Thursday, 14 July 2022
Department of Finance
295. To ask the Minister for Finance the tax expenditures and reliefs which are to expire by 31 December 2022; the estimated cost of extending each from 1 January to 31 December 2023; if the cost of extending each to 31 December 2023 is factored into the base for next year as provided in the Summer Economic Statement; and the cost of each in tabular form. [39433/22]
The below table provides a list of tax expenditures which are due to expire on 31 December 2022.
|-||Name of Tax Expenditure||Sunset Clause|
|1||CGT Farm Restructuring Relief||31.12.2022|
|2||Residential Development (Stamp Duty) Refund Scheme||31.12.2022|
|3||Young Trained Farmer Relief (Stamp Duty)||31.12.2022|
|4||Farm Consolidation Relief (Stamp Duty)||31.12.2022|
|5||Help to Buy Incentive||31.12.2022|
|6||Knowledge Development Box||31.12.2022|
|7||Special Assignee Relief Programme (SARP)||31.12.2022|
|8||Stock Relief: New arrangements for qualifying farmers (Young Trained Farmer)||31.12.2022|
|9||Stock Relief: Special provisions for Registered Farm Partnerships||31.12.2022|
|10||Living City Initiative||31.12.2022|
|11||Foreign Earnings Deduction||31.12.2022|
|12||Sea-going naval personnel||31.12.2022|
|13||Reduced rate of USC for Medical Card Holders||31.12.2022|
The Budget package cost of extending measures with sunset clauses will be set out in the Budget Day documentation. If these measures were to be extended into 2023 these estimates would be subject to revision based on the latest available data.
296. To ask the Minister for Finance the estimated cost of extending the reduced rate of USC for medical card holders to 31 December 2023; and if the cost of same is factored into the base for 2023 as provided in the Summer Economic Statement. [39434/22]
As the Deputy may be aware, the reduced rate of Universal Social Charge (USC) for medical card holders was never intended to be a permanent feature of the USC. Instead, it was planned to phase in the full USC charge for medical card holders via a transitional approach. This concession for medical card holders has been extended on a number of occasions most recently in Budget 2022, with an extension of the reduced rate of USC until 31 December 2022.
At Budget 2022, the cost of extending the reduced rate of USC for medical card holders was estimated at €62 million. However, this was cost-neutral in Budget package terms as this measure was considered to be accounted for in the tax base.
The Budget package cost of extending any measures with sunset clauses will be set out in the Budget Day documentation. However, it is important to point out that if any measure is extended into 2023, the cost may be subject to revision based on the latest available data. For example, it is currently estimated that the reduced rate of USC for medical card holders would cost in the region of €40 million in 2023.
The information requested by the Deputy is set out in the Revenue post-Budget 2022 Ready Reckoner, which is the most recent available and may be located on Revenue's Statistics webpage at:
Based on the above Ready Reckoner, it is estimated that approximately 2.07 million taxpayer units will be subject to the Universal Social Charge (USC) in 2022. A full USC distribution is provided in the table below.
|USC (2022)||Earners (2022)*|
|2 per cent rate||586,600|
|4.5 per cent rate||1,181,300|
|8 per cent rate||301,200|
*shows the breakdown by the highest rate of USC paid by taxpayer units
298. To ask the Minister for Finance the total value of unclaimed tax, through Revenue for overpaid tax; the number of persons to whom this applies; and if he will make a statement on the matter. [39436/22]
I assume that the Deputy’s question relates to PAYE taxpayers.
I am advised by Revenue that, where an income tax return is not completed, it is not possible for Revenue to know if a taxpayer may be due additional credits or reliefs and as such it is not possible to provide the Deputy with final details on the amount of overpaid tax as individual taxpayer circumstances differ. Some taxpayers may have overpaid tax in some years and underpaid in others and some may be entitled to additional credits or reliefs which they have not yet claimed while others may have additional income on which tax may be due.
I am further advised that, to date, Revenue has refunded €430m to 620,000 taxpayers in respect of the 2021 tax year. In respect of tax year 2020, €440m has been refunded to 660,000 taxpayers, while just over €500m was refunded to 800,000 taxpayers in respect of 2019.
