Pádraig O'Sullivan (Cork North Central, Fianna Fail)
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232. To ask the Minister for Finance if the naval personnel sea service tax credit will be increased; and if he will make a statement on the matter. [4806/23]

Michael McGrath (Cork South Central, Fianna Fail)
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Section 472BB of the Taxes Consolidation Act 1997 (TCA 1997) provides that a tax credit, called the sea-going naval personnel credit, is available to those who satisfy the qualifying conditions of that section.

This credit was introduced by Finance Act 2019 in recognition of the proportion of their time that naval personnel spend away from the State at sea (and the various hardships associated with that); and to aid in the recruitment and retention of personnel in the Naval Service. It was initially available to permanent members of the Irish naval service in the 2020 year of assessment only. However, the availability of the credit has since been extended and the credit now applies for the 2021 to 2023 years of assessment inclusive also.

The sea-going naval personnel tax credit was €1,270 for the 2020 year of assessment. For the 2021, 2022 and 2023 years of assessment the credit was increased to €1,500.

Full details of qualifying conditions that apply are set out in the relevant Tax and Duty Manual (Part 15-01-48) available on the Revenue website at the following link: 

www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-48.pdf

This credit was introduced as a targeted and time bound measure aimed at incentivising the retention of skilled personnel who have been trained, at cost to the Exchequer, to provide essential services in the area of fisheries protection, amongst other functions.

The further extension of this tax credit for the 2023 year of assessment recognises the unique conditions of service in the navy, whilst also ensuring the credit remains a targeted and time bound measure. There is also scope for other retention measures to be implemented on foot of the Public Service Pay Commission (PSPC) Report on Recruitment and Retention in the Permanent Defence Force.

My Department will continue to engage with the Department of Defence in relation to the current taxation measure. Decisions regarding tax incentives and reliefs are normally made in the context of the annual Budget and Finance Bill process. Such decisions must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines. The guidelines make clear that any policy proposal which involves tax expenditures should only occur in limited circumstances where there are demonstrable market failures, where a tax-based incentive is more efficient than a direct expenditure intervention. Tax reliefs, no matter how worthwhile in themselves, may serve to narrow the tax base and can make general reform of the tax system that much more difficult.