Michael Conaghan (Dublin South Central, Labour)
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To ask the Minister for Finance if he will detail in tabular form, every tax relief that is currently available to Irish citizens; and the tax revenue lost to the Exchequer from each tax relief in each of the past three years. [14439/13]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that the total identifiable costs to the Exchequer which are currently available relate to income tax and corporation tax allowances, reliefs, exemptions and tax credits available as set out in the following tables for 2008 and 2009, the most recent year for which the necessary detailed historical information is available. It should be noted that there have been changes since this period, i.e. some schemes have been abolished or modified and others have been introduced. For instance, as the Deputy will be aware, virtually all of the area-based and property tax incentive schemes have ended and this year’s Finance Act provided for a cap on property-based Accelerated Capital Allowance Schemes (in line with the tax life of the particular scheme) to be introduced from 1 January 2015. Relevant notes relating to items in the tables are also included.

Index of Tables and Notes

a) Note on the Cost of Tax Credits, Allowances and Reliefs 2008 and 2009

b) Table IT 6 showing Cost of Tax Credits, Allowances and Reliefs 2008 and 2009. Figures of cost in relation to corporation tax are included in the “Income Tax and/or Corporation Tax ” section of this table.

c) Notes on Table IT 6

d) Note on Green Paper on Pensions

e) Estimate of cost of certain property-based tax incentives and incomes exempt from tax for 2008 and 2009.

f) Note on reliefs in respect of which costs are not currently quantifiable or are negligible or are not identifiable within total aggregates.

Work is ongoing to update the costs to 2010 terms but this is not yet complete.

a) Cost of Tax Credits, Allowances and Reliefs 2008 and 2009

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 2008 and 2009 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.

Apart from the artists' exemption, these figures do not take account of the application of the restriction of reliefs originally provided for in section 17 of Finance Act 2006, which took effect from 1 January 2007. The restriction was extended by Section 23 of Finance Act 2010.

Finally, the estimates shown in many cases are tentative and are subject to revision in the light of later information.

b) Table IT 6 showing Cost of Tax Credits, Allowances and Reliefs 2008 and 2009

INCOME TAX AND CORPORATION TAX

Table IT6

Cost of Tax Credits, Allowances and Reliefs 2008 and 2009