Tuesday, 12 July 2011
Department of Finance
Question 91: To ask the Minister for Finance if businesses are legally obliged to pass on the reduced VAT rate to customers with effect from 1 July 2011; the checks that will be carried out to ensure that businesses who operate in the area in which the reduced rate applies do not retain the VAT reduction by not passing on the cut to customers; and if he will make a statement on the matter. [19613/11]
The Finance (No. 2) Act 2011 provided for a second reduced VAT rate, of 9%, on a temporary basis in respect of certain services and goods for the period 1 July 2011 to end 2013. Businesses must account for VAT at the 9% rate on these specified goods and services provided by them on or after 1 July 2011. Where the goods and services are supplied to another VAT-registered business a VAT invoice must be issued, charging VAT at the new rate. However, where the supplies are to unregistered customers there is no obligation to show the VAT separately. Businesses dealing with unregistered customers are not legally obliged to reduce their (VAT-inclusive) pricing to reflect the post-1 July 2011 lower rate, but would be expected to do so.
However, in reducing the VAT burden on activities related to the tourism industry, the introduction of the 9% VAT rate is aimed at contributing towards boosting tourism and the creation of additional jobs in that sector. With this in mind, the VAT reduction will be kept under review and evaluated before end 2012 in order to determine its effectiveness in aiding the industry. If it is shown that the VAT reduction has little or no effect in aiding the industry then the measure is open to being reformed or abolished. In addition, checks on the correct operation of VAT, including the rates of VAT applied are integral parts of Revenue's audit and compliance programmes.
Question 92: To ask the Minister for Finance the tax take that would be raised each year from a wealth tax of 1% levied on all persons with wealth of over €1 million; and if he will make a statement on the matter. [19618/11]
Question 93: To ask the Minister for Finance the tax take that would be raised each year from a wealth tax of 1% levied on all persons with wealth of over €10 million; and if he will make a statement on the matter. [19619/11]
I propose to take Questions Nos. 92 and 93 together.
I am informed by the Central Statistics Office that the CSO institutional accounts do not give an indication of the number of households or persons classified by the categories of wealth they hold. These statistics are based on aggregate information collected from financial institutions and do not contain the demographic details which would enable such a breakdown of the statistics. I am informed by the Revenue Commissioners that they have no statistical basis for compiling estimates in relation to a potential wealth tax. It is therefore not possible to provide the information requested by the Deputy.
Question 94: To ask the Minister for Finance the extra tax that would be raised by increasing the income tax on all taxable income over €100,000 for an individual and €200,000 for a couple by 1%; and if he will make a statement on the matter. [19620/11]
Question 95: To ask the Minister for Finance the extra tax that would be raised by increasing the income tax on all taxable income over €200,000 for an individual and €400,000 for a couple by 1%; and if he will make a statement on the matter. [19621/11]
I propose to take Questions Nos. 94 and 95 together.
I am advised by the Revenue Commissioners that the estimated full year yield to the Exchequer, estimated by reference to 2011 incomes, of a 1% point increase in the top rate of income tax for those single and widowed individuals with incomes over €100,000 and married couples with incomes over €200,000 as referred to by the Deputy would be of the order of €59 million in a full year. In addition, the cost of a 1% point increase in the top rate of income tax for those single and widowed individuals with incomes over €200,000 and married couples with incomes over €400,000 would be of the order of €30 million in a full year. These estimates are based on confining the increased tax rate to the segment of income that is in excess of the stated thresholds of €100,000, €200,000 and €400,000.
These figures are estimates from the Revenue tax-forecasting model using actual data for the year 2008 adjusted as necessary for income and employment trends for the year 2011. They are therefore provisional and likely to be revised. It should be noted that a married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit. The Deputy should be aware that increases in the income tax rates at the levels proposed would constitute a third rate of tax. Given the current band structures, major issues would need to be resolved as to how, in practice, such new rates could be integrated into the current system and how this would affect the relative position of different types of income earners
Question 96: To ask the Minister for Finance if he will provide an update regarding the amount of revenue realised since the exemption from benefit-in-kind tax for employer-provided child care was abolished by the last Government; if he will consider overturning the decision to abolish the exemption in view of the fact that attempts are being made to encourage persons back into the workplace; and if he will make a statement on the matter. [19681/11]
The costs of the provision of certain free or subsidised childcare facilities by employers were exempt from a benefit-in-kind charge on the employees that availed of such facilities. This exemption was abolished in the recent Budget and Finance Bill 2011. This relief was introduced in 1999 to encourage employers to invest in childcare facilities and thus increase the overall supply of childcare places. At the time of its introduction, there was a scarcity of childcare places and the costs associated with childcare were increasing. The aim of the exemption was to encourage employers who were not traditionally associated with the provision of childcare to provide such facilities for their employees. The Commission on Taxation recommended the abolition of this exemption, citing equity, due to the likelihood that only large employers have the ability to make the necessary investments.
A number of support measures are in place to ease the burden on working parents. These support measures include a free pre-school year in Early Childhood Care and Education, a five-year National Childcare Investment Programme which aims to fund an additional 25,000 childcare places by end 2011, as well as extended paid and unpaid maternity leave. With a view to keeping the scheme simple and reducing administration on the part of employers, there was no notification procedure for employers involved. Accordingly, the Revenue Commissioners do not have costs for the scheme. It was estimated in Budget 2011 that the abolition would yield €3 million to the Exchequer in 2011 and €6 million in a full year.