Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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459.To ask the Minister for Finance the number of people who do not use their full tax credit; the total cost of refunding unused tax credits to the people; and if he will make a statement on the matter. [33750/24]

Jack Chambers (Dublin West, Fianna Fail)
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I am advised by Revenue that it is not possible to identify precisely, with the data available for statistical analysis, the number of taxpayers who claimed a credit but did not use all of the value of the credit in offsetting their gross tax liability.

My Department has examined the matter of refundable tax credits in the Tax Strategy Group (TSG) process in advance of Budget 2024, and the analysis and findings of the review were published in the Income Tax TSG paper, which is available on the Department of Finance’s website at the following link:

Overall, the review identified a number of issues concerning refundable tax credits. Introducing such credits would represent a fundamental change to the personal tax system. It could also potentially prove to be very costly and provide relatively little benefit to the majority of individuals, including those working full time and earning at least the national minimum wage because such workers generally fully utilise their tax credits. Furthermore, refundable tax credits could also have potential behavioural impacts on labour supply and reduce the incentive to work or to take on additional work. Implementing a system of refundable tax credits would result in operational and administrative complexities as well as potentially reducing eligibility for some existing supports for low income households. At the time of the review tentative estimates provided by Revenue suggested potential costs could be in the region of €1 billion in relation to making personal tax credits refundable.

However, I am further advised that Revenue has not undertaken an exercise to estimate a projected impact of refundable tax credits to the Exchequer in the manner outlined by the Deputy, or the administrative cost of establishing the necessary systems to facilitate the refund of tax credits. Any such exercise in estimation would be highly complex as it would involve assumptions about the manner in which such a system would operate, its possible effects on individuals not currently in the tax net and how such a system might interact with any social protection payments. Further complexity arises as a result of certain tax credits being shareable in the cases of jointly assessed taxpayer units. In the absence of a fully designed scheme of refundable tax credits that addresses all the relevant issues outlined, an estimated cost of refunding of credits is not currently available.