Wednesday, 20 January 2010
Department of Finance
Question 157: To ask the Minister for Finance if he will clarify the issue of the tax treatment of couples on old age pensions in a manner that could be regarded as discriminatory and outline the way in which their PAYE tax credit is implemented when the couple are on separate social welfare pensions when the couple has one person on social welfare and one on qualified adult allowance, when the couple divide their entitlements with each getting their own payment; and the way in which social welfare take this into account when they included pensions as qualified adult allowance when their own entitlement on their own record may be slightly less. [2357/10]
I am informed by the Revenue Commissioners that, in general, three scenarios may arise.
Only one spouse is entitled to the State pension (contributory) and such spouse receives an increased amount in respect of his/her adult dependant.
In this scenario, there is only one State pension and therefore only one PAYE tax credit is due against such pension (assuming, of course, that such PAYE tax credit is/was not utilised against that spouse's other income).
Only one spouse is entitled to the State pension (contributory) with such spouse entitled to an increased amount in respect of his/her adult dependant. However, the adult dependant has requested that the adult dependant element of the pension be payable by the Department of Social and Family Affairs directly to him/ her.
In this scenario, there is only one State pension and therefore only one PAYE tax credit is due against such pension (assuming, of course, that such PAYE tax credit is/was not utilised against other income). This position remains unaltered even though the adult dependant amount is payable directly to the adult dependant by the Department of Social and Family Affairs.
Each spouse is entitled in his/her own right to a State pension (for example, arising from his/ her own respective relevant social welfare contributions whilst working)
In this scenario
there are two separate and distinct State pensions; and
each spouse is entitled to a PAYE tax credit against his/her respective State pension (assuming, of course, that each spouse's PAYE tax credit is/was not utilised against their other income).
The question of entitlement to these payments is a matter primarily for the Minister for Social and Family Affairs.
Question 158: To ask the Minister for Finance the action he will take in respect of the European Commission's finding that the imposition of the vehicle registration tax on vehicles, when VRT has already been paid in the country of origin, is contrary to the obligations assumed by section 90 of the Single European Act; and if he will make a statement on the matter. [2369/10]
Question 159: To ask the Minister for Finance the formula in use by the Revenue Commissioners to calculate vehicle registration tax on imported cars from within the EU, when tax has been previously paid, in view of the fact that this formula bears no relevance to the actual value of the vehicle, the price paid for same or the age of the car; the way this formula is arrived at; and if he will make a statement on the matter. [2370/10]
I propose to take Questions Nos. 158 and 159 together.
I am advised by the Revenue Commissioners that under section 132 of Finance Act 1992 vehicle registration tax (VRT) is chargeable, leviable and payable on the registration of vehicles in the State. There is no provision in law for an exemption from, or reduction in, the charge to VRT in relation to vehicles that were previously registered in another jurisdiction.
VRT is charged on the open market selling price (OMSP) of a vehicle in the State. OMSP is defined in section 133 of the Finance Act 1992 and is the price, inclusive of all taxes and duties, which a vehicle may reasonably be expected to fetch on a first arm's length sale in the open market in the State by retail. The OMSP of new vehicles in the State is declared to the Revenue Commissioners by wholesale distributors of new vehicles, while the OMSP of imported second hand vehicles is determined by the Revenue Commissioners based on factors such as age, mileage and vehicle condition.
In order to provide the same base for the application of VRT on vehicles sourced in the State and abroad, VRT is charged on the OMSP of the vehicle and not on the purchase price of vehicles bought in other jurisdictions. The amounts, levels or types of tax charged on a vehicle in another jurisdiction, while they might impact on the purchase price of the vehicle in that jurisdiction, are not taken into account in the calculation of the OMSP in the State.
From a European Union perspective, VRT is a national tax and does not contravene EU law. Article 90 of the EC Treaty allows Member States to charge national taxes provided that there is no discrimination against imported goods in favour of indigenous goods. It provides that: "No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products".
This principle was further underpinned by a European Court of Justice (ECJ) judgement (Case C-313/05, Maciej Brzezinski v Dyrektor Izby Celnej w Warszawie) of 18 January 2007, where the ECJ ruled in favour of Poland regarding their entitlement to charge an excise duty on the importation of second-hand vehicles into that jurisdiction.
Accordingly, in the case of a vehicle brought into Ireland from another jurisdiction, VRT is payable on the registration of the vehicle in the State, irrespective of whether or not a registration (or similar) tax had been paid previously outside the State.