Written answers
Tuesday, 17 June 2008
Department of Finance
Tax Code
11:00 pm
Leo Varadkar (Dublin West, Fine Gael)
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Question 176: To ask the Minister for Finance the number of taxpayers who benefit from tax relief on pension contributions; the annual cost to the Exchequer; and if he will make a statement on the matter. [22527/08]
Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The latest estimates of the cost of tax and PRSI relief for private pension provision and of the numbers of taxpayers benefiting from these reliefs are in respect of 2006. This information is set out in the following table:
| Estimate of the cost of tax and PRSI reliefs for private pension provision 2006. | ||
| Estimated costs | Numbers* | |
| € million | ||
| Employees' Contributions to approved Superannuation Schemes | 540 | 680,000 |
| Employers' Contributions to approved Superannuation Schemes | 120 | 362,000** |
| Estimated cost of exemption of employers' contributions from employee BIK | 510 | 362,000 |
| Exemption of investment income and gains of approved Superannuation Funds | 1,200 | Not available |
| Retirement Annuity Contracts (RACs) | 380 | 2006 data not available |
| Personal Retirement Savings Accounts (PRSAs) | 120*** | 71,500 |
| Estimated cost of tax relief on "tax-free" lump sum payments | 130 | |
| Estimated cost of PRSI and Health Levy relief on employee and employer contributions | 220 | Not available |
| Gross cost of tax relief | 3,220 | |
| Estimated tax yield from payment of pension benefits | 320 | |
| Net cost of tax relief | 2,900 | |
| **Numbers of employees for whom employers are contributing to occupational pension funds as included in P35 returns to Revenue for 2006. | ||
| ***The figure for PRSAs does not include contributions made by employees through employers' payroll systems and in respect of which tax relief is provided on the net pay basis. |
Leo Varadkar (Dublin West, Fine Gael)
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Question 177: To ask the Minister for Finance if he will estimate the cost of granting mortgage interest relief at source at the 41% rate; and if he will make a statement on the matter. [22528/08]
Brian Lenihan Jnr (Dublin West, Fianna Fail)
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It is assumed that the Deputy has in mind the replacement of the flat rate of 20% that currently applies for tax relief on mortgage interest allowed under the tax relief at source system (TRS) by a rate of 41%.
I am informed by the Revenue Commissioners that, based on an estimate of €645 million as the cost of mortgage interest relief expected to be allowed in 2008 under the current system, it is provisionally estimated that the full year cost of the change mentioned by the Deputy would be of the order of €677 million.
This would increase the total cost of mortgage interest relief to over €1.3 billion per annum, over double the current estimated cost for 2008.
It should also be noted that the current flat rate system gives a greater benefit to those whose income may be below the level at which they would actually pay income tax than would be available under a marginal relief system.
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