Revenue has further advised that a Preliminary End of Year statement is made available to PAYE taxpayers through the myAccount service after the end of each tax year. The Preliminary End of Year Statement sets out each taxpayer’s provisional tax position for that tax year, based on information available on Revenue records.
To claim a refund of overpaid tax, taxpayers should complete an income tax return. The quickest and easiest way to do this is online through Revenue’s myAccount facility. The information on Revenue’s records is prepopulated on the individual’s income tax return. This simplified facility encourages taxpayers to claim their entitlements and ensure as far as possible, that they pay the right amount of tax at the right time.
Revenue is currently writing to taxpayers who may have overpaid or underpaid tax in these years, inviting them to submit returns to finalise their tax position and over 50,000 taxpayers have been written to in the past month in this regard.
Based on the provisional end-of-year position for PAYE taxpayers who have not submitted an Income Tax return, Revenue records indicate that there are approximately 300,000 customers who have not filed a tax return for 2019 and who may have overpaid tax in that year by €10 or more. The provisional figures indicate that the potential amount overpaid is €170m.
The equivalent provisional figures for 2020 are €150m potentially overpaid in respect of 270,000 customers, while provisional figures for 2021 indicate that approximately €300m is potentially overpaid in respect of 450,000 customers in 2021.
Revenue further advises that the overall numbers of taxpayers who may have overpaid tax is less than the aggregate of the above figures as some customers may have overpaid tax in one or more of the years shown. Similarly, the net amount of tax overpaid will be less than the aggregate of the figures shown as Revenue records indicate that taxpayers may have overpaid in some years and underpaid in others.
Revenue will continue to communicate directly with taxpayers who have over/underpaid balances per their Preliminary End of Year statement.
The bank levy was extended for one year in Budget 2022. At the time, this was estimated to raise €87 million. As the levy ends this year, a Government decision would be required to extend it into 2023.
If this measure was to be extended this estimate would be subject to revision based on the latest available data. The cost or revenue generated from extending measures will be set out in the Budget documentation. As the Deputy will appreciate, it would not be appropriate for me to comment on decisions that may be taken in advance of Budget 2023.
I am advised by Revenue that the tables below set out the estimated first and full year costs to the Exchequer of the policy changes outlined by the Deputy.
|Personal Credit||First Year Cost |
|Full Year Cost |
|PAYE Credit||First Year Cost |
|Full Year Cost |
|Earned Income Credit||First Year Cost |
|Full Year Cost |
302. To ask the Minister for Finance the estimated cost to the Exchequer of reducing the 2% rate of USC to 1% and simultaneously increasing the threshold at which this 1% rate would be applied from €21,295 to €23,322 and €25,350, respectively. [39466/22]
I propose to take Questions Nos. 301 and 302 together.
I am advised by Revenue that the following table sets out the estimated costs to the Exchequer, on a first and full year basis, of the scenarios outlined in the table.
|Scenario||First Year Cost |
|Full Year Cost |
|Increase 2nd USC band upper limit by €2,027||75||85|
|Increase 2nd USC band upper limit by €4,055||145||165|
I am further advised by Revenue that the table below sets out the estimated costs to the Exchequer, on a first and full year basis, of the different scenarios outlined in the table. For the purposes of these estimates, the 2% rate of USC was reduced to 1% and the 1% rate applied to the full revised band.
|Scenario||First Year Cost |
|Full Year Cost |
|Increase 2nd USC band upper limit by €2,027 and reduce the rate to 1%||305||350|
|Increase 2nd USC band upper limit by €4,055 and reduce the rate to 1%||400||460|
303. To ask the Minister for Finance the estimated revenue that would be raised to the end-December 2022 by introducing a 3% income tax surcharge, levied through USC, on individual incomes on the portion of income in excess of €140,000, effective from 27 September 2022. [39467/22]
It is assumed that the measure outlined by the Deputy is in addition to the surcharge of 3% on non-PAYE income in excess of €100,000.
