Terence Flanagan (Dublin North East, Independent)
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193. To ask the Minister for Finance the net benefit to the Exchequer as a result of the 15,000 jobs that have been created since the reduction in the VAT rate; and if he will make a statement on the matter. [46415/13]

Michael Noonan (Limerick City, Fine Gael)
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It is not possible to calculate the net benefit to the Exchequer as a result of the 15,000 jobs that have been created since the reduction in the VAT rate that would take account of all of the variables that apply in every case. However, I can put forward a specific example for the information of the Deputy. The calculations presented are based on a single individual who takes up full time employment, 39 hours a week at the minimum hourly rate of €8.65 per hour, which equates to an annual income of €17,542 per annum. Before taking up the employment, the individual was entitled to the full rate of Jobseekers Benefit/Allowance at €188 per week. No other secondary benefits, which the individual may have been entitled to, have been included for the purpose of these computations. Furthermore, it is assumed that the individual is not in receipt of a medical card and therefore does not benefit from the concessionary Universal Social Charge (USC) rate. In addition, the calculations that have been computed below are on the assumption that the 15,000 jobs mentioned by the Deputy would have not been created without the reduction in the VAT rate. The following tax credits have been included in the computation:

Tax Liability 2013

Additional tax revenues of €22.5 million per annum (€1,501 per annum X 15,000 employments) would be generated over a full tax year in such a case. In addition, savings of €146.6 million (€9,776 per annum X 15,000 claimants) would be achieved in relation to Jobseekers payments. Therefore, the total annual benefit to the Exchequer would be €169 million in this specific example.

However, I would stress again that this is a very specific and simple analysis. What is not reflected in the calculations is the potential costs which would have arisen had it not been for the cut in the VAT rate, such as increased numbers on the live register. In this context, one of the explicit goals of the measure was the retention of existing staff whom would otherwise have lost their job, by improving the margins for operators in these labour intensive sectors. While, it is not possible to readily place a figure on this, I am confident that this is indeed the case.