Leo Varadkar (Dublin West, Fine Gael)
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Question 264: To ask the Minister for Finance if he will estimate the revenue that would be accrued by allowing pension contributions to be deducted from income tax at the standard rate only; and if he will make a statement on the matter. [1249/09]

Leo Varadkar (Dublin West, Fine Gael)
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Question 265: To ask the Minister for Finance if he will estimate the revenue that would be accrued by abolishing tax relief in respect of pension contributions; and if he will make a statement on the matter. [1250/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 264 and 265 together.

I assume that the Deputy is referring to individual pension contributions, the tax relief on which is allowed at the taxpayer's marginal tax rate, that is, at the standard or higher rate of income tax as appropriate in each case. A breakdown of the cost of tax relief on employee contributions to occupational pension schemes is not available by income tax rate, as tax returns by employers to the Revenue Commissioners of employee contributions to such schemes are aggregated at employer level. An historical breakdown is available by tax rate of the tax relief claimed on contributions to personal pension plans — Retirement Annuity Contracts (RACs) and Personal Retirement Savings Accounts (PRSAs) — by the self-employed and others, to the extent that the contributions have been included in the personal tax returns of those taxpayers. The latest full historical data available in this regard is in respect of the tax year 2005.

There is, therefore, no statistical basis for providing definitive figures. However, by making certain assumptions about the available information, it is estimated that the full year yield to the Exchequer from confining tax relief to the standard rate of 20 per cent in respect of individual contributions to occupational pension schemes, RACs and PRSAs would be about €500 million. The full year yield from abolishing the tax relief is estimated at over €1 billion.

As highlighted in the "Green Paper on Pensions", where tax relief arrangements are of such significance, as in this instance, the removal of the reliefs would represent a fundamental adjustment to the current balance of the tax system and would have very significant implications in terms, among other things, of the economic and behavioural impacts which would ensue. These impacts would be difficult to model in advance. For these reasons, the real informational content of these costings of tax reliefs is limited and should be treated with some caution.