I am advised by Revenue that the estimated first and full year yield to the Exchequer from a change of this nature is €240m and €310m respectively.
It is not possible, using existing data, to accurately estimate the yield that would arise from implementing this change for the final quarter of 2022 only. On a technical basis, assuming the surcharge would only apply to those taxpayers whose annual income exceeds €140,000 and that the surcharge would only apply to income arising in the period specified, then the yield may be tentatively considered to be in the region of €60m.
However, I am advised by Revenue that it would not be possible to implement such a proposal with effect from 27 September 2022.
304. To ask the Minister for Finance the estimated revenue that would be raised to end-December 2022 by tapering personal, PAYE and Earned Income tax credits at a rate of 2.5% per €1,000 for individual incomes between €100,000 and €140,000, effective from 27 September 2022. [39468/22]
I am advised by Revenue that as their modelling tool is built to model scenarios on a taxpayer unit basis (i.e. including jointly assessed couples as taxpayer units), it is not possible to estimate changes to tax credits on an individual basis for a projected tax year.
However, incomes recorded on historic tax returns can be used to estimate the potential yield and/or cost associated with the adjustment of tax credits. As 2019 is the latest year for which full tax return data is currently available to be analysed, Revenue completed an analysis based on the 2019 tax year.
Applying the tapering out of the Personal Tax Credits, the Employee Tax Credit and the Earned Income Tax Credit for individuals with an income above €100,000, in the manner outlined by the Deputy in relation to 2019 would have yielded an estimated €270m and €325m on a first and full year basis respectively.
As the income data used for the analysis relates to total annualised incomes, it is not possible to estimate a yield from the tapering of credits on a quarterly basis.
I am also advised by Revenue that it would not be possible to implement such a proposal with effect from 27 September 2022.
Section 126AA of the Stamp Duties Consolidation Act (“SDCA”) 1999 provides for a levy on certain financial institutions (known as the “Bank Levy”). Since its introduction in 2003, the Bank Levy has been extended on several occasions and it currently applies to the end of 2022.
The Bank Levy is calculated by reference to the amount of deposit interest retention tax (“DIRT”) paid in a specified base year. For the year 2022, the applicable rate is 308% of DIRT paid in 2019.
Section 60 of the Finance Act 2021 excludes KBC Bank Ireland plc and Ulster Bank Ireland DAC from the Bank Levy. In addition, any deposits that transfer from KBC or Ulster Bank to other financial institutions during 2022 are not taken into account when calculating the levy payable by those financial institutions for 2022.
I am advised by Revenue that It is estimated that the bank levy will raise €87million for 2022. In order to produce an annual yield of €150 million in 2022, the rate would need to be approximately 531%.
306. To ask the Minister for Finance the estimated revenue to be raised to end-December 2022 by introducing a 40% rate of capital gains tax on the portion of individual income, including income generated by gains, in excess of €500,000, effective from 27 September 2022. [39473/22]
I am advised by Revenue that the potential tax yield from a measure as outlined by the Deputy would be in the region of €12 million in 2022, if this measure was effective in relation to disposals made on or after 27 September 2022. The Deputy will wish to note that the CGT associated with disposals made on or after 1 December 2022 will not impact the 2022 calendar year tax receipts as it will fall to be paid in 2023.
This estimate is based on 2019 data, the latest year for which fully analysed data are available, with the higher proposed rate being applied to the proportionate amount of the gains above the combined threshold only. The estimate assumes no changes in behaviour resulting from the proposed increase in the tax rate.
307. To ask the Minister for Finance further to Parliamentary Question No. 177 of 21 June 2022, if the revenue generated with respect to a 40% rate of capital gains tax on individual incomes in excess of €500,000, including income from gains, was calculated on the basis of the farm restructuring relief, revised entrepreneur relief and retirement relief applying to the applicable income before the proposed 40% rate is applied; and if he will make a statement on the matter. [39474/22]
I am advised by Revenue that the estimated full-year revenue generated from a 40% Capital Gains Tax (CGT) rate being applied to the taxable gains of individuals with aggregate income and gains in excess of €500,000 included the impact of entrepreneur relief.
