Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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61. To ask the Minister for Finance the estimated amount that would be raised annually by implementing four new tax bands by amounts (details supplied) [29098/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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It is assumed that the new tax rates and bands proposed by the Deputy would be integrated into the current income tax system. On that basis, I am advised by Revenue that the estimated additional yield to the Exchequer would be of the order of €1.3 billion and €1.7 billion on a first year and full year basis respectively.

These calculations have been generated by reference to estimated 2021 incomes, based on actual data for the year 2018, the latest year for which returns are available. The estimates have been adjusted as necessary for income, self-employment and employment trends in the interim. It is assumed that there is no change in behaviour as a result of the new taxation structure.

Richard Bruton (Dublin Bay North, Fine Gael)
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62. To ask the Minister for Finance the tax liability that may arise under income tax, USC and PRSI as a result of persons having received support from the temporary wage subsidy scheme; the way in which the Revenue Commissioners will inform persons of their liability; and if the Revenue Commissioners phase the recovery of taxes due. [29126/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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As there are considerable differences in each person’s tax circumstances, it is not possible to provide details of the estimated undercharges arising from the taxation of payments under the Temporary Wage Subsidy Scheme (TWSS), nor to estimate the numbers of individuals who may have such undercharges.

The TWSS was legislated for in section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020.

Payments made under the scheme are income supports and share the characteristics of income. Other income earners in receipt of comparable “normal wages” are taxable on those wages. In the interest of equity, therefore, payments under the TWSS are subject to income tax and USC.

While income tax and the USC on most income is deducted in real-time as and when the person is paid, the TWSS payments were not taxed in real-time and are instead liable to income tax and USC at the end of the year (2020).

Revenue will make a Preliminary End of Year Statement available to all employees in January 2021, including those who were in receipt of the TWSS. The Preliminary End of Year Statement includes information relating to an employee’s income received, including pensions and income from the Department of Employment Affairs and Social Protect, as well as their tax credit entitlements. For the tax year 2020, the Statement will also include information on the amounts of TWSS payments, if any, received by each employee. In addition, the Statement will provide employees with a preliminary calculation of the income tax and USC position for 2020 and will indicate whether their tax position is balanced, underpaid or overpaid for the year.

Upon viewing the Preliminary End of Year Statement through myAccount, which is Revenue’s secure online facility for individual taxpayer services, employees will have an opportunity to update their personal record, declare any additional income and claim any additional tax credits due, for example qualifying health expenses, to arrive at their final liability for 2020.

Where a liability is finalised, individuals may opt to fully or partially pay any income tax and USC liability through the Payments/Repayments facility in myAccount. Where individuals do not opt to fully or partially pay, Revenue will collect the liability by reducing their tax credits over 4 years, interest free. The reduction of tax credits will start in January 2022.

On 25 September 2020, Revenue provided an update, by way of public announcement, as to how any tax liability arising on the TWSS will be dealt with. I am pleased to welcome this fair and flexible approach being taken by and I am confident that Revenue will continue to work with their customers to minimise any financial hardship to the greatest extent possible, noting that because of our progressive income tax system, in the vast majority of cases, the expected tax liability will be modest in scale.

Richard Bruton (Dublin Bay North, Fine Gael)
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63. To ask the Minister for Finance the reliefs made available to enterprises in respect of tax liabilities arising during the Covid-19 crisis; the periods covered; and the way in which it is planned to recover the warehoused liabilities in the situation in which many enterprises will remain vulnerable for some considerable time. [29129/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Financial Measures (Covid-19) (No. 2) Act 2020 put on a statutory footing the arrangements for the ‘warehousing’ of tax debts that Revenue had been operating on an administrative basis since the beginning of Covid-19 related restrictions in March 2020. The arrangements apply to VAT liabilities in respect of January/February 2020 to July/August 2020 inclusive and PAYE (Employer) liabilities in respect of February to August 2020 inclusive.

The legislation provides that outstanding VAT and PAYE (Employer) liabilities incurred during the period of restricted trading (known as Period 1) can be deferred for a period of 12 months after resumption of trading (known as Period 2). Rather than the normal interest rate of c. 10% per annum on such liabilities, interest on ‘warehoused’ debts is applied at 0% to the end of ‘Period 2’ and 3% thereafter until the liabilities are paid (known as Period 3). While the debt must ultimately be paid, taxpayers can repay it over an extended ‘Period 3’ timeline, depending on their financial circumstances and avail of the reduced 3% interest rate for the payment duration.

Access to the ‘warehousing’ arrangements is dependent on all outstanding tax returns being filed and current taxes being paid on a timely basis once trading is resumed. The 0% interest rate available in Period 2 can be extended to a date no later than 31 December 2022 by Ministerial Order. Businesses that avail of the ‘warehousing’ scheme also qualify for a Tax Clearance Certificate if they otherwise meet the normal qualifying conditions. This allows them to avail of other essential Covid-19 related supports such as the Employment Wage Subsidy Scheme (EWSS) and the Stay and Spend Scheme. There are almost 70,000 taxpayers and businesses currently availing of the ‘warehousing’ arrangements to the value of €1.8 billion (€978m VAT and €825m Employers PAYE).

As a further support measure for businesses, I also introduced the reduced 3% annual interest rate for certain non- Covid-19 related tax debts as part of the July 2020 Jobs Stimulus Package. This rate represents a significant reduction from the standard 8% and 10% rates that normally apply to such liabilities and is applicable across all tax-heads and outstanding debts that cannot be ‘warehoused’, for example older liabilities and as well as tax debts not associated with Covid-19. The interest rate reduction is a key incentive to businesses to bring their tax affairs into order, be tax cleared, and thereby become eligible for the other Covid-19 related supports that are available, including the EWSS and the Stay and Spend Scheme.

To avail of the reduced 3% rate, businesses are required to agree a payment arrangement with Revenue by 31 October 2020. Revenue has advised me that almost €50m of non-Covid-19 related tax debt is now covered by phased payments incorporating the reduced 3% rate.