Wednesday, 9 Oct 2024

Tax Data

Questions (41)

Darren O'Rourke

Question:

41. Deputy Darren O'Rourke asked the Minister for Finance the estimated full-year cost of reversing the 2024 carbon tax increase, and postponing the 2025 increase; and if he will make a statement on the matter. [40384/24]

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Written answers

Minister for Finance

I am advised by Revenue that its Ready Reckoner for calculating the impact of potential changes in rates of taxation can be used to estimate the effect of changes to the carbon tax rate by extrapolating from the information on page 23. The Ready Reckoner is available on the Revenue website at: www.revenue.ie/en/corporate/information-about-revenue/statistics/ready-reckoner/index.aspx.

An update of the Ready Reckoner is due to issue in the coming weeks. These estimates assume no behavioural changes as a result of price changes.

Tax Code

Questions (42, 43, 71)

John Paul Phelan

Question:

42. Deputy John Paul Phelan asked the Minister for Finance the rationale for the significant increase in excise duty on cigarettes in Budget 2025 given the concerns set out in the Tax Strategy Group paper regarding the scale of illegal trade in tobacco in Ireland and the resultant tax losses to the Exchequer; and if he will make a statement on the matter. [40406/24]

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John Paul Phelan

Question:

43. Deputy John Paul Phelan asked the Minister for Finance if Budget 2025 contained any additional resource aimed at the detection and enforcement of illegal cigarette smuggling, including for enhanced spot-checks to ensure compliance with duty-free travel allowances for cigarettes; and if he will make a statement on the matter. [40407/24]

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Brendan Smith

Question:

71. Deputy Brendan Smith asked the Minister for Finance if, in view of the huge loss to the Exchequer in 2023 due to the highest ever level of illicit cigarettes coming into this State, and taking into account the recent increase in excise on tobacco, he will outline the additional measures that will be implemented to counteract this illegal trade in such products, to protect the revenue due to the State and also legitimate trade; and if he will make a statement on the matter. [40601/24]

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Written answers

Minister for Finance

I propose to take Questions Nos. 42, 43 and 71 together.

According to the World Health Organization evidence shows that significantly increasing tobacco excise taxes and prices is the single most effective and cost-effective measure for reducing tobacco use. It is also a measure specifically called for in Article 6 of the WHO Framework Convention on Tobacco Control.

Ireland is committed to a policy of high taxation of tobacco in order to encourage people to quit smoking, particularly younger people. The policy rationale of the Budget 2025 increase, and the aim of this Government, is one where an increase in the price of cigarettes will encourage increased cessation attempts in current smokers and reduce smoking initiation amongst younger people and those on lower incomes. This not only achieves our public health objectives, but would also increase the disposable incomes of those who give up smoking.

The HSE offer a number of free programmes and supports to those who wish to stop smoking through the QUIT service. “We Can Quit” is one such free, supportive group programme offered in partnership with local community organisations. Additionally, in February 2023 the HSE announced that a range of nicotine replacement therapies (NRT) will be offered free of charge from local stop smoking clinics. The free NRT is being offered as part of a package of supports to those who wish to quit smoking.

Revenue is committed to targeting the illicit tobacco trade and implements a range of measures to identify and target the smuggling, supply or sale of illicit tobacco, including duty free tobacco in excess of duty-free allowances, and where possible, prosecuting those involved. In its efforts to detect the importation of excess duty-free goods, Revenue uses a combination of risk analysis, profiling, intelligence, screening of checked-in and carry-on baggage and the deployment of its detector dog teams. I have been informed by Revenue of the recent purchase and deployment of an additional mobile baggage scanner, which is being used in conjunction with Revenue’s other resources to help identify illicit products contained in passengers’ baggage. Revenue’s strategy also involves developing and sharing intelligence on a national, EU and international basis. Revenue continues to adopt an agile response to this threat and monitors trends in the illicit tobacco trade on an ongoing basis and adjusts its actions and redeploys its resources in response to new developments or methodologies employed by the criminal gangs involved in that trade.

I am advised that Revenue frequently engages with duty-free operators at the points of entry into the State to discuss the duty-free regime and any additional measures to mitigate against the importation of excess duty-free goods.

The smuggling of tobacco products has a transnational and cross border dimension and in addition to Revenue’s ongoing cooperation with An Garda Síochána in this area, Revenue also works closely with its counterparts in other jurisdictions including colleagues in Northern Ireland through the Cross Border Joint Agency Task Force (JATF) and international bodies including OLAF (the EU’s anti-fraud agency), Europol and the World Customs Organisation.

