Michael McGrath (Cork South Central, Fianna Fail)
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182. To ask the Minister for Finance the fiscal space available in 2017 if tax bands and credits are indexed and if they are not indexed; and if he will make a statement on the matter. [9588/16]

Michael McGrath (Cork South Central, Fianna Fail)
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183. To ask the Minister for Finance the cost of indexing tax bands and credits in 2017 based on his estimate of earnings growth and inflation; and if he will make a statement on the matter. [9589/16]

Michael McGrath (Cork South Central, Fianna Fail)
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184. To ask the Minister for Finance the change in the monetary value of the PAYE and personal tax credits in 2017 if they were indexed in line with expected earnings growth and inflation; and if he will make a statement on the matter. [9590/16]

Michael McGrath (Cork South Central, Fianna Fail)
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185. To ask the Minister for Finance the change in the entry point to the top income rate for a single person, currently at €33,800, if it were indexed in 2017 based on expected earnings growth and inflation; and if he will make a statement on the matter. [9591/16]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 182, 183, 184 and 185 together.

As set out in the Stability Programme Update 2016, the tax revenue estimate for the period 2017 to 2021 incorporates a provision for the indexation of the income tax system at a cost of c. €400 million in a full year. It should be noted that in practice this is made up of a first year cost of c. €300 million with a carryover effect of c. €100 million. This is a technical assumption based on the medium-term projected increase in non-agriculture wages.

In addition, as I stated in the House during the Stability Programme Update debate recently, net fiscal space is currently estimated to be around €900 million in 2017. I want to stress that this is a work in progress figure and is subject to revision. Esimates will be refined for 2017 to 2021 in the coming weeks by my Department. However, the €900 million of fiscal space assumes a decision will be taken not to index the income tax system in 2017. 

Therefore, if indexation of the income tax system proceeds as reflected in the tax revenue forecasts, then the fiscal space would be reduced by c. €300 million in 2017 to c.€600 million. It should be noted that income tax payers would benefit from such a course of action.

However, if the Government decides not to index the income tax system then the fiscal space would remain unchanged at c. €900 million for 2017.

Tables 1, 2 and 3 set out the responses to the Deputy's questions if indexation were based on earnings growth and inflation in 2017 as forecast by my Department and set out in the macro-economic forecasts contained in the 2016 Stability Programme Update. The macroeconomic forecasts were endorsed by the Irish Fiscal Advisory Council. The forecast vales were:

- Non-agriculture Pay per Capita: 2.5%

- Consumer Price Index: 1.6%

Table 1: the estimated cost in 2017 of indexing income tax credits, bands and Universal Social Charge based on estimated earnings growth and inflation growth in 2017: