Joan Burton (Dublin West, Labour)
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Question 139: To ask the Minister for Finance if he will itemise all tax expenditures and reliefs, including their expected cost for 2010 and for 2011, assuming no policy change; the total revenue that would be raised on a 2011 and full-year basis through the abolition of each, through the standard-rating of each and through excluding each for all incomes over €100,000 and €125,000 respectively. [25358/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am advised by the Revenue Commissioners that the total identifiable costs to the Exchequer of all income tax and corporation tax allowances, reliefs, exemptions and tax credits available are set out in the following tables for 2006, the most recent year for which the necessary detailed historical information is available. Relevant notes relating to items in the tables are also included.

Estimates of the prospective yield to the Exchequer in 2011 from the abolition or standard rating of each deduction and relief from incomes over the specified ranges are not available. These estimates could not be provided without undertaking an extensive and costly development of the Revenue tax model nor would they capture any behavioural change on the part of taxpayers as a consequence of such change or their economic effects.

COST OF TAX CREDITS, ALLOWANCES AND RELIEFS 2006 AND 2005

The following table IT 6 shows the estimated cost in terms of revenue forgone of the personal tax credits and the main reliefs and deductions allowable under the income tax system. A number of reliefs which apply both to individuals and companies is also included and the cost shown in relation to these reliefs covers income tax and corporation tax.

An adjustment is included in the cost figures applying to income tax to compensate for incomplete numbers of tax returns on record at the time of compiling the estimates.

The tax credits and reliefs listed in the table serve varying purposes. Many are essentially structural reliefs through which individual tax liabilities are adjusted to reflect relative taxable capacity. The main personal tax credits are a good example of this since they may be regarded as part of the progressive income tax structure representing a band of income chargeable at a zero rate. Others, such as relief for interest paid in full or investment in corporate trades, are tax-based incentives in favour of specific groups or activities which are designed to promote certain aspects of public policy.

In computing taxable profits, account needs to be taken in some way of the depreciation of capital assets incurred in earning those profits. To this extent, the figures in the table of the "costs" of capital allowances should not be regarded as measuring a "loss of tax revenue" on profits. To compute such "loss", regard would have to be had to the excess of the amount of the capital allowances at current rates over the amount of the normal allowances.

The figures shown for the basic personal tax credits (married, single and widowed) are the costs of these tax credits as if all other tax credits and the exemption limits did not apply. They do not include individuals who are not on Revenue records because their incomes are below the income tax thresholds. The cost figures for the exemption limits are based on the excess of the exemption limits over the basic personal tax credits.

The figures of cost are for 2006 and 2005 and all figures are based on tax due in respect of assessments for each year and not on tax receipts within that year.

The figure against each credit or allowance represents the additional tax which would become payable if the tax credit or allowance were withdrawn assuming no consequent change in the behaviour of taxpayers (for example, in relation to the reliefs for savings), or the amounts of payments (for example, interest payable on certain savings schemes might need adjustment to take account of the new tax liability).

The numbers of claimants of each credit or relief are shown for both years to the extent that they are available. The numbers included are the taxpayers who would be adversely affected by the withdrawal of the respective credit or relief.

In the calculations, each tax credit or allowance has been dealt with separately and on the assumption that the rest of the tax system remained unchanged. It would be therefore inaccurate to calculate the effect of withdrawing all the credits, reliefs and allowances by simply totalling the figures. For example, the costs shown for capital allowances and stock relief are also calculated on the basis of separate withdrawal of these reliefs. Their combined cost would be greater than the sum of the separate costs because allowances are not always fully set off against available profits. For instance, a person with €1,000 gross trading profits, €1,000 capital allowances and €1,000 stock relief would pay no tax if either of the reliefs were withdrawn but would pay tax on €1,000 profits if both reliefs were withdrawn. In this case, the cost of each relief separately is nil but the combined cost is tax on €1,000. Basic data is not available to enable an estimate of the combined cost of these reliefs to be made.

The figures for estimates based on tax returns 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.

Finally, the estimates shown in many cases are tentative and are subject to revision in the light of later information. Some of the cost figures included in the table for 2005 reflect revisions to figures previously published in the 2007 Report.

NOTES ON TABLE IT 6

(1) Figures accompanied by an asterisk * are particularly tentative and subject to a considerable margin of error.

(2) The cost figures for the exemption limits are based on the excess of the exemption limits over the basic personal tax credits. They include the cost of marginal relief for taxpayers whose incomes are not greatly in excess of the exemption limits.

(3) The figures shown for the basic personal tax credits (married, single and widowed) are the costs of these tax credits as if all other tax credits and the exemption limits did not apply. They do not include individuals who are not on Revenue records because their incomes are below the income tax thresholds.