Revenue optimises media engagement in terms of successful prosecutions, significant seizures and enforcement initiatives, ensuring the general public is aware of the commitment by Revenue to tackling the illicit cigarette and tobacco trade and to deter those involved. To further encourage the general public to engage with Revenue in its efforts targeting the shadow economy and the supply of illegal tobacco products, Revenue includes a message on all press releases relating to tobacco products notifying that businesses or members of the public can contact Revenue in confidence on the free phone number 1800 295 295.

I am pleased to acknowledge that Revenue has achieved considerable success in tackling the illicit tobacco trade. The table below outlines the number and value of seizures of cigarettes and tobacco from 2020 to end September 2024:

2020

-	No. of Seizures	Value
Cigarettes	3,132	€32.8m
Tobacco	1,304	€4.2m
	No. of Seizures	Value
Cigarettes	4,889	€43.5m
Tobacco	1,692	€24.1m
	2021
	No. of Seizures	Value
Cigarettes	5,431	€39.5m
Tobacco	1,563	€8.5m
	2022
	No. of Seizures	Value
Cigarettes	5,164	€55.7m
Tobacco	1,673	€7.7m
	2024 (30 September)
	No. of Seizures	Value
Cigarettes	3,801	€74.8m
Tobacco	1,147	€30.7m

In addition, the number of summary convictions and fines related to tobacco offences is outlined in the table below:

Year	No. of Summary Convictions	Fines
2020	41	€98,500
2021	52	€119,800
2022	61	€124,000
2023	87	€204,000
2024 (as at end September)	60	€150,750

Further successes, highlighting Revenue’s approach to the illicit tobacco trade include the detection and dismantling of an illicit commercial cigarette factory in Dublin in February 2024. This detection was as a result of an intelligence-led operation and follow-up investigations are ongoing nationally and internationally.

The Government has ensured through the Finance Acts over the years that Revenue has the necessary statutory powers to tackle the illicit tobacco trade. I am satisfied that the current legislative framework provides an effective basis for undertaking and continuing its important work in this area. I am assured that Revenue is aware of the threat that tobacco smuggling poses to health, to legitimate business interests and to the Exchequer and I commend Revenue and all the relevant State agencies for their work in this important area.

This Government has been consistent in its strong support for ensuring that Revenue has the necessary resources to fulfil its mandate in respect of functions that are critical for its effective functioning as a tax and customs administration.

Question No. 43 answered with Question No. 42.

Fiscal Policy

Questions (44)

John Paul Phelan

Question:

44. Deputy John Paul Phelan asked the Minister for Finance if the ongoing development of the framework for allocation of the windfall receipts will consider the potential to invest in acquiring equity to finance the scaling of Irish enterprises in order to enhance the competitiveness of the Irish economy and to expand the corporation tax base; and if he will make a statement on the matter. [40415/24]

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Written answers

Minister for Finance

As part of Budget 2025, my Department published a document titled “Use of the Escrow Receipts – A Framework”.

The document sets out the following in relation to the framework for the allocation of these windfall receipts.

“The ultimate guiding principles should be to continue to expand the capital stock to support competitiveness, productivity and future economic development in a manner that is consistent with value for money, and complements other available sources of funding including the NDP, AIB Share sale proceeds and resources available to Climate and Nature Projects from the Infrastructure, Climate and Nature Fund (ICNF). The provision of the additional funding for infrastructure to support housing, water, energy and transport would form the key strategic investment pillars for these funds”.

As I mentioned in my speech on Budget day, work is just beginning on developing the framework and will be overseen by my Department and the Department of Public Expenditure, NDP Delivery & Reform, involving input from relevant departments and agencies.

Question No. 45 answered with Question No. 37.

Question No. 46 answered with Question No. 38.

Tax Data

Questions (47)

Pauline Tully

Question:

47. Deputy Pauline Tully asked the Minister for Finance the amount collected in local property tax in County Cavan in 2020, 2021, 2022 and 2023. [40428/24]

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Written answers

Minister for Housing, Local Government and Heritage

Local Property Tax (LPT) funding allocations are decided in advance of collection, based on estimates of the LPT yield in individual local authority areas for the following liability year. Every local authority is entitled to receive a minimum amount of funding under the LPT allocation process, known as the baseline. Cavan County Council’s baseline for each of the year’s 2020 to 2023 was €9,480,501.

Until 2022, 80% of the estimated LPT yield before variation, was retained locally and 20% used to provide equalisation funding to those local authorities with lower property tax bases. Where 80% of the estimated LPT yield in a local authority area was lower than an authority’s baseline, the authority was topped-up to that baseline. Equalisation funding came from a compulsory 20% contribution from all local authorities and where necessary, additional funding from the Exchequer.

