Written answers

Tuesday, 15 July 2014

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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208. To ask the Minister for Finance to set out the partial and full year revenue that would be raised for the Exchequer from the introduction of a new rate of 48% on a person's income in excess of €100,000. [31226/14]

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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236. To ask the Minister for Finance to set out the partial and full year cost to the Exchequer from exempting income earners below €17,542 per annum from the universal social charge. [31256/14]

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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238. To ask the Minister for Finance to set out the partial and full year cost to the Exchequer of not increasing universal social charge from 4% for a series of earners in 2015, as planned, and the offset to this cost of maintaining the higher rate of USC for the self-employed from 10% to 7%. [31258/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 208, 236 and 238 together.

It is assumed that the threshold for the 48% Income Tax rate proposed by the Deputy, would not alter the existing standard rate band structure applying to single and widowed persons, to lone parents, married couples and civil partnerships.

I am advised by the Revenue Commissioners that, given the current band structures, major issues would need to be resolved as to how, in practice, such a new Income Tax rate could be integrated into the current system and how this would affect the relative position of different types of income earners.

Notwithstanding these issues, the Revenue Commissioners estimate that the first and full year yield to the Exchequer of the introduction of the suggested new third rate of Income Tax of 48% would be of the order of €222 million and €380 million respectively.

The Revenue Commissioners further estimate the partial and full year costs to the Exchequer of increasing the existing exemption threshold of €10,036 for the Universal Social Charge (USC) to €17,542 would be €502 million and €689 million respectively.

The Revenue Commissioners tentatively estimate the first and full year cost of retaining the exemption from the 7% rate of Universal Social Charge (USC) for those on medical cards with an aggregate annual income below €60,000 to be of the order of €77 million and €102 million respectively. They also estimate that the first and full year yield from retaining the 10% rate of USC, which is currently applicable to self-employed income in excess of €100,000, estimated by reference to 2014 incomes, would be of the order of €50 million and €123 million respectively (this is the additional yield compared to the case where only the 7% rate applied to self-employed income in excess of €100,000).

These figures are estimates for 2014 from the Revenue tax forecasting model using latest actual data (for the year 2011), adjusted as necessary for income, self-employment and employment trends in the interim. They are provisional and may be revised. Married persons or civil partners who have elected or have been deemed to have elected for joint assessment are counted as one tax unit. While not directly available from tax records, recent data exchanges between Revenue and the HSE mean medical card holders can be identified and linked to Revenue's taxpayer records. As a result, it is estimated that 20% of earners with USC liable income between €16,016 and €60,000 hold a medical card and this is the basis for the relevant costing above.

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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209. To ask the Minister for Finance to set out the partial and full year revenue that would be raised for the Exchequer by increasing the rate of capital gains tax from 33% to 40%. [31228/14]

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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210. To ask the Minister for Finance whether it is possible and the amount that would be raised by eliminating the capital gains tax exemption for seven years for properties bought from December 2011 to 2013. [31229/14]

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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211. To ask the Minister for Finance to set out the partial and full year revenue that would be raised for the Exchequer from abolishing capital gains tax exemptions for private principal residences sold in excess of €1 million. [31230/14]

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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240. To ask the Minister for Finance to set out the partial and full year cost to the Exchequer of dividing the capital gains tax categories into passive and active and applying a 40% rate to the passive CGT activity, that is, buying shares and the existing rate to active engagement, that is, selling on a business. [31260/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 209 to 211, inclusive, and 240 together.

I am advised by the Revenue Commissioners that the yield to the Exchequer, estimated from increasing the Capital Gains Tax (CGT) rate from 33% to 40% could be in the region of €105million in a full year. A partial year yield is not available as it would depend on the date of introduction of the proposal. This estimate includes corporate gains. I am advised by the Commissioners that the estimate assumes no behavioural changes on the part of taxpayers. Increases in rates may have a significant behavioural impact and as a result may not produce the expected increase in tax yield.

Regarding the capital gains tax exemption for properties bought in the period 7 December 2011 to 31 December 2014 and held for at least 7 years, I am informed by the Revenue Commissioners that the CGT relief contained in Section 604A of the Taxes Consolidation Act 1997 (enacted in Finance Act 2012 and extended by Finance (No 2) Act 2013) will have no cost, in terms of CGT forgone, for a period of seven years from the time any properties to which the relief applies were acquired. Any such properties sold within seven years of being acquired will not qualify for the relief. Disposals made after the seven year period of ownership will be subject to CGT on any gain but effectively at a reduced rate by reference to the fraction that seven years bears to the overall period of ownership. It is not possible at this time to estimate when such properties will be disposed of in the future or the amount of chargeable capital gain, if any, that may arise on such disposals. As to the question of removing the exemption, the position is that it will end shortly at the close of this year and there would very likely be legal issues around the removal of a relief from individuals who have already acted upon it in good faith.