(4) Arising from the change over to Tax Relief at Source the figures relate to the number of policies issued. These include policies where subscriptions were paid by businesses on behalf of their employees.

(5) Part of the cost of contributions to Permanent Health Benefit Schemes is not identifiable as a result of the move to a "net pay" basis for contributions by PAYE taxpayers from 6 April 2001.

(6) See the following table "Green Paper on Pensions" for background commentary and cost figures for 2007.

(7) Arising from the work on the "Green Paper on Pensions" (2007) the basis for costing this item was changed for 2005 and is not directly comparable with the figures for earlier years. See also the following table "Green Paper on Pensions" for more recent figures.

(8) "Other" relates to borrowings for purposes such as acquiring an interest in a company or partnership or to pay death duties.

(9) The cost of exempting the income of charities, colleges, hospitals, schools, friendly societies, etc. from income tax includes the sums repaid in respect of tax credits, income tax deducted at source (certain dividends, other investment income and payments received under covenant), and also includes tax on (see Note 10) (a) donations made by the PAYE and self-employed sectors to approved bodies (b) income tax repayments on foot of PAYE donations. It also includes the cost of exempting certain bodies from the deduction on income arising from government securities. Information is not available about other income received gross.

(10) The cost figures for relief for donations to Approved Sports Bodies and for certain Sports Persons are based on self assessment returns.

(11) In the absence of other information, tax has been assumed at the standard rate of income tax even though a different rate might be appropriate in many cases.

(12) The costs included for corporation tax are by reference to accounting periods which ended in the years 2005 and 2006.

(13) The cost shown for capital allowances does not include any cost associated with "unused capital allowances", that is, capital allowances which are not absorbed by a company in the accounting period in which they arise because they exceed the amount of the company's profits of that accounting period which are available for offset. Unused capital allowances can be offset as losses against taxable profits arising in the previous accounting period and against certain profits arising in future accounting periods and can be offset against the profits of another company in the same group of companies. It is estimated that €3340 million of unused capital allowances were claimed in respect of 2006 accounting periods but as the proportion of this item which is included in previous years losses and in group relief is not separately identifiable a reliable estimate of the cost of the capital allowance element cannot be provided.

(14) The tax cost shown for section 23 type relief is the estimated ultimate tax cost relating to the total allowable expenditure in respect of claims made in 2005 and 2006 tax returns for the first time. The cost shown is for income tax cases only.

(15) The cost does not include any notional cost associated with IFSC companies. The International Financial Services activity in Ireland represents new business which has developed as a result of, among other things, the concessionary tax rate. This means that as the cost of the concessionary rate is not just the difference between the concessionary tax rate and the full tax rate, it is therefore not quantifiable. In regard to the cost shown for the effective rate of 10 per cent for manufacturing and certain other activities, no account is taken of the fact that without these incentives, many enterprises may not have set up here. To the extent that profits earned by such enterprises would not have been available for Irish tax purposes, part of the cost figure shown might be regarded as notional.

(16) The costs shown for R&D is for claims for R&D on corporation tax returns for accounting periods ending in 2005 and 2006. However, the cost includes the cost associated with claims where the company was entitled to the credit but was unable to absorb it in that accounting year.

Green Paper on Pensions – updated estimates of cost for 2007

As part of the work on the Green Paper on Pensions, a review was carried out of the current regime of incentives for supplementary pension provision with a view to developing more comprehensive and reliable estimates of the cost of reliefs in this area. The review examined, among other things, the current reliefs and incentives for investment in supplementary pensions and the data available on which to base reliable estimates of the costs in revenue foregone to the Exchequer.

The review drew on newly available 2007 aggregate data on contributions to pension schemes by employers and employees arising from a P35 initiative introduced on foot of provisions that were included in Finance Act 2004 with a view to improving data quality. Estimates of the cost of tax for private pension provision updated for 2007 are included in the table below.

Estimate of the cost of tax and PRSI reliefs for private pension provision 2007.

**This is numbers of employees for whom employers are contributing to occupational pension funds as included in P35 returns to Revenue for 2007. Figures are as verified to date but may be understated and subject to revision.

The breakdown and make-up of these estimated costs of reliefs differ from presentations of costs in this area for previous years in a number of respects and are not directly comparable. For further details on the cost of tax and other reliefs and the changes in the methodology, refer to pages 106 and 107 of the Green Paper on Pensions which is available at www.pensionsgreenpaper.ie. Certain property-based tax incentives and incomes exempt from tax - uptake and estimated potential cost to the Exchequer in terms of income tax and corporation tax forgone based on 2006 tax returns

Provisions were included in the Finance Acts of 2003 and 2004 to enable new statistical data on the uptake of tax relief for certain property-based tax incentives and incomes exempt from tax to be obtained from tax returns. This information, derived from changes introduced by the Revenue Commissioners to income tax returns and corporation tax returns for 2006, is set out in the following table.

