Tuesday, 21 February 2012
Department of Finance
Question 152: To ask the Minister for Finance the total revenue to be raised in 2012 from the imposition of a 5% surcharge on persons with gross incomes of more than €100,000 on the amount of income sheltered by property reliefs, including section 23 reliefs and accelerated capital allowance schemes; and if he will make a statement on the matter. [9215/12]
As the Deputy will be aware Finance Bill 2012 contains two proposed measures aimed at reducing the cost to the State of the “legacy” property-based tax incentive schemes and bringing it to an end in a shorter time period. These measures consist of a property relief surcharge, which will take effect from 1 January 2012 and a cap on property-based Accelerated Capital Allowance Schemes to be introduced from 1 January 2015. The Exchequer yield from the property relief surcharge will depend on the level of use of the “legacy” reliefs by individuals falling within the ambit of the measure thus it is difficult to be certain on the amount that it will generate. However, I have no reason at this stage to change the figure of €15m savings in a full year, which I announced at Budget time.
The property relief surcharge and the 2015 cap on accelerated capital allowances, which limit property tax reliefs that benefit high income earners, demonstrate this Government’s commitment to developing a fairer tax code.
These provisions reflect the findings of the Economic Impact Assessment on the measures proposed by the previous Government for restricting the property-based “legacy” tax relief schemes. The Impact Assessment, which was published with the Finance Bill, considered the impacts of these proposals and highlighted, in particular, the vulnerability of small investors to insolvency if they lost these reliefs. The Economic Impact Assessment report concludes that relief to small scale investors should not be restricted in the current climate but that there is scope for larger investors to contribute more.
This Government believes that large scale investors in property that attracts tax reliefs can and should make more of a contribution. The property relief surcharge will therefore be imposed on investors with an annual gross income of €100,000 and over. It is also estimated that the change to the high earners restriction in 2010 will yield additional taxes from high earners who benefit from tax reliefs.
Question 153: To ask the Minister for Finance the total lost tax revenue in 2011 arising from income sheltered from taxation by section 23 reliefs and accelerated capital allowance schemes; and if he will make a statement on the matter. [9216/12]
I am informed by the Revenue Commissioners that the latest relevant information available as to the cost to the Exchequer of all property related tax schemes (Section 23 type reliefs and accelerated capital allowances) is for the year 2009, based on personal income tax returns filed by non-PAYE taxpayers and corporation tax returns filed by companies for that year. On that basis the estimated cost is €342 million. This figure includes owner-occupier relief. It should be noted that any corresponding data returned by PAYE taxpayers in the income tax return (Form 12) is not captured in the Revenue computer system. However, any PAYE taxpayer with non-PAYE income greater than €3,174 is required to complete an income tax return (Form 11).
The estimated relief claimed has assumed tax forgone at the 41% rate in the case of individuals and 12.5% in the case of companies. The figures shown correspond to the maximum Exchequer cost in terms of income tax and corporation tax.
Question 154: To ask the Minister for Finance with respect to the standard rate VAT increase to 23%, if any assessment has been carried out by him on the impact of this tax increase on the domestic economy, retail sales and or employment levels; and if he will make a statement on the matter. [9217/12]
At Budget time, the Government carefully considered the various options open to it in terms of taxation. One of the key objectives of the Government is to get people back to work. Indirect taxes have a less adverse impact on economic activity and employment, which is why Budget 2012 focused on indirect taxes, such as VAT, rather than on income tax. As we have very little actual data for 2012 as of yet, it is too early to assess the impact of the increase in the standard VAT rate.