Thursday, 7 November 2013
Department of Finance
Tax Reliefs Application
I propose to take Questions Nos. 83 and 84 together.
A breakdown of the cost of tax relief on employee contributions to occupational pension schemes is not available by either income tax rate or by reference to income levels, as tax returns by employers to the Revenue Commissioners of employee contributions to such schemes are aggregated at employer level. There is, therefore, no statistical basis for providing definitive figures. However, by making certain assumptions about the available information, it is estimated that the full-year yield to the Exchequer from confining tax relief to the standard rate of 20% in respect of pension contributions to occupational pension schemes, retirement annuity contracts and personal retirement savings accounts and confining tax relief for the Public Service pension related deduction to the standard rate of 20% would be in the region of €480 million. This estimate includes €90 million in respect of the Public Service pension related deduction.
This estimate does not allow for possible behavioural changes that could arise from a change in the rate of relief. I should note that, as indicated in my Budget 2014 speech, contributions to pension savings will continue to attract income tax relief at the marginal rate.
In terms of the 2010 income tax year, the latest year for which the necessary figures are available, it is estimated that about 760,000 claimants avail of income tax relief on contributions to occupational pension schemes, retirement annuity contracts and personal retirement savings accounts. Due to the lack of distributional data by either tax rate or by income levels as mentioned earlier it is not possible to provide reliable details of the impact of standard rating by reference to the numbers affected or by reference to income bands.