In line with the commitment in the Programme for Government – Our Shared Future, the LPT allocation mechanism changed from 2023 onwards to allow for 100% of the estimated yield to be retained locally within the local authority area where it is collected. Equalisation funding is now met by the Exchequer, to ensure that all authorities continue to receive, at a minimum, an amount equivalent to their baseline.

Finally, it should be noted that as a result of a baseline review, Cavan’s baseline has increased to €11,783,496 from 2024 onwards. This increases equalisation funding provided by €2.3m per annum.

The table below sets out Cavan County Council’s LPT baseline and the amount of equalisation funding provided as part of that allocation in the years 2020 to 2023.

Year	LPT baseline	LPT retained locally (before any local variation of the base rate)	Equalisation funding provided
2020	€9,480,501	€3,571,524 (80% of estimated LPT yield)	€5,908,977
2021	€9,480,501	€3,631,978 (80% of estimated LPT yield)	€5,848,522
2022	€9,480,501	€3,639,652 (80% of estimated LPT yield)	€5,840,849
2023	€9,480,501	€3,750,334 (100% of estimated LPT yield)	€5,730,167

Question No. 48 answered with Question No. 37.

Question No. 49 answered with Question No. 38.

Tax Code

Questions (50)

Jim O'Callaghan

Question:

50. Deputy Jim O'Callaghan asked the Minister for Finance if he will consider reducing the VAT on e-bikes to 9%; and the first- and full-year costs of such a measure. [40478/24]

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Written answers

Minister for Finance

The Deputy should note while I did give the matter some consideration, no decision was made in Budget 2025 to reduce the VAT rate on bicycles and ebikes. Further consideration can be given to this matter as part of the annual Budget process for Budget 2026. It should be noted that is not possible to treat specific categories of bicycles, such as cargo bikes or electric bikes, separately.

As with any VAT reduction there is no guarantee that VAT reductions would be passed to the consumer. I would also note that bicycles are already available at different prices points so the expected impact on consumer behaviour from a reduction in VAT is limited.

The estimated full year cost of reducing VAT on bicycles and ebikes to 13.5% is €8m. The estimated first year cost is €6.7m.

Tax Data

Questions (51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61)

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Pearse Doherty

Question:

61. Deputy Pearse Doherty asked the Minister for Finance the first- and full-year cost of the increase of €60 in the dependent relative tax credit; the number of people that would benefit from this measure; and if he will make a statement on the matter. [40535/24]

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Written answers

Minister for Finance

I propose to take Questions Nos. 51 to 61, inclusive, together.

I am advised by Revenue that all estimates are made on a pre-Budget 2025 basis, as the measures outlined by the Deputy pertain to the Income Tax and USC package outlined in Budget 2025. The Deputy will wish to be aware that the estimated number of taxpayer units benefitting from a measure, as well as the estimated tax cost, as set out below, relate to those benefitting from each policy change in isolation and on a standalone basis. Taken together as a combined Income Tax and USC package, the number of beneficiaries and tax cost for any particular policy change will differ, due to the interactive nature of the tax system, as certain policy changes can act to reduce the tax liability to zero for some taxpayers before another individual policy measure is applied.

The estimated number of beneficiaries is provided as a count of taxpayer units benefitting, a taxpayer unit includes jointly assessed taxpayers as one unit. For these taxpayers it is not possible to provide information on the number of individuals benefitting, as jointly assessed taxpayers avail of tax band and credit sharing.

Measure	First year cost	Full year cost	Beneficiaries
Increase the 2% USC ceiling by €1,622	€55m	€65m	1.6m taxpayer units
Reduce the 4% USC rate to 3%	€450m	€515m	1.6m taxpayer units
Increase the standard rate cut-off point by €2,000	€470m	€535m	1.1m taxpayer units
Increase the personal tax credit by €125	€340m	€390m	2.2m taxpayer units
Increase the employee tax credit by €125	€280m	€315m	2.0m taxpayer units
Increase the earned income tax credit by €125	€20m	€30m	200,000 taxpayer units
Increase the home carer tax credit by €150	€9m	€11m	65,000 taxpayer units
Increase the single person child carer tax credit by €150	€8m	€9m	64,000 taxpayer units
Increase the incapacitated child tax credit by €300	€10m	€11m	35,000 taxpayer units
Increase the blind person’s tax credit by €300	€0.4m	€0.4m	1,500 taxpayer units
Increase the dependent relative tax credit by €60	€5m	€6m	58,000 taxpayer units

Question No. 52 answered with Question No. 51.

Question No. 53 answered with Question No. 51.

Question No. 54 answered with Question No. 51.

Question No. 55 answered with Question No. 51.

Question No. 56 answered with Question No. 51.

Question No. 57 answered with Question No. 51.

Question No. 58 answered with Question No. 51.

Question No. 59 answered with Question No. 51.

Question No. 60 answered with Question No. 51.