In relation to principal private residences, I am informed by the Revenue Commissioners that, as information on the value of capital gains arising from the disposal of principal private residences is not required in CGT returns, there is no basis for separately identifying the yield that would arise from the removal of the exemption from CGT for sales of principal private residences above €1 million. Accordingly, the specific information requested by the Deputy is not available.

Regarding the final question, I am informed by the Revenue Commissioners that, as tax returns do not provide a basis for compiling estimates in relation to the amount of CGT liability separately associated with passive and active activity, it is therefore not possible to provide the information requested by the Deputy.

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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212. To ask the Minister for Finance to set out the partial and full year revenue that would be raised for the Exchequer by increasing capital acquisitions tax to 40%. [31231/14]

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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213. To ask the Minister for Finance to set out the partial and full year revenue that would be raised for the Exchequer by increasing capital acquisitions tax to 40% and reduce the group thresholds by 10%, 15% and 20% respectively. [31232/14]

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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214. To ask the Minister for Finance to set out the partial and full year revenue that would be raised for the Exchequer by reducing the group thresholds for capital acquisitions tax by 10%, 15% and 20% respectively. [31233/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 212 to 214, inclusive, together.

I am advised by the Revenue Commissioners that the estimated full year yield to the Exchequer from increasing the Capital Acquisitions Tax (CAT) rate from 33% to 40%, based on the expected outturn in 2014, could be in the region of €77 million, assuming no change in the existing thresholds.

The estimated full year yield from existing taxpayers from applying the proposed CAT rate of 40% and reducing thresholds by 10% is €100 million, from applying the proposed CAT rate of 40% and reducing thresholds by 15% is €112 million, and from applying the proposed CAT rate of 40% and reducing thresholds by 20% is €124 million.

The estimated full year yields, while maintaining the CAT rate at 33%, from existing taxpayers of reducing CAT thresholds by 10%, 15% and 20% is €19 million, €29 million and €38 million respectively.

I am advised that CAT returns are not required to be filed with the Revenue Commissioners where gifts and inheritances do not exceed 80% of the current threshold limits. For this reason, the estimates shown above do not include any additional yield associated with benefits brought into the tax net due to reduced threshold limits.

Partial year yields are not shown as they would depend on the date of introduction of the proposals.  All estimates are provisional and subject to revision.

It should be noted that these estimates are based upon an assumption that there would be no behavioural impact of these changes, which could lead to differing Exchequer yield impacts.  In addition, the realisation of any yield on assets relating to property is subject to movements in the value of such assets.

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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215. To ask the Minister for Finance to set out the partial and full year revenue that would be raised for the Exchequer by increasing the once-off charge for establishing a discretionary trust by 1% and the annual charge for a trust from 1% to 1.5%. [31234/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that a precise breakdown of the yield from Discretionary Trust Tax between the once-off charge and the annual charge is not available. However, I am advised by the Commissioners that it is understood that the bulk of the yield is derived from the annual charge. On that basis, the estimated full year yield to the Exchequer from the suggested increase in the annual charge rate of 1% to 1.5% could be in the region of €0.8 million.

The estimated full year yield to the Exchequer from the suggested increase of 1% in the once-off charge is likely to be negligible.

A partial year yield estimate is not available as it would depend on the date of introduction of the proposal.

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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216. To ask the Minister for Finance to set out the partial and full year revenue that would be raised for the Exchequer by the introduction of a new 1% wealth tax on net assets in excess of €1 million, excluding qualified provisions such as working farmland, the first 20% of a family home, capital sums in pension funds, business assets, applying to global assets for those domiciled or ordinarily resident in the State and to domestic assets for those resident in the State for tax purposes. [31235/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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In order to estimate the potential revenue from a wealth tax, it would first be necessary to identify the wealth held by individuals.

I am informed by the Revenue Commissioners that they currently have no statistical basis for compiling estimates in relation to a potential wealth tax. Although an individual's assets and liabilities are declared to the Revenue in a number of specific circumstances (for example, after a death), this information is not a complete measure of financial assets in the State, nor is it recorded in a manner that would allow analysis of the implications of an overarching wealth based tax.

It is therefore not possible to provide the information requested by the Deputy.

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