Written Answers Nos. 421-440
421. Deputy Pearse Doherty asked the Minister for Finance the first- and full-year costs in each of the years 2025, 2026, 2027, 2028 and 2029 of extending the reduced 9% rate of VAT applying to electricity and gas. [33303/24]
Amharc ar fhreagraThe estimated annual cost of applying a 9% VAT rate to gas and electricity is €342m (€253m for electricity and €89m for gas). The estimated cost for the November/December 2024 VAT period is €63m (€44m for electricity and €19m for gas).
While the first year cost for VAT measures is usually lower because the revenue from the November/December VAT period is not collected until the following year, it should be noted that for this measure, if the 9% VAT rate for gas and electricity was applied in the November/December 2024 VAT period the first year cost for applying the 9% VAT rate in 2025 would remain €342m.
It is important to be aware that estimates of tax costings for VAT are provided on the basis of the current Budget year (2024) rather than the next Budget year (2025). The Budget year costings for 2025 are prepared for the party costings service and are used to feed into costings requested by the Department of Finance in advance of the Budget. The Revenue Pre-Budget Ready Reckoner (published end August) will also be on the basis of Budget year 2025.
I am advised that Revenue cannot provide estimates for later years due to the unknown nature of the future tax base and future economic behaviour.
422. Deputy Pearse Doherty asked the Minister for Finance the first- and full-year cost in each of the years 2025, 2026, 2027, 2028 and 2029 of making research and development payable credits, under the R&D tax credit regime, payable in one instalment for small and micro companies and SMEs. [33306/24]
Amharc ar fhreagraIt is assumed that the Deputy is referring to accelerating the second and third payable credit associated with the Research and Development Tax Credit (R&D) for small and micro-companies.
The Deputy may be aware of changes included in the Finance (No.2) Act 2023, which made the first €50,000, previously €25,000, of a claim on R&D expenditure payable in full. This was done to provide a cash-flow benefit for smaller R&D projects and encourage more companies to engage with the regime.
I am informed by Revenue that the estimated cost of making the full amount of the R&D credit payable in one instalment for small and micro-companies is in the region of €43 million. It should be noted that this cost is a cash flow cost and not an additional full year cost as it does not entail any change to the overall amount of the credit. This estimate is based on R&D tax credit claims included on Corporation Tax returns for 2022, the latest year for which fully analysed data is available. It assumes no behavioural change by companies claiming this credit.
The Deputy may also be aware that Corporation tax returns are due to be filed nine months after the end of the accounting period. Returns for accounting years ending in 2023 may therefore be filed up to late September this year, therefore information on tax expenditures in 2023 and years after 2023 are not yet available.
Furthermore, Revenue have advised that they are unable to provide estimates for later years due to the unknown nature of the future tax base and future economic behaviour.
423. Deputy Pearse Doherty asked the Minister for Finance the revenue raised in the years 2025, 2026, 2027, 2028 and 2029 by introducing a luxury vehicle tax applied at a rate of 10% on the importation or sale of vehicles of a value in excess of €65,000, excluding HGVs, ambulances, hearses, motor vehicle clearly marked for policing activities, motor vehicle clearly marked and equipped for emergency medical or fire response activities or recreational vehicles designed or adapted to provide temporary residential accommodations. [33315/24]
Amharc ar fhreagra424. Deputy Pearse Doherty asked the Minister for Finance the revenue raised in the years 2025, 2026, 2027, 2028 and 2029 by introducing a luxury vehicle tax applied at a rate of 10% on the importation or sale of vehicles of a value in excess of €85,000, excluding HGVs, ambulances, hearses, motor vehicle clearly marked for policing activities, motor vehicle clearly marked and equipped for emergency medical or fire response activities or recreational vehicles designed or adapted to provide temporary residential accommodations. [33316/24]
Amharc ar fhreagra425. Deputy Pearse Doherty asked the Minister for Finance the revenue raised in the years 2025, 2026, 2027, 2028 and 2029 by introducing a luxury vehicle tax applied at a rate of 10 per cent on the importation or sale of vehicles of a value in excess of €100,000, excluding HGVs, ambulances, hearses, motor vehicle clearly marked for policing activities, motor vehicle clearly marked and equipped for emergency medical or fire response activities or recreational vehicles designed or adapted to provide temporary residential accommodations. [33323/24]
Amharc ar fhreagraI propose to take Questions Nos. 423, 424 and 425 together.
