Written answers

Thursday, 5 April 2007

5:00 pm

Photo of Ruairi QuinnRuairi Quinn (Dublin South East, Labour)
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Question 182: To ask the Minister for Finance the number and percentage of income earners who paid tax at the higher rate and the standard rate in respect of each year since 2002 to date in 2007. [13786/07]

Photo of Ruairi QuinnRuairi Quinn (Dublin South East, Labour)
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Question 183: To ask the Minister for Finance the expected distribution of income earners for income tax payments for 2007, broken down in number and percentage terms into the categories of exempt, marginal relief, standard rate and higher rate; the comparative figures for each year since 2002; and if he will make a statement on the matter. [13787/07]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I propose to take Questions Nos. 182 and 183 together.

The information requested by the Deputy in a format which presents the data in terms of the effective tax rates actually paid by taxpayers is set out in the following table. This is the same format as used for the presentation of pre-Budget 2007 and post-Budget 2007 distributions of earners in the 2007 Budget booklet.

Tax YearExempt(1)Paying at 20% or less(2)Paying at greater than 20%Total
2002632,700907,400344,9001,885,000
2003649,300894,300383,6001,927,200
2004*677,100878,200437,9001,993,200
2005*732,400895,700458,0002,086,100
2006*776,100937,700446,7002,160,500
2007*845,900930,600438,2002,214,700
Notes
(1)Standard rate liability fully covered by tax credits or Age Exemption limits.
(2)Higher rate tax liability fully covered by tax credits and includes those who face a gross liability for tax at the marginal relief rate of taxation.
*Figures for these years are provisional and subject to revision.

Figures in the table are rounded to the nearest hundred and any apparent discrepancies in totals are due to this.

The figures for the years 2002 and 2003 are based on incomes data derived from income tax returns held on Revenue records and have been grossed-up to an overall expected level to adjust for incompleteness in the numbers of returns on record at the time the data was extracted for analytical purposes.

For the years 2004 to-date, the figures are estimates from the Revenue tax forecasting model using actual data for the year 2003 adjusted as necessary for income and employment growth for the years in question.

It should be noted that a married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit.

Photo of Ruairi QuinnRuairi Quinn (Dublin South East, Labour)
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Question 184: To ask the Minister for Finance the average amount of income tax paid by a PAYE employee, a self employed person and a farmer in respect of each year since 2002 to date in 2007. [13788/07]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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Figures of the average amount of income tax paid in the categories mentioned by the Deputy in each of the years 2002 to 2006 inclusive, the latter year being the latest year for which the necessary detailed information is available, are set out as follows:

Year(a) PAYE(b) Farmers(c) Other Self-employed
20024,0081,956 (i)10,210 (i)
1,829 (ii)9,592 (ii)
20034,1801,833 (i)8,154 (i)
1,693 (ii)6,911 (ii)
2004*4,5491,507 (i)11,070 (i)
1,161 (ii)8,100 (ii)
2005*4,6091,628 (i)11,891 (i)
1,343 (ii)9,662 (ii)
2006*4,8261,523 (i)11,871 (i)
1,456 (ii)11,394 (ii)
* Figures for these years are provisional and subject to revision.
Figures at (i) include yield from special Revenue investigations relating to bogus non-resident accounts, offshore accounts and single premium insurance products (where applicable), and figures at (ii) exclude these amounts.
The amounts paid by each sector must be seen in the context of the relative numbers of taxpayers in the PAYE and self-employed (including farming) sectors.
Notes on table
(a)PAYE figures
(i)Income tax collected through the PAYE mechanism covers more than income tax on ordinary wages and salaries. It includes tax paid by directors of close companies who are akin to the self-employed as well as tax on "other income" of employees such as rent and other investment income. It also includes the tax paid under PAYE on the income from employment of farmers and other self-employed individuals.
(ii)The average tax payment for each year in column (a) is obtained by dividing the net receipt of PAYE tax in each calendar year by the total number of income earners on the PAYE tax record for the corresponding income tax year including those who are exempt from tax.
(b)Farming figures
(i)In calculating the figures in this column the estimated net receipt of income tax paid by full-time farmers in each calendar year has been divided by the number of full-time farming tax units assessed to tax for the income tax year corresponding to the calendar year e.g. the 2002 receipt is divided by the number assessed for the income tax year 2002. These numbers exclude cases who are not required to file annual tax returns and whose position is reviewed periodically because their incomes are clearly too low to attract a tax liability on an individual basis.
(ii)The figures for averages do not take into account the tax attributable to the farming profits of farmers who, or whose spouses, carry on another trade or profession. Farm tax represents a fraction of their overall tax liability and the emerging average farm tax payments could not be regarded as representative of the normal average tax yield from the farming sector.
(iii)Income tax on farming profits is collected with Schedule D tax generally and because of this it cannot be precisely distinguished. Accordingly, the figures shown for tax payments by farmers are estimated.
(c)Other Self-employed figures
(i)The figures contained in this column are obtained by dividing the estimated net receipt of income tax in each calendar year from tax units whose main source of income is from self-employment, other than full-time farming, by the estimated number of those units assessed to tax for the corresponding income tax year as explained in note (i) for column (b).
These numbers exclude cases who are not required to file annual tax returns and whose position is reviewed periodically because their incomes are clearly too low to attract a tax liability on an individual basis.
General Notes
(i)A married couple who has elected or has been deemed to have elected to have the income of both spouses assessed on the husband is counted as one tax unit.
(ii)Some figures in the columns differ from those given previously. This is due to more accurate information becoming available in the meantime.
(iii)Receipts of deposit interest retention tax and dividend withholding tax are not included in the calculations. Basic data are not available which would enable the amounts of these taxes referable to interest paid or credited to particular classes of taxpayers to be ascertained.

Photo of Ruairi QuinnRuairi Quinn (Dublin South East, Labour)
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Question 185: To ask the Minister for Finance the date of the most recent study by the Revenue Commissioners of tax paid by high earners; the principal findings of that study; and if he will make a statement on the matter. [13789/07]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The most recent report on the effective tax rates of the top 400 earners was published on 26 June 2006 and covered the tax year 2002.

The main findings of the report were that the numbers in lower effective rate bands for 2002 increased when compared with the 2001 results:

The number of taxpayers with a zero effective rate increased from 5 to 6.

The number of taxpayers with an effective rate of less than 15% increased from 55 to 79.

The number of taxpayers with an effective rate of less than 20% increased from 75 to 95.

The number of taxpayers with an effective rate of less than 30% increased from 115 to 150.

This data underlined the valid reasons for my decision in Budget 2006 to introduce a restriction on the use of tax reliefs by high income individuals, effective from 1 January 2007. This action complemented the various measures taken by the Government since 1997 to curb abuses, curtail reliefs, reinforce equity and restore confidence in the fairness of the tax system.

A copy of the report is available on my Department's website at:

http://www.finance.gov.ie/viewdoc.asp?fn=/ documents/Publications/other/revtop400jun06.htm.

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