Louise O'Reilly (Dublin Fingal, Sinn Fein)
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215. To ask the Minister for Finance the savings to be made by withdrawing tax relief on private health insurance; and if he will make a statement on the matter. [10361/16]

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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217. To ask the Minister for Finance the amount of income tax foregone in each of the years 2011 to 2016, to date, and the projected amount in 2017 through tax breaks on private health insurance; the income brackets of the beneficiaries of these tax breaks, by every €10,000 of earned income; and if he will make a statement on the matter. [10418/16]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 215 and 217 together.

I am advised by the Revenue Commissioners that a Costs of Tax Expenditures Table is available on the Revenue Statistics webpage at . This table displays the estimated cost, in terms of revenue foregone, as well as the numbers who availed of the main tax credits and reliefs, including tax relief on medical insurance premiums. The table contains information from 2004 to 2013, the latest year for which full information is currently available. Provisional data indicate an estimated cost for tax relief on medical insurance premiums of €354 million and €325 million in 2014 and 2015 respectively.Forecasts for 2016 and 2017 are not currently available.

It should be noted that the medical insurance tax relief costs in the Tax Expenditures Table include, where relevant, the cost to the Exchequer of age-related relief at source, which was established by the Health Insurance (Miscellaneous Provisions) Act 2009. The cost of the age related tax credit for years 2009 to 2012 inclusive is offset by a stamp duty on health insurance policies.

The age related tax credit and stamp duty were part of an interim scheme of risk equalisation, which was introduced in order to provide direct support to community rating in the private health insurance market and is intended to be revenue neutral over its duration. This interim scheme expired on 31 December 2012 and was replaced from 1 January 2013 by a permanent risk equalisation scheme, provided for in the Health Insurance (Amendment) Act 2012. Risk equalisation credits are not given through the tax system effective from 1 January 2013.

Since 16 October 2013, tax relief for medical insurance premiums has been restricted to the first €1,000 per adult and the first €500 per child insured. Any portion of premium paid in excess of these ceilings no longer qualifies for tax relief.Prior to this, income tax relief for medical insurance premiums was provided at source, at the standard rate of income tax, on the entire premium amount regardless of cost. Therefore, the State was paying 20% of the cost of all private medical insurance premiums.

The cost of Income Tax relief in respect of medical insurance increased significantly in the years leading up to the introduction of the caps in Budget 2014, estimated at €404 million in 2011 and €448 million in 2012 (excluding the age related tax credit). Despite the increasing cost of the relief, the numbers insured were estimated to have reduced by approximately 150,000 over the same period, while at the same time the level of medical cover decreased on some policies. Against this background the increase in costs was unsustainable. If the relief had remained unchanged and the trend was to continue, it was estimated that the cost of the uncapped relief would have increased to approximately €1 billion per annum by 2020.

In my view, taking into account the increasing costs and reducing coverage outlined above, it was unfair and unsustainable to allow unrestricted tax relief on private medical insurance premiums, particularly at a time when the general population had contributed so much to repairing the public finances. The ceilings ensure a level of continuing support via the tax system for those who purchase medical insurance policies, while reducing Exchequer exposure to more expensive policies.

I am informed by the Revenue Commissioners that the returns filed with Revenue do not include information that would allow an income distribution of the beneficiaries of this tax relief to be provided. Accordingly, the specific information requested as to the income brackets of individuals claiming tax relief on private health insurance premiums is not available.