I am advised by Revenue that the full year yield from the proposals to introduce a ten per cent luxury vehicle tax on the importation or sale of vehicles with values in excess of €65,000, €85,000 and €100,000 is tentatively estimated in the following table.
|
Proposal |
Estimated full year yield |
|
Value in excess of €65,000 |
€110m |
|
Value in excess of €85,000 |
€56m |
|
Value in excess of €100,000 |
€36m |
They are based on the most recent 12 months of Revenue registrations data (July 2023 to June 2024) and assume no behavioural change. The estimates are inclusive of Category A and B vehicles only. The vehicle types specified have been excluded where possible. Category M and all other Category C vehicles have been excluded, as Revenue systems do not hold the necessary price data.
I am further advised that Revenue cannot provide estimates for later years due to the unknown nature of the future tax base and future economic behaviour.
426. Deputy Jennifer Whitmore asked the Minister for Finance to consider a change to the age tax credit in Budget 2025, given that the prevailing rate has been in place for several years, since there are a number of pensioners on relatively small incomes who have not been able to fully benefit form pension increases in recent years; and if he will make a statement on the matter. [33482/24]
Amharc ar fhreagraThe tax code provides for a number of tax measures for those aged 65 and over. This includes section 464 Taxes Consolidation Act 1997 which provides for the Age Tax Credit for individuals aged 65 or over. The credit is due in the year that an individual reaches the age of 65 and is granted for the full tax year. The current value of the tax credit is €245 per year for single persons or €490 per year for married couples or civil partners. The credit is available when the older spouse or civil partner reaches the age of 65.
It is important to take into account that the current tax arrangements for persons aged 65 or older compare favourably with the tax treatment of the generality of taxpayers. For example, the current age exemptions limits mean that single, widowed or surviving civil partners aged 65 or older do not pay any income tax if they earn less than €18,000 per annum, with a threshold of €36,000 in place for a married couple or civil partners where one person is 65 years of age or older. The relevant income thresholds may be increased further if the individual has a qualifying child.
Marginal relief may also be available where the individual’s or couple’s income exceeds the relevant exemption limit but is less than twice that amount. Where marginal relief applies the individual or couple is taxed at 40 per cent on all income above the exemption limit to a ceiling of twice the exemption limit. The system of marginal relief ensures that in cases where an individual's or couple’s income rises above the exemption threshold that their net income will not decline, as the 40 per cent income tax rate only applies to the proportion of income above the threshold. Once the income exceeds twice the exemption limit, marginal relief is no longer available and the individual pays tax under the normal tax system.
Where the individual’s income is greater than the exemption limit but below twice that limit, the taxpayer is entitled to the benefit of the more favourable treatment of either the use of marginal relief or the normal tax system of credits and bands.
In circumstances where the individual or couple no longer benefits from the age exemption or marginal relief they will benefit from the increases to the main personal tax credits in recent Budgets.
The increases to the main personal tax credits in Budget 2024 (€100 increase to the single, employee and earned income credits and a €200 increase to the credit for married couples/civil partnerships) means that the effective entry point to income tax has increased for all taxpayers, including those aged over 65. From 2024, the effective entry point to income tax for an individual in receipt of the single person credit, employee/earned income credit and the age credit has increased by €1,000 per annum from €18,975 to €19,975 per annum.
Furthermore, reduced rates of USC also apply for persons aged 70 or older where their total income is €60,000 per annum or less. The State Contributory Pension and the State Non-Contributory Pension are also excluded from the calculation when determining whether an individual’s total income has exceeded the €60,000 per annum threshold. It is also worth pointing out that the State Contributory and Non-Contributory Pensions are not chargeable to USC or Pay Related Social Insurance.
