Eoghan Murphy (Dublin South East, Fine Gael)
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Question 166: To ask the Minister for Finance the rate at which a flat tax on income would have to be if all existing tax credits, allowances and reliefs were abolished, with the first €15,000 of earnings exempt of tax for every income earner, to achieve a target yield equal to the amount currently raised from income tax, the universal social charge and employee's PRSI. [23692/12]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that if the combined Budget estimate of €16.84 billion expected in 2012 from income tax, USC and employee's PRSI was to be raised by applying a single flat rate of tax on the basis outlined by the Deputy, the rate of tax required, based on projected 2012 incomes, would be 27%. This tentative estimate is based on the assumption that a full flat tax system is introduced and that the existing income tax, USC and employee PRSI structures would be replaced in their entirety by the system outlined by the Deputy. In such an event, the personal tax credits and allowances and tax reliefs in general would no longer apply. This is normally a feature of flat tax systems. For example, contributions to approved superannuation schemes would no longer attract tax relief and mortgage interest relief and medical insurance relief which are provided at source would cease to apply. Other schemes and reliefs which it is assumed would be abolished for the purpose of this costing include capital allowances, property reliefs generally, the various savings related tax reliefs, tax relief on redundancy payments, the business expansion scheme and film relief. To the extent that any of these reliefs were continued, the costs would be higher

The flat rate figure is an estimate from the Revenue tax-forecasting model using actual data for the year 2009 adjusted as necessary for income and employment trends for the year 2012. It is, therefore, provisional and likely to be revised.