Written answers

Wednesday, 6 April 2016

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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138. To ask the Minister for Finance the cost of raising the universal social charge exemption to €19,572 and only applying the charge to earnings in excess of €19,572 per year (details supplied). [5581/16]

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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139. To ask the Minister for Finance the revenue from tapering out all tax credits by five per cent per €1,000 on income between €80,000 and €100,000 per year, resulting in no entitlement to tax credits when income is in excess of €100,000. [5582/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 138 and 139 together.

I am informed by the Revenue Commissioners that the estimated first and full year costs to the Exchequer of exempting income up to €19,752 from Universal Social Charge (USC) are in the order €501 million and €684 million respectively. This estimate envisages that for cases with incomes in excess of this threshold, USC would start to be applicable at the 5.5% rate on income in excess of €19,752 and the current 8% and 3% surcharge rates would also remain. I am informed that raising the threshold to €19,752 would mean an estimated 41% of income earners would be exempt from USC liability.

These figures are estimates from the Revenue tax forecasting model using latest actual data for the year 2013, adjusted as necessary for income, self-employment and employment trends in the interim. They are estimated by reference to 2016 incomes and are provisional and may be revised.

The estimated first and full year yield to the Exchequer of tapering the tax credits by 5% per €1,000 on income between €80,000 and €100,000, resulting in no entitlement to tax credits when income is in excess of €100,000, is €618 million and €872 million respectively.

The figures for the yield from tapering the Personal, PAYE and Earned Income Credit are estimates from the Revenue tax forecasting model using latest actual data for the year 2013, adjusted as necessary for income, self-employment and employment trends in the interim. They are estimated by reference to 2016 incomes and are provisional and may be revised.  The estimates for the remaining tax credits are based on 2013 tax returns, the latest year for which complete returns data are available. The estimate does not include a yield from the Rent Tax Credit which is currently being withdrawn on a phased basis, ending in 2017. These estimates also take no account of any change in taxpayer behaviour which might arise on foot of the introduction of such a measure in terms of assessment status and claiming of credits.

Finally, I have been advised by the Revenue Commissioners that, given the current tax structures, major issues would need to be resolved as to how, in practice, the tapering out of tax credits could be integrated into the current system, and how this would affect the relative position of different types of income earners.

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