With regards to the possibility of changes to the age tax credit in Budget 2025, the Deputy will appreciate it is a longstanding practice of the Minister for Finance not to comment in advance of the Budget on any tax matters that might be the subject of Budget decisions.
Finally, it should be noted that the Commission on Taxation and Welfare recently reviewed the tax system in the round. The Commission recommended that age should be removed as a factor for determining the charge to income tax and USC. The report stated that the determination of an individual’s tax treatment based on age narrows the base and breaches the concept of horizontal equity, whereby those with similar income should pay the same proportion of that income in taxes. It also breaches the concept of intergenerational equity. Further details are set out in the Report of the Commission, located at the following link - www.gov.ie/en/publication/7fbeb-report-of-the-commission/ .
427. Deputy Eoin Ó Broin asked the Minister for Finance the cost of reducing the period in which pre-letting expenditure in respect of certain residential premises can be claimed from eight years to four years; and two years respectively. [33483/24]
Amharc ar fhreagraSection 97A Taxes Consolidation Act 1997, introduced in Finance Act 2017, allows a deduction (capped at €10,000 per premises) from rental income for certain pre-letting expenditure on properties which have been vacant for at least six months and are subsequently let. To qualify, the expenditure must be incurred in the twelve months immediately prior to the letting.
Finance Act 2022 increased the maximum allowable deduction from €5,000 to €10,000 and decreased the vacancy period from 12 months to six months, in accordance with a commitment in the Housing for All Action Plan.
The purpose of the measure is to encourage owners of vacant residential property to bring that property into the rental market, for a minimum of four years. The expenditure must be such as would be allowed against rental income as if it had been incurred during the period of letting.
A deduction for pre-letting expenditure is currently claimed against rental income in a single tax year, at the start of the next period in which the property is let, rather than over eight years. The Deputy may be referring to capital allowances, which are deductions allowed for certain capital expenditure which can be claimed over eight years. Capital allowances cannot be claimed in respect of pre-letting expenditure.
428. Deputy Eoin Ó Broin asked the Minister for Finance the cost of reducing the period in which the deduction for retrofitting expenditure can be claimed to one year, subject to the rental premises remaining in the rental market for a period of two, five and ten years respectively. [33484/24]
Amharc ar fhreagraA new tax incentive was introduced in Finance Act 2022 for small-scale landlords who undertake retrofitting works while the tenant remains in situ, which has the aim of attracting and retaining small-scale landlords in the private rental sector. This measure is provided for in section 97B Taxes Consolidation Act 1997.
The provision provides for a deduction for certain retrofitting expenses incurred by landlords on rented residential properties in calculating their Case V rental profits. The expenses that qualify for deduction are those in respect of which the landlord has received a home energy grant from the Sustainable Energy Authority of Ireland (SEAI). The expenses incurred must be in the period 1 January 2023 to 31 December 2025. The maximum deduction that can be claimed is the lesser of the qualifying expenditure incurred or €10,000, and a landlord is only entitled to claim the relief on a maximum of two of his/her rental properties. A landlord is also required to keep the premises subject to a tenancy for two years after the end of the year in which the qualifying works are completed, otherwise the amount deducted will be clawed back.
Unlike other rental expenses, a deduction for retrofitting expenses is not claimable in the year in which it is incurred. Instead, the deduction is claimed against the rental income of the year following that in which the expense was incurred. For example, expenses incurred on retrofitting works in 2023 should be included in calculating rental profits for 2024 and may be claimed by a landlord on their income tax return for that year.
As the deduction for retro-fitting expenditure is already currently claimed against rental income in a single tax year, the first part of the Deputy's question does not arise.
In relation to the second part of the Deputy's question, and having regard to the fact that relief under this measure will be claimed for the first time in 2025 (when the income tax return for the 2024 tax year is filed), I am advised by Revenue that it would not be possible to project any change in costs from varying the period that the premises must remain on the rental market.
429. Deputy Marian Harkin asked the Minister for Finance if a financial service provider has not kept required records such as records of phone calls in relation to a customer as detailed in the Consumer Protection Code 2012 issued by the Central Bank of Ireland, can this be adjudicated by the Financial Services and Pensions Ombudsman. [33530/24]
Amharc ar fhreagraThere is a robust consumer protection framework in place in Ireland to support consumers who may wish to make a complaint against a financial service provider.
