the Exchequer and numbers of claimants for tax relief in relation to local authority service charges is the income tax year 2003. In that year an estimated number of 169,300 claimants availed of the tax relief for the service charges at an estimated cost to the Exchequer of €8.2 million.

These figures relate to the numbers of income earners in a position to absorb the tax relief either partly or fully, but do not include the numbers of qualifying claimants who, because of the operation of other deductions and reliefs, have their taxable income reduced to nil or have their tax liability reduced to nil by the impact of other tax credits. Accordingly, potential claimants for the tax relief for service charges whose tax liability has been reduced to nil in this way are not included in the numbers given in this reply.

Irrespective of the marginal tax rate of claimants, tax relief for service charges is confined to the standard rate of tax in respect of charges taxpayers have paid in the previous financial year.

A breakdown of the relevant figures by reference to the marginal tax rate of each claimant is set out in the following tables:

Service Charges — by Tax Rate 2003
All claimants
Tax RateNumber of casesAmount allowed for Tax ReliefReduction in Tax
Standard Rate (20%)*64,71115,120,6553,024,131
Higher Rate (42%)98,46124,587,0004,917,400
Total163,17239,707,6557,941,531
*Includes claimants benefiting from marginal relief or with zero tax liability arising from the granting of service charges credit.
Claimants whose main source of income is subject to tax under Schedule E /PAYE
Tax RateNumber of casesAmount allowed for tax reliefReduction in Tax
Standard Rate (20%)*48,92010,801,1102,160,222
Higher Rate (42%)84,50020,791,4954,158,299
Total133,42031,592,6056,318,521
*Includes claimants benefiting from marginal relief or with zero tax liability arising from the granting of service charges credit.
Claimants whose main source of income is subject to tax under Schedule D
Tax RateNumber of casesAmount allowed for tax reliefReduction in Tax
Standard Rate (20%)*15,7914,319,545863,909
Higher Rate (42%)13,9613,795,505759,101
Total29,7528,115,0501,623,010
*Includes claimants benefiting from marginal relief or with zero tax liability arising from the granting of service charges credit.

The lower aggregate figures in these tables (compared to the slightly higher figures mentioned in the opening paragraph) are taken directly from filed income tax returns which represent about 98 per cent of all income tax returns expected for 2003. The higher figures in the initial table have, in accordance with normal practice, been grossed-up at aggregate level to adjust for this 2% incompleteness.

The designation of a tax rate to claimants is based on identifying the top tax rate applying to the taxable income of each claimant while taking into account the impact of tax credits and standard rated reliefs where they reduce tax liability to nil. To arrive at the figure for taxable income, the gross income is reduced by various relevant deductions and allowances such as capital allowances, losses, allowable expenses and retirement annuities. In some cases, these will reduce the taxable income to nil. In other cases where the impact of tax credits and standard rated reliefs, such as the relief provided for service charges, is to reduce tax liability to nil it gives rise to a cost in terms of tax forgone.

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