Seán Canney (Galway East, Independent)
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258. To ask the Minister for Finance if he intends to increase the benefit-in-kind by 40% which will reduce the income for workers who need a company vehicle to carry out their duty; and if he will make a statement on the matter. [53189/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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Recent Government policy has focused on strengthening the environmental rationale behind company car taxation. Until the changes I brought in as part of the Finance Act 2019, Ireland’s vehicle benefit-in-kind regime was unusual in that there was no overall CO2 rationale in the regime. This is despite a CO2 based vehicle BIK regime being legislated for as far back as 2008 (but never having been commenced).

In Finance Act 2019, I legislated for a CO2-based BIK regime for company cars from 1 January 2023. From that date the amount taxable as BIK remains determined by the car’s original market value (OMV) and the annual business kilometres driven, while new CO2 emissions-based bands will determine whether a standard, discounted, or surcharged rate is taxable. The number of mileage bands is reduced from five to four. Detailed information on the taxation of employer-provided vehicles is included in Tax and Duty Manual Part 05-01-01b, which is available on the Revenue website.

EVs will benefit from a preferential rate of BIK, ranging from 9 – 22.5% depending on mileage. Fossil-fuel vehicles will be subject to higher BIK rates, up to 37.5%. This new structure with CO2-based discounts and surcharges will incentivise employers to provide employees with low-emission cars.

I am aware that there have been arguments surrounding the mileage bands in the new BIK structure as they can be perceived as incentivising higher mileage to avail of lower rates, leading to higher levels of emissions. However the rationale behind the mileage bands is that the greater the business mileage, the more the car is a benefit to the company rather than its employee (on average); and the more the car depreciates in value, the less of a benefit it is to the employee (in years 2 and 3) as the asset from which the benefit is derived is depreciating faster. Mileage bands also ensure that cars more integral to the conduct of business receive preferential tax treatment.

I believe that better value for money for the taxpayer is achieved by curtailing the amount of subsidies available and building an environmental rationale directly into the BIK regime. It was determined in this context that reforming the BIK system to include emissions bands provides for a more sustainable environmental rationale than the continuation of the current system with exemptions for electric vehicles (EVs). This will bring the taxation system around company cars into step with other CO2-based motor taxes as well as the long-established CO2-based vehicle BIK regimes in other member states.

In addition to the above and in light of government commitments on climate change, Budget 2022 extended the preferential BIK treatment for EVs to end 2025 with a tapering mechanism on the vehicle value threshold. This BIK00, low motor tax of €120 per annum, SEAI grants, discounted tolls fees, and 0% BIK on electric charging.

Finally, it should be noted that this new BIK exemption forms part of a broader series of very generous measures to support the uptake of EVs, including a reduced rate of 7% VRT, a VRT relief of up to €5,0 charging mechanism was legislated for in 2019 and was announced as part of Budget 2020. I am satisfied that this has provided a sufficient lead in time to adapt to this new system before its implementation in 2023.

Holly Cairns (Cork South West, Social Democrats)
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259. To ask the Minister for Finance his views on extending the tax credits for renters to include persons renting social housing and meet the financial threshold. [53272/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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On Budget Day, I announced a €500 Rent Tax Credit which it is proposed will be claimable in respect of rent paid in 2022 and subsequent years to end-2025

The intention is that, in order for a person to be in a position to claim the credit in a year:

- the rent paid must be in respect of the person’s principal private residence;

- the person living in the rented property themselves, or their spouse/civil partner, must have paid sufficient rent and sufficient income tax to avail of the credit;

- the tenancy must be registered with the Residential Tenancies Board (RTB), but only where this is already a legal requirement.

In the context of a person who is single fully utilising the €500 tax credit, "sufficient rent" amounts to €2,500 in a year. For 2022, "sufficient income tax" amounts to €3,900 (equivalent to the aggregate 2022 value of the Personal Tax Credit, the Employee/Earned Income Tax Credit and the proposed Rent Tax Credit). For 2023, "sufficient income tax" amounts to €4,050 (equivalent to the aggregate proposed 2023 value of the Personal Tax Credit, the Employee/Earned Income Tax Credit and the Rent Tax Credit).

Parents who pay rent on behalf of their student child who is enrolled on an approved third-level course and residing in a RTB registered property will also be eligible to claim. Where the student is under 23 on 1 January of the year of their first point of entry into the course, the parent(s) will be able to claim the tax credit for the duration of that course.

As I stated in my Budget 2023 speech, the credit is specifically targeted to assist renters who do not receive other State housing supports. Renters who are in receipt of support, such as the Housing Assistance Payment or Rent Supplement or who are availing of the Rental Accommodation Scheme or cost rental arrangements, will not be eligible for the credit.

Paul Kehoe (Wexford, Fine Gael)
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260. To ask the Minister for Finance if he is considering any changes to the level of inheritance tax; and if he will make a statement on the matter. [53454/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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There have been many increases to the CAT thresholds in recent years. The Group A threshold was raised from €225,000 to €280,000 in Budget 2016, to €310,000 in 2017, to €320,000 in Budget 2019 with a further rise to €335,000 in Budget 2020.

The Group B threshold rose from €30,150 to €32,500 in Budget 2017 and the Group C threshold rose from €15,075 to €16,250 in Budget 2017.

The deputy will appreciate that there would be a significant cost in making further substantial changes to the Group A, Group B and Group C thresholds. For example, recent Revenue estimates indicate that the cost of increasing the CAT A threshold from its current €335,000 to €400,000 would be €47 million, the estimated cost of increasing the CAT B threshold from its current €32,500 to €35,000 would be €8 million, and the estimated cost of increasing the CAT C threshold from its current €16,250 to €19,000 would be €3 million.

The options available for providing increases to CAT thresholds need to be considered in the context of available resources and must be balanced against competing demands. I have no plans to make changes to the rate of Capital Acquisitions Tax or inheritance tax thresholds at this time.