The Central Bank’s Consumer Protection Code (the Code) 2012 imposes record keeping and complaints resolution requirements on regulated entities.
Provision 11.5 of the Code states that a regulated entity must maintain up-to-date records containing, inter alia, “all correspondence with the consumer and details of any other information provided to the consumer in relation to the product or service”. The Code defines “record” as “any document, file or information (whether stored electronically or otherwise) and which is capable of being reproduced in a legible form.”
Provision 11.6 of the Code requires regulated entities to retain details of individual transactions for six years after the date on which the particular transaction is discontinued or completed. They must retain all other records for six years from the date on which the regulated entity ceased to provide any product or service to the consumer concerned.
When any consumer, whether an individual, a small business or an organisation, is unable to resolve a complaint or dispute with a financial service provider or a pension provider, they can refer their complaint to the Financial Services and Pension’s Ombudsman (FSPO).
The FSPO is an independent, impartial, fair and free service. It plays a vital role in the financial consumer protection framework in place in Ireland to support consumers of financial services.
If a consumer makes a complaint about a financial service provider that it has failed within the context of the provision of a financial service, to retain records of its interactions with that consumer, whether phonecalls or otherwise, this is a matter which falls within the remit of the FSPO.
The FSPO provides a service which is accessible to the public, and a consumer is neither required nor expected by the FSPO to be familiar with the provisions of the Code. Rather, a consumer pursuing a complaint is encouraged by the FSPO to explain their complaint in their own words. The FSPO will then scrutinise the essence of that complaint within the context of the regulatory framework for the provision of financial services, in order to ensure that the matter can be investigated as appropriate.
430. Deputy Pearse Doherty asked the Minister for Finance the cost of expanding section 481 tax relief to theatre productions. [33651/24]
Amharc ar fhreagra431. Deputy Pearse Doherty asked the Minister for Finance the cost of restoring the regional uplift for section 481 tax relief. [33652/24]
Amharc ar fhreagra432. Deputy Pearse Doherty asked the Minister for Finance the cost of establishing a regional uplift for section 481 tax relief limited to productions filmed in Gaeltacht areas. [33653/24]
Amharc ar fhreagraI propose to take Questions Nos. 430, 431 and 432 together.
In relation to question 33651/24, I am advised by Revenue that theatre productions are not separately identified on corporation tax returns. The costing requested would depend on the number and cost of qualifying theatre productions. Therefore, Revenue has no basis on which to estimate the cost of extending this relief in the manner suggested.
In relation to question 33652/24, Finance Act 2018 introduced a short-term, tapered regional uplift for productions being made in areas designated under the State aid regional guidelines. The purpose of the regional uplift was to support the development of new, local pools of talent in areas outside the current main production hubs, to support the geographic spread of the audio-visual sector.
The uplift originally provided an increased level of credit for four years, with 5% available in years 1 and 2 (2019 and 2020), 3% available in year 3 (2021), 2% available in year 4 (2022). However, in recognition of the detrimental impact the COVID-19 crisis had on the audio-visual sector, Finance Act 2020 amended the regional uplift to provide for an additional 5% year in 2021, in effect to replace the incentive lost as a result of the COVID-related public health measures. The tapered withdrawal of the uplift then restarted, reducing to 3% in 2022, 2% in 2023, and it has now ceased.
As the regional uplift was an approved State aid, any restoration of the uplift would require approval from the European Commission. It should be noted that a further extension of the uplift in its previous form may not be possible. While it was not a Regional Aid, the relief operated by reference to the regional aid map applicable at the time it was introduced. A new regional aid map, covering a smaller geographic area, was introduced from April 2021 and, while approval was granted by the European Commission for the uplift to continue to reference the previous map for its remaining term, it is not clear that a similar approval would be granted if the uplift were to be re-introduced.
I am advised by Revenue that the Exchequer cost of the regional uplift is dependent on the number of qualifying films, as well as the timing and value of claims made for the relief into the future. As information on future expenditure in this sector is unknown, there is no basis available to provide an accurate estimate of the information requested by the Deputy.