The figures shown include the amounts claimed in the year but exclude amounts carried forward into the year either as losses or capital allowances, and include any amounts of unused losses and/or capital allowances which will be carried forward to subsequent years.

Notes:

. The figures shown relate to the various reliefs/incentives and exemptions as specified in the 2006 form 11 and CT1.

. There were concerns that in some instances the new, separately categorised data on property incentives may not have been correctly entered on the Tax returns. Revenue drew the attention of the relevant tax practitioner bodies to these deficiencies to rectify them in future returns and also increased awareness among its own staff involved in processing tax returns of the need to ensure, through closer examination of the returns, that they are correctly completed.

. The estimated costs have assumed tax foregone at the 42% rate in the case of income tax and 12.5% in the case of corporation tax. This means the figures shown correspond to the maximum Exchequer cost in terms of income tax and corporation tax. However, the actual Exchequer cost could be lower, particularly in relation to the exempt income items, as the income could be subject to deductions for allowable expenses and other costs thereby reducing the level of income that would be actually subject to tax.

. Some of the costs shown above are included in the costs shown for capital allowances and section 23 relief in Table IT6. For example, exempt income included above is not part of capital allowances.

RELIEFS IN RESPECT OF WHICH COSTS ARE NOT CURRENTLY QUANTIFIABLE OR ARE NEGLIGIBLE OR ARE NOT IDENTIFIABLE WITHIN TOTAL AGGREGATES.

Exemption in respect of certain income derived from the leasing of farm land;

Relief for new shares purchased on issue by employees;

Relief from averaging of farm profits;

Exemption for income arising from payments in respect of personal injuries;

Exemption of certain payments made by Haemophilia HIV Trust;

Exemption of Pensions, Benefits or Gratuities Payable to Veterans of the War of Independence their Widows or Dependents;

Exemption of lump sum retirement payments;

Relief for allowable motor expenses;

Tapering relief allowable for taxation of car benefits in kind;

Reduced tax rate of 10% for authorised unit trust schemes;

Reduced tax rate of 10% for special investment schemes;

Exemption of certain grants made by Údarás na Gaeltachta;

Relief for investment income reserved for policy holders in life assurance companies;

Relief for various business related expenses such as staff recruitment, rent, legal fees, and other general expenses;

Exemption in certain circumstances on the interest on quoted bearer Eurobonds;

Exemption of payments made as compensation for loss of office;

Exemption of scholarship income;

Exemption for income received under Sceim na bhFoghlaimeoiri Gaeilge.

Joan Burton (Dublin West, Labour)
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Question 140: To ask the Minister for Finance further to Parliamentary Question No. 342, of 3 November, 2009, if he will provide a breakdown of the numbers, where available, and the cost to the Exchequer of the tax relief for pension investment scheme for those earning less than €10,000, less than €20,000, less than €30,000, less than the average industrial wage, less than €40,000, less than €50,000, less than €60,000, less than €70,000, less than €80,000, less than €90,000, less than €100,000, and more than €100,000; and the extra revenue which would be generated for the Exchequer by limiting tax relief for pension investment to those in each of the pay brackets set out above. [25361/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners that the latest relevant information available is in respect of income tax relief allowed for contributions to Retirement Annuity Contracts (RACs) and Personal Retirement Savings Accounts (PRSAs) for the income tax year 2007.

RACs and PRSAs are available to the self-employed and to employees not in occupational pension schemes. The information is set out in tables following this reply which provide the number of cases, amount of deduction and reduction in tax for tax relief for RACs and PRSAs for the various contribution ranges. The information is based on income returns contained in Revenue records at the time the data were compiled for analytical purposes, representing close on 90% of all returns expected. A married couple who has elected or has deemed to have elected for joint assessment is counted as one tax unit.

The figures for the total number of cases and the total reduction in tax shown in the tables are lower than those indicated in the table supplied with the reply I gave on 3 November 2009 to Parliamentary Question ref 38545/09 tabled by the Deputy. This is due to the fact that the figures in the tables represent under 90 per cent of all income tax returns expected for 2007, while the figures supplied on 3 November were, in accordance with normal practice, grossed-up at aggregate level to adjust for this incompleteness.