Due to the level of information provided on tax returns, Revenue does not have sufficient data to include the impact of farm restructuring and retirement relief in the estimate.
308. To ask the Minister for Finance the estimated additional yield that could be generated in 2023 if the bailed-out banks had applied to them a 25% and 50% limit respectively on the losses that could be carried forward in a year and a five year absolute limit in which the losses could be utilised. [39475/22]
As the Deputy is aware, loss relief for corporation tax is a long-standing feature of the Irish corporate tax system and a standard feature of corporation tax systems in OECD countries to recognise the fact that a business cycle runs over several years. Loss relief works by allowing a deduction for losses incurred in one accounting period against profits earned in another period.
I note that section 851A of the Taxes Consolidation Act, 1997 precludes Revenue officials from directly or indirectly disclosing taxpayer information to third parties unless this is specifically provided for in legislation. Therefore it is not possible to provide estimates based on such a small cohort of taxpayers. However, based on publicly available information as to the bank’s profitability levels, a limit of 25% or 50% on the tax losses forward that can be used in one year would likely not yield significant additional tax, due to the amounts of losses forward available to the banks.
A five-year absolute limit on the carry forward of losses would mean that the banks would no longer be able to use the historic losses that are being carried forward since the financial crisis. The likely additional tax yield from such a measure would depend on the banks future profitability levels which cannot be accurately estimated at present.
The value of these tax losses to the State is realised through share sales. The banks share prices recognise a certain value for the tax losses and as such the State will continue to receive value for the balance of tax losses as future sell-downs complete. There would be a negative impact on the valuation of the State’s investments in the banks from a change in tax treatment of losses carried forward.
Despite the scale of losses accumulated, the banks contribute to the Exchequer through the financial institutions levy. It should also be noted that loss relief does not shelter profits made by the bank in all their corporate entities.
In 2018 Department of Finance officials produced a detailed technical note for the Committee on Finance, Public Expenditure and Reform, and Taoiseach on the subject of both bank losses and corporation tax losses more generally (see www.gov.ie/en/publication/436ff7-technical-note-on-the-potential-consequences-of-changes-to-the-treat/). It was further updated and re-circulated to members during the 2019 Finance Bill process.
309. To ask the Minister for Finance the total Exchequer funding collected through carbon tax intake on an annual basis since its introduction; and if he will make a statement on the matter. [39522/22]
I am advised by Revenue that the total annual amounts collected through the Carbon Tax, since its introduction in 2010 and up to 2020, are published on the Revenue website at the following link:
I am further advised that the amounts raised through the Carbon Tax in 2021 and provisionally to the end of June 2022 are €652 million and €409 million respectively.
310. To ask the Minister for Finance the estimated annual revenue from applying a charge on the size of the assets of all qualifying Section 110 companies, at a rate of 0.001%, 0.01% and 0.1% in tabular form. [39529/22]
I am informed by Revenue that the information requested by the Deputy is not immediately available from Revenue data and therefore it is not possible in the time available to respond to this Parliamentary Question to provide the estimates sought.
However the Deputy may find the following information, provided by the Central Bank, to be of assistance, as it provides a near approximation of the estimate sought. The assets under management of financial vehicle corporations (FVCs) and special purpose vehicles (SPVs) amounts to €1,038.5 billion at end Q1 2022. These figures should encompass the population of section 110 companies, however it should be noted that a small number of FVCs are not section 110 companies, so the total assets of section 110 companies specifically would be somewhat below this figure.
Subject to this caveat, the table below provides a breakdown of a simple calculation based on multiplying the rates requested by the total assets as at end Q1 2022. However, it should also be noted that the potential yield from a levy of the nature proposed would depend on a range of factors, including the period of charge, the assets within scope of the charge and any changes in business decisions in response to the new tax.
I am advised by Revenue that as details of share buy backs are not reported on tax returns, it does not have data on which to base an accurate estimate of the potential annual revenue from implementing a tax as outlined by the Deputy.