However, the Deputy may wish to note that the estimated additional cost of the regional uplift on claims paid during 2022 was approximately €3.4m. This estimated cost is based on payments for both upfront claims (for 90% based on budgeted expenditure) in 2022, a year in which the regional uplift was 3%, and balancing claims from previous years.
In relation to question 33653/24, I am advised by Revenue that it cannot provide an estimate the cost of establishing a regional uplift for film production in Gaeltacht areas as it has no data on which to base such an estimate.
Section 481 provides relief in the form of a corporation tax credit related to the cost of production of certain films. The scheme is intended to act as a stimulus to the creation of an indigenous film industry in the State, creating quality employment opportunities and supporting the expression of the Irish culture.
433. Deputy Pearse Doherty asked the Minister for Finance the cost of expanding section 481 tax relief to unscripted films. [33654/24]
Amharc ar fhreagraSection 481 provides relief in the form of a corporation tax credit related to the cost of production of certain films. The scheme is intended to act as a stimulus to the creation of an indigenous film industry in the State, creating quality employment opportunities and supporting the expression of the Irish culture.
The Deputy will be aware that, as part of his Budget 2024 speech, my predecessor Minister McGrath announced plans for the development of an incentive for the unscripted production sector.
It is intended that this new incentive will complement the long-standing section 481 tax credit in supporting Ireland’s growing and internationally-recognised audio-visual sector.
Work is being undertaken on the design the measure at this time with a view to introduction in this year's Finance Act. In order to introduce the credit, approval will be required from the European Commission as an incentive of this nature is a State aid.
In terms of the cost of expanding section 481 to unscripted films, there are a number of variables associated with undertaking such a costing that are required to produce an accurate estimate, for example, the type of unscripted content such an extension would cover. There are a broad range of genres to which an unscripted production credit could apply, including lifestyle programming, entertainment, factual entertainment, factual programming and live programming (news, current affairs sports, talk shows and award shows). A further consideration would be the type of expenditure such an extension would cover.
In addition to the above, the future cost of the extension of section 481 to unscripted films would also be dependent on the number of films that would qualify as a result of such an extension, as well as the timing and value of claims made for the relief into the future. As information on future expenditure in this sector is unknown, an accurate estimate of the information requested by the Deputy cannot be provided.
434. Deputy Pearse Doherty asked the Minister for Finance the revenue that would be gained by imposing a levy on ticket sale and distribution service providers at a rate of 3%, 4% and 5%, based on the revenue earned by the provider for services provided in the State. [33656/24]
Amharc ar fhreagraAs a small open economy, connected to Europe, the US and the wider world, Ireland is committed to a competitive, transparent and stable corporation tax system. As the Deputy will be aware, the trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%, and we are committed under the Pillar Two agreement to increasing to an effective rate of 15% for in-scope companies. Some of the main features of the current regime are its simplicity and that it applies to a broad base.
Imposing additional taxes or levies on certain sectors would involve increased complexity and could change the attractiveness of Ireland's corporate tax regime. While it is possible that imposing such taxes could lead to theoretical gains, there is a risk of such taxes leading to lower levels of economic activity and to companies passing the additional tax burden onto their suppliers or consumers.
In relation to the proposed levy on ticket sale and distribution service providers envisaged by the Deputy, I am advised by the Revenue Commissioners that it cannot provide an estimate of the revenue that would be raised by this proposal as it has no data on which to base such an estimate.
The Deputy should note that the Minister for Enterprise, Trade and Employment is responsible for policy matters regarding digital services, including marketplaces, that act as intermediaries in their role of connecting consumers with goods, services and content.
435. Deputy Pearse Doherty asked the Minister for Finance the cost of introducing income averaging for artists. [33657/24]
Amharc ar fhreagra437. Deputy Aengus Ó Snodaigh asked the Minister for Finance the estimated cost of introducing income averaging for artists, in tabular form. [33715/24]
Amharc ar fhreagraI propose to take Questions Nos. 435 and 437 together.
