Patrick Nulty (Dublin West, Labour)
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Question 221: To ask the Minister for Finance if he will provide, in tabular form, the amount that could be raised annually for the Exchequer if a wealth tax following the model of Switzerland, France, Norway, Canada and Luxemburg were to be introduced; and if he will make a statement on the matter. [25100/12]

Michael Noonan (Limerick City, Fine Gael)
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Of the five "wealth taxes" mentioned by the Deputy, three – those in France, Norway and Switzerland – are wealth taxes as normally understood, that is, an annual recurring tax on wealth. To estimate the potential revenue from such a wealth tax, we would need to identify the wealth held by individuals. I am informed by the Central Statistics Office that the CSO institutional sector 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. So while the CSO's institutional sector accounts show that households held c. €126 billion on deposit in 2010, this is not broken down by income or wealth categories. However, I understand that, following discussions between the Department of Public Enterprise and Reform, the CSO and the Central Bank, the CSO has commenced a "Household Finance and Consumption Survey", which will include, inter alia, a survey of wealth. The first results of this survey will be available in 2014.

I am informed by the Revenue Commissioners that they have no statistical basis for compiling estimates in relation to a potential annually recurring tax on wealth. It is therefore not possible to provide the information requested by the Deputy on the potential return from implementing a wealth tax system based on the models operating in France, Norway and Switzerland.

Luxembourg abolished its wealth tax on individuals in 2006 but still has a "net wealth tax" on companies, which is at 0.5% on the company's net assets – the assets of the company less debts – in the balance sheet at the end of the accounting period. I am informed by the Revenue Commissioners that the Corporation Tax returns do not require the value of company assets to be recorded so it is not possible to provide an estimate of the potential yield should such a tax be introduced in Ireland.

The only "wealth tax" among those listed by the Deputy where it is possible to make an estimate of the potential yield if a similar measure was introduced here is the newly introduced tax in the Province of Ontario in Canada. This is an income tax rather than a tax on wealth, as it applies to the portion of an individual's income in excess of CN$500,000 in a year.

The full year yield to the Exchequer from implementing a system on similar lines, where an additional tax of 3.12% would be applied to the excess of incomes above a threshold of €388,000 (the approximate equivalent of the Canadian threshold of CN$500,000), would be of the order of €73 million by reference to projected incomes for 2012.

The 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 in the interim. The figure is, therefore, provisional and likely to be revised. This potential yield may also be subject to significant behavioural effects.

Asset values increase and decrease over time and in the context of recent economic circumstances they may have declined considerably in many cases. Thus, if the value of an asset or of an individual's wealth is measured at a particular time there is no guarantee that the asset value or the individual's wealth will remain at that level or increase from that point. This would make it difficult to predict the potential yield from a wealth tax - and this would have to be borne in mind in terms of its consistency as a source of revenue.

Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT) are, in effect, taxes on wealth, in that they are levied on an individual or company on the disposal of an asset (CGT) or the acquisition of an asset through gift or inheritance (CAT). However, they are not annual taxes on an individual's wealth. The rate of both these taxes is currently 30%, which I increased from 25% in Budget 2012. I also reduced the CAT group tax-free threshold for gifts/inheritances from parents to children (the Group A threshold) from €332,084 to €250,000. The introduction of wealth taxes similar to those referred to by the Deputy could have a negative impact on receipts from CGT and CAT. The overall net revenue result cannot therefore be estimated with any certainty.

The information set out in this answer is provided in the following table, as requested.