Written answers

Tuesday, 19 January 2010

9:00 pm

Photo of Mary UptonMary Upton (Dublin South Central, Labour)
Link to this: Individually | In context

Question 243: To ask the Minister for Finance the estimated saving that would occur from the standardisation of all pension tax reliefs at 20%; his views on the recent report by the Economic and Social Research Institute that showed that €8 out of every €10 of tax relief in this area goes to the top 20% of earners; and if he will make a statement on the matter. [48600/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

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 2007.

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% in respect of individual contributions to occupational pension schemes, RACs and PRSAs would be about €500 million.

I assume that the ESRI Report referred to by the Deputy is that entitled Pension Policy: New Evidence on Key Issues published in November last. The Report deals mainly with the question of whether existing tax incentives for private pension provision would be better targeted to encourage improved coverage by allowing relief on contributions at the standard income tax rate or at a hybrid rate of 30% rate. While apparently seeing merit in both approaches, the Report favours tax relief on pension contributions at the standard income tax rate in conjunction with sustaining the State Pension and schemes to increase pension coverage among lower to middle income earners.

The recently published Renewed Programme for Government includes a commitment to introduce a single 33% rate for tax relief on private pension provision in the context of the National Pensions Framework. This would result in a reduction in the tax relief on pension contributions available to higher rate taxpayers and an additional incentive to pension savings for standard rate taxpayers. However, the full detail and timing of the introduction of this measure have yet to be decided. I will bear the ESRI Report in mind in the context of delivering on the Government's commitment in this area.

Photo of Mary UptonMary Upton (Dublin South Central, Labour)
Link to this: Individually | In context

Question 244: To ask the Minister for Finance the average effective tax rate including all levies for a person earning €15,000, €25,000, €35,000, €45,000, €55,000, €75,000 and €100,000; and if he will make a statement on the matter. [48602/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

I assume the Deputy is referring to a taxpayer on PAYE and paying the full rate of PRSI. On that basis, the effective average tax rates for the annual earnings as requested are set out as follows: Single Person

IncomeEffective Average Tax Rate
â'¬15,0000.0%
â'¬25,00010.3%
â'¬35,00018.8%
â'¬45,00025.3%
â'¬55,00030.0%
â'¬75,00035.6%
â'¬100,00039.2%

Married Person, One Income with Children

IncomeEffective Average Tax Rate
â'¬15,0000.0%
â'¬25,0004.9%
â'¬35,00011.0%
â'¬45,00015.2%
â'¬55,00021.6%
â'¬75,00029.4%
â'¬100,00034.6%

These rates include income tax, PRSI, health levy and income levy, as appropriate.

Photo of Mary UptonMary Upton (Dublin South Central, Labour)
Link to this: Individually | In context

Question 245: To ask the Minister for Finance the reason he did not impose a one off wealth tax on high net worth persons; his views on the fact that many high net worth persons are suffering in the economy, there are many who continue to be wealthy; if he will consider introducing a one off wealth tax as part of a call to patriotic action; and if he will make a statement on the matter. [48604/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

As part of my recent Budget I announced a "domicile levy", full details of which will be announced in the Finance Bill. The levy of €200,000 will apply to Irish-domiciled individuals whose worldwide income exceeds €1 million and whose Irish-located capital is greater than €5 million.

Although all taxes and potential taxation measures are constantly reviewed in the context of the Budget and Finance Bill, I do not have any plans at present to introduce a Wealth Tax. One of the difficulties with such a tax is that asset values can fluctuate considerably over time and the potential yield from such a tax may not be significant in the current climate.

Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT) are, in effect, taxes on wealth, in that they are levied on an individual or company when they dispose of an asset (CGT) or acquire an asset through gift or inheritance (CAT). The rate of both these taxes was increased to 25% in the 2009 Supplementary Budget.

Comments

No comments

Log in or join to post a public comment.