The latest tax year for which income tax returns are required to have been made (and in respect of which data on contributions to RACs and PRSAs would be included) is 2008. The deadline for making those returns was 31 October 2009 (or 17 November 2009 if submitted via the Revenue on-line Service – ROS). I am informed by the Revenue Commissioners that it takes time to process the various data on the returns received and, moreover, that many return forms for 2008 continue to be received in the months beyond the October/November deadlines. Before providing any figures for 2008, the Revenue Commissioners prefer to have as high a proportion of tax returns for that year as is possible represented in the data by allowing sufficient time to elapse to ensure that an acceptable level of maturity in the figures is attained. In that context, it is hoped that sufficient data should be available by September next to provide comparable tables for 2008,

It is not possible to provide corresponding figures in regard to the take-up of the tax relief for pension contributions by employers and employees to occupational pension schemes as the relevant data are not captured in such a way as to make this possible. Provisions were included in the Finance Act 2004 with a view to improving data quality and transparency without overburdening taxpayers or employers. The Act includes provisions that require employers to provide data on superannuation contributions in the P35 form to be filed by employers from 2006 on. These changes have yielded additional information regarding the overall cost of tax relief for pension contributions but, as the returns are aggregated at employer level, they cannot provide a precise basis for measuring the potential impact on the Exchequer of any proposals to limit tax relief for pension investment for individuals across different income ranges.

Joan Burton (Dublin West, Labour)
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Question 141: To ask the Minister for Finance the cost to the Exchequer of the health and medical expenses relief scheme; the projected cost to the Exchequer for the years 2010 and 2011; the number of taxpayers who availed of this scheme; and if he will make a statement on the matter. [25362/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners that the most recent year for which final information is available on the cost to the Exchequer, and the numbers of taxpayers availing, of the tax relief for health expenses is the income tax year 2006. In 2006, an estimated 349,000 taxpayers availed of the health expenses relief at an estimated cost to the Exchequer of €165 million.

I am not in a position to provide the data requested by the Deputy for the years 2010 and 2011 in relation to the above mentioned relief.

The numbers availing represent income earners who were in a position to absorb at least some of the tax relief and thereby give rise to an Exchequer cost. They do not include the numbers of potential claimants whose entitlements to other tax reliefs or credits were sufficient to reduce their liability to tax to nil without reference to the specific relief.

A married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit.

Joan Burton (Dublin West, Labour)
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Question 142: To ask the Minister for Finance the cost to the Exchequer of the tuition fees tax relief scheme; the number of taxpayers who avail of the scheme; and if he will make a statement on the matter. [25363/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners that the most recent year for which final information is available on the cost to the Exchequer, and the numbers of taxpayers availing, of the tax relief for tuition fees is for the income tax year 2006. The relevant figures are shown in the following table.

The numbers availing represent income earners who were in a position to absorb at least some of the tax relief and thereby give rise to an Exchequer cost. They do not include the numbers of potential claimants whose entitlements to other tax reliefs or credits were sufficient to reduce their liability to tax to nil without reference to the specific relief. The numbers availing are rounded to the nearest hundred as appropriate.

A married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit.

Joan Burton (Dublin West, Labour)
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Question 143: To ask the Minister for Finance the cost to the Exchequer of the medical insurance premiums tax relief at source scheme; the number of taxpayers who avail of the scheme; and if he will make a statement on the matter. [25364/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners that the cost to the Exchequer of tax relief allowed for medical insurance premia in 2009 is provisionally estimated at €374 million.

The numbers availing of the scheme relate to the number of policies issued as it is not possible to compile a reliable count of the number of individual claimants. For 2008, the latest year for which it is available, the number of policies issued is provisionally estimated at 1,017,400.

The cost figure above does not include the cost to the Exchequer of €216 million of the age-related tax relief at source, which is established by the Health Insurance (Miscellaneous Provisions) Act 2009. This tax credit is part of a scheme designed to address the issues covered by the Supreme Court judgment of 2008 that found against the risk equalisation scheme for the provision of private health insurance.

The scheme is two-fold, an age-related tax credit to compensate for the higher cost of insurance for older persons, which is funded by a levy on health insurance companies based on the number of people covered by policies underwritten by them. This scheme is a temporary measure for three years from 1 January 2009 to 31 December 2011. It is intended that it will be revenue-neutral over its duration.

Joan Burton (Dublin West, Labour)
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Question 144: To ask the Minister for Finance the cost to the Exchequer of the home carer tax credit; the number of taxpayers who avail of the scheme; and if he will make a statement on the matter. [25365/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners that provisional estimates, on a preliminary basis, of the cost to the Exchequer of the home carer tax credit and the associated number of income earners availing of it for the income tax years 2010 are as follows:

The figures for 2010 are estimates from the Revenue tax forecasting model using actual data for the year 2007, adjusted as necessary, for income and employment growth for the years in question and are therefore provisional and subject to revision. The numbers availing represent income earners who were in a position to absorb at least some of the home carer tax credit and thereby give rise to an Exchequer cost. They do not include the numbers of potential claimants whose entitlements to other tax credits were sufficient to reduce their liability to tax to nil without reference to the home carer credit. The numbers availing are rounded to the nearest hundred as appropriate.

A married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit.