Written answers
Wednesday, 19 October 2016
Department of Finance
Budget Measures
Pearse Doherty (Donegal, Sinn Fein)
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47. To ask the Minister for Finance if he will provide for each tax measure announced in budget 2017, the full year cost; and if he will make a statement on the matter. [31051/16]
Michael Noonan (Limerick City, Fine Gael)
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The full year costs for the tax measures announced in Budget 2017 are set out in the following table.
| 1. REVENUE RAISING MEASURES | Yield Full Year €m |
|---|---|
| EXCISE | |
| Tobacco Products Tax Excise duty on a pack of 20 cigarettes is increased by 50c, with a pro-rata increase on other tobacco products. It will raise the price of cigarettes in the most popular price category to €11.00 per pack of 20 cigarettes. | 65 |
| COMPLIANCE MEASURES | |
| Section 110 Draft amendments to Section 110 will be made in the Finance Bill to address unintended uses of the section. Further amendments will address other issues arising in relation to Funds and property. | 35 |
| Tackling offshore tax evasion A comprehensive programme of targeted compliance interventions against those engaged in offshore tax evasion. (2017 yield estimated at €30m). | _ |
| Increase resources to confront non-compliance Increasing Revenue staff resources on audit and investigation activities as well as enhancing ICT systems capacity. | 50 |
| 2. REVENUE RELIEVING MEASURES | Cost Full Year €m |
|---|---|
| USC | |
| Incomes of €13,000 or less are exempt. Otherwise, €0 to €12,012 @ 0.5% €12,013 to €18,772 @ 2.5% €18,773 to €70,044 @ 5% €70,045 to €100,000 @ 8% PAYE income in excess of €100,000 @ 8% Self-employed income in excess of €100,000 @ 11% Medical card holders and individuals aged 70 years and over whose aggregate income does not exceed €60,000 will now pay a maximum USC rate of 2.5%. | -390 |
| INCOME TAX | |
| An increase in the Home Carer Tax Credit from €1,000 to €1,100 | -8 |
| An increase in the Earned Income Credit from €550 to €950 | -58 |
| Interest Relief Rented Residential Property The deduction available for qualifying interest payments on monies borrowed to purchase, improve or repair residential rental property is being increased from 75% to 100% over the next 5 years. The deduction will be increased by 5 percentage points each year, with the first increase from 75% to 80% to take effect from 1 January 2017. This measure will apply to both new and existing mortgages. The full-year cost of €70 million, being the cost for full restoration to 100%, will be reached in 2022. | -70 |
| Deposit interest retention tax (DIRT) Reduced rate of DIRT: The rate of DIRT will be decreased by 2% each year for the next 4 years until it reaches 33%. The costs shown are in relation to the first 2% reduction. Each subsequent reduction is currently costed at the same amount. (The full year cost will be reached in 2020) | -36 |
| OTHER INCOME TAX MEASURES | |
| Foreign Earnings Deduction (FED) FED is being extended until the end of 2020. Colombia and Pakistan are being added to the list of qualifying countries. The minimum number of days required to be spent in the qualifying countries is being reduced from 40 to 30 per annum. This will help smaller businesses to access the relief to identify trading opportunities in non-traditional markets for Irish goods and services. | -3 |
| Special Assignee Relief Programme To provide certainty to the FDI sector, SARP, which was due to expire at the end of next year, is being extended for an additional 3 years until the end of 2020. | -8 |
| HOUSING | |
| Help to Buy A rebate of Income Tax paid is being introduced to assist first time buyers of newly built homes to fund the deposit required under the Central Bank macro-prudential rules. Income Tax paid over the previous four years will be available for rebate, up to a total value of 5% of the purchase price, up to a maximum of €400,000. Where the new home is valued between €400,000 and €600,000 the maximum relief (i.e. €20,000) will continue to be available. Homes valued at greater than €600,000 will not qualify for any relief. This scheme will run until the end of 2019. | -40 |
| Capital acquisitions tax Changes to tax-free thresholds: The Group A lifetime tax-free threshold applying to gifts and inheritances from parents to children is being raised from €280,000 to €310,000, The Group B lifetime tax-free threshold applying to gifts and inheritances made to parents, siblings, nieces, nephews or grandchildren is being raised from €30,150 to €32,500. The Group C lifetime tax-free threshold applying to gifts and inheritances made to all others (except spouses and civil partners who are exempt) is being raised from €15,075 to €16,250 | -25 |
| Rent a Room The ceiling for the rent-a-room scheme is being increased from €12,000 to €14,000 for 2017 and subsequent years. This scheme provides that where a homeowner rents out a room or rooms in their principle private residence they can earn up to €14,000 tax free. The increase will allow homeowners to rent out an additional room at standard rental rates without breaching the new ceiling. | -1 |
| Living City Initiative The Living City Initiative is being amended to encourage an increase in the take-up of the scheme. This initiative is being extended to landlords in respect of rented residential property. In addition, the restriction on the maximum floor size of the property is being removed, along with the requirement that the property must have been previously used as a dwelling. | -3 |
| Home Renovation Incentive The HRI is being extended until 31 December 2018. | -38 |
| ENTREPRENEURS/SELF-EMPLOYED | |
| Accelerated Capital Allowances for energy efficient equipment The existing scheme of accelerated capital allowances for energy efficient equipment is being made available to sole traders and non-corporates. | -3 |
| Start Your Own Business Relief The Start Your Own Business relief provides a limited income tax exemption for individuals who are long term unemployed who set up their own business. It is being extended for a further 2 years until the end of 2018 to encourage additional new start-up businesses. | -10 |
| Revised CGT entrepreneur relief: A reduced CGT rate of 10% will apply to the disposal in whole or in part of a business up to an overall limit of €1 million in qualifying chargeable gains. | -14 |
| RURAL ECONOMY | |
| Fishers Tax Credit A new tax credit is being introduced for fishers to assist the viability of the fishing sector. Fishers who have fished for at least 80 days in a tax year will be entitled to an income tax credit of €1,270 per annum. | -6 |
| Agri-Taxation The Income Averaging regime allows a farmer's taxable profit to be averaged out over a 5-year period. It is being amended to allow a farmer to "step out" of averaging in a year where income is low. This will be available immediately for farmers who will be paying their preliminary tax towards the end of this month. | _ |
| Increase in Farmer's Flat-Rate Addition from 5.2% to 5.4% (VAT) The farmer's flat-rate addition will be increased from 5.2% to 5.4% with effect from 1 January 2017 | -11 |
| Bog restoration (€2m one-off cost) | _ |
| Farm restructuring | -1 |
| Fishing vessel decommissioning | -2 |
| MISCELLANEOUS OTHER TAXATION MEASURES | |
| EXCISE | |
| High Efficiency Combines Heat and Power A full carbon tax relief is being provided to incentivise the uptake of HE CHP for fuel inputs used in highly efficient electricity generation | -2 |
| Microbreweries Relief The special relief reducing the standard rate of Alcohol Products Tax by 50% on beer produced in microbreweries which produce not more than 30,000 hectolitres per annum is being extended to apply to microbreweries which produce not more than 40,000 hectolitres per annum. The amount of hectolitres upon which a brewery can claim relief remains at 30,000 hectolitres. This increase is an interim measure to allow for a review of the relief with a view to introducing a tapered relief. | _ |
| Vehicle Registration Tax (VRT) The VRT reliefs available for the purchase of hybrid electric vehicles and plug-in hybrid electric vehicles, are being extended to 31 December 2018. Electric vehicles, and electric motorcycles are being extended to 31 December 2021. | _ |
Michael McGrath (Cork South Central, Fianna Fail)
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48. To ask the Minister for Finance the details of any impact assessment on the property market carried out by his Department in respect of the help to buy tax rebate for first time buyers; the person or body that carried out such an assessment; if he will publish the assessment; the other analysis that was completed by his Department on this measure; and if he will make a statement on the matter. [31167/16]
Michael Noonan (Limerick City, Fine Gael)
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A key priority for this Government is to develop a fully functioning housing market that responds adequately to the needs of our citizens. To this end, Rebuilding Ireland- Action Plan for Housing and Homelessness, under the direction of Minister Coveney and the Department of Housing, Planning Community and Local Government, with cross Departmental support including from the Department of Finance, was launched in July.
This comprehensive Action Plan takes a holistic approach in addressing the many interacting structural constraints affecting the housing market in areas such as planning and land use, regulation and skills deficits in the construction sector. While the primary focus of the Action Plan is to tackle structural constraints, fiscal supports can play a supporting and time-bound role in addressing the current problems in the housing sector, pending the delivery of the structural elements of the Action Plan.
My officials considered the potential impact of the "Help to Buy" incentive, as part of their analysis of the proposal and the design of the relevant parameters of the incentive. Given the critical nature of the housing crisis and the urgency with which a Governmental response was required, there was insufficient time to commission an independent impact assessment in relation to this measure.
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