There is insufficient detail set out in the Deputies' questions as to how the proposed income averaging for artists might operate and therefore, there is no basis upon which to estimate a cost.
436. Deputy Pearse Doherty asked the Minister for Finance the cost of increasing the cap on the level of exempt income under the artists’ tax exemption from €50,000 to €60,000, to €75,000, and to €100,000. [33658/24]
Amharc ar fhreagra438. Deputy Aengus Ó Snodaigh asked the Minister for Finance the estimated cost of increasing the cap on the level of exempt income under the artists’ tax exemption from €50,000 to €60,000, to €75,000, and to €100,000, in tabular form. [33716/24]
Amharc ar fhreagraI propose to take Questions Nos. 436 and 438 together.
I am advised by Revenue that it is not possible to estimate the cost associated with the proposals outlined by the Deputies, due to the way in which the data are captured on the tax returns.
Taxpayers availing of the artists’ exemption are required to file a Form 11 tax return. The amount of income eligible for the exemption is declared on the return. Any additional income above the exemption cap is declared as self-employed trading income. It is not possible to determine how much of the income declared by these taxpayers as trading income would be eligible for the artists’ exemption, as many artists have multiple income streams, not all of which would be eligible to the exemption.
440. Deputy Richard Boyd Barrett asked the Minister for Finance the full-year revenue that would be generated by imposing a minimum effective corporate tax rate of 15% on pre-tax gross trading profits before deductions, reliefs and allowances and assuming no behavioural change; and if he will make a statement on the matter. [33727/24]
Amharc ar fhreagraThe trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%. Some of the main features of the current corporation tax regime are its simplicity and that it applies to a broad base. Changing this rate (or imposing additional levies on corporate profits) would involve increased complexity and could change the attractiveness of Ireland's corporate tax offering.
It is my understanding that the Deputy is referring to the gross trading profits of companies data which is released annually by Revenue. As with individual income taxpayers, companies can use net credits, deductions and reliefs against their profits to reduce taxable income or CT payable. For example, companies are entitled to capital allowances in respect of certain expenditure and these can be set against profits and, where a company has losses or carries forward losses from a previous accounting period (subject to conditions), these can be used to offset against its CT liability in a variety of ways. Loss-relief is a standard feature of corporation tax systems in most OECD countries. It recognises the fact that a business cycle runs over several years and that it would be unfair to tax income earned in one year and not allow relief for losses incurred in another.
In October 2021 Ireland, along with almost 140 other countries in the OECD/G20 Inclusive Framework, signed up to an historic agreement to reform the international tax framework as it applies to large corporate groups. Building on the original Base Erosion and Profit Shifting (BEPS) project, the agreement contains a two-pillar solution to address the tax challenges arising from digitalisation and globalisation. Recognising how multi-national enterprises (MNEs) across the globe now operate commercially and generate value, this significant reform will ensure that the international tax framework keeps pace with these developments in a coordinated way.
Pillar Two of the agreement will see the adoption of a global minimum effective tax rate of 15% applying to multinational companies with global revenues in excess of €750m. Ireland will retain its 12.5% corporation tax rate on trading profits for the 95% of companies in Ireland that are out of scope of the agreement.
Pillar Two has been in effect in effect in Ireland since 31 December 2023 after the EU Minimum Tax Directive was transposed. However, it is important to recognise that the minimum corporate tax rate is only one element of the OECD Two Pillar agreement. Any projected changes to corporation tax yields following implementation must also take into account Pillar One, which provides for a reallocation of certain profits to market jurisdictions.
An initial estimate of the potential cost of implementing both pillars of the OECD agreement in terms of reduced tax receipts was published in 2020 as being potentially in the region of €2 billion per annum - approximately 20% of CT revenue at that time.
Estimating the potential impact of the OECD agreement represents a considerable and on-going challenge, not least due to the fact that the negotiations are still ongoing. Given this uncertainty, the original assumption was retained in the SPU with a net loss of €2 billion from both pillars of the agreement incorporated from 2026 onwards. My Department will produce a full set of fiscal projections as part of Budget 2025 in the autumn.
