Written answers
Wednesday, 3 July 2013
Department of Finance
Tax Code
Pearse Doherty (Donegal South West, Sinn Fein)
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72. To ask the Minister for Finance further to Parliamentary Question No. 82 of 26 June, if he will outline the effective tax rate effect for income earners whose tax credits were phased out with a reduction of half the credits between €100,000 and €150,000; three quarters of the credits between €150,000 and €200,000; and abolished over €200,000; based on the current tax rates; but also setting out a table of what the effective rate would be if a new third tax rate of 48% was introduced on income over €100,000. [32381/13]
Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that the increases in the effective tax rates, estimated by reference to 2013 incomes, that would be brought about by reducing the main personal and employee tax credits in the manner mentioned by the deputy in parliamentary question 30922/13 are set out in respect of each specified income range as follows.
| Range of Gross Income. | Reduction in tax credits Increase in effective rates of income tax. Percentage points % |
|---|---|
| €100,000 to € 150,000 | + 2.16 |
| € 150,001 to € 200,000 | + 2.07 |
| Over € 200,000 | + 1.06 |
If the impact of a new third tax rate of 48% on taxable income over €100,000 is included with the reductions in tax credits already mentioned the corresponding combined increases in the effective tax rates are estimated as follows.
| Range of Gross Income. | Reduction in tax credits and new top tax rate of 48% Increase in effective rates of income tax Percentage points % |
|---|---|
| €100,000 to € 150,000 | + 2.5 |
| € 150,001 to € 200,000 | + 3.5 |
| Over € 200,000 | + 4.87 |
The figures for increases in effective tax rates are obtained by calculating the tax increases arising from the changes as a percentage of the total gross income of income earners in each of the specified income ranges. It should be noted that the income ranges shown in the above table relate to Gross Income as defined in Revenue Statistical Report 2011. These figures are estimates from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. They are therefore provisional and likely to be revised. It should also 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.
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