Tax Code.

Dáil Éireann Debate, Thursday - 5 October 2006

Thursday, 5 October 2006

Questions (84, 85, 86, 87, 88, 89, 90, 91, 92, 93)

Paul McGrath

Question:

82 Mr. P. McGrath asked the Minister for Finance the 10 most popular occupations or professions in respect of self-employed persons earning more that €200,000 per annum. [31333/06]

Paul McGrath

Question:

90 Mr. P. McGrath asked the Minister for Finance the 10 most popular occupations or professions in respect of PAYE workers earning more that €200,000 per annum. [31341/06]

Written answers

Minister for Finance (Mr. Cowen)

It is proposed to take Questions Nos. 82 and 90 together.

I am informed by the Revenue Commissioners that the latest relevant sector-based information available on employees taxed under the PAYE system and self-employed persons taxed under the self-assessment system is derived from income tax returns filed for the income tax year 2003. It is not possible at present to provide the information sought for a more recent year if the data are to be reasonably accurate.

The sector identifier used on the tax records is based on the 4 digit "NACE code (Rev. 1)" which is an internationally recognised economic activity code system. On this basis, the information requested is as follows:

Gross income exceeding €200,000 by NACE Economic Activity Code, 2003.

Employees
Sector (economic activity code)	Number of income earners with gross income exceeding €200,000
Cases where no sector identified (9991)	1,110
Letting of own property (70.20)	481
Medical practice activities (85.12)	319
Monetary intermediation (65.12)	290
Hospital activities (85.11)	280
General construction of building and civil engineering works (45.21)	249
Business and management consultancy activities (74.14)	153
Activities auxiliary to insurance and pension funding (67.20)	134
Development and selling of real estate (70.11)	128
Architectural and engineering activities and related technical consultancy (74.20)	127

Self-Employed
Sector (economic activity code)	Number of income earners with gross income exceeding €200,000
Legal Activities (74.11)	1,426
Medical practice activities (85.12)	1,025
Cases where no sector identified (9991)	692
Accounting, book-keeping and auditing activities; tax consultancy (74.12)	494
Letting of own property (70.20)	409
Dental practice activities (85.13)	229
Farming (1.11, 1.21, 1.22, 1.30, 1.90)	184
Architectural and engineering activities and related technical consultancy (74.20)	170
Hospital activities (85.11)	154
Dispensing chemists (52.31)	107

‘Employees' and ‘Self-Employed' are classified for this purpose according to their main source of income. The NACE codes are not essential for the assessment and collection of taxes and duties and the correct allocation and maintenance of these codes is subject to the limit of available resources. The economic sector breakdown on Revenue records is based on details which were recorded using information supplied by income earners or their employers at some point in the past.

Some of that information may have been incorrect or misinterpreted in the first instance, or may not have been subsequently updated as necessary. For these reasons some of the economic sector codes on tax records are likely to be out of date or inaccurate and the reliability of the figures for the sectors currently provided will be limited to that extent. A married couple who has elected or who has been deemed to have elected for joint assessment is counted as one tax unit and their incomes are aggregated in the statistics.

Paul McGrath

Question:

83 Mr. P. McGrath asked the Minister for Finance the number of PAYE workers and the number of self employed workers who have incomes of €200,000, €200,000 to €400,000, €400,000 to €600,000, €600,000 to €1,000,000 and over €1 million who paid tax at only the 20% rate of tax and paid no income tax at all. [31334/06]

Minister for Finance (Mr. Cowen)

I am informed by the Revenue Commissioners that the most recent basic data on incomes available from which information of the type requested by the Deputy could be derived are in respect of the income tax year 2003 and are set out the following tables. For completeness, the numbers of income earners liable for tax at the top rate of 42 per cent are also included.

The Deputy will be aware that this material is dated in that major changes I made in my Budgets to the structure and extent of tax reliefs will increase the average tax rate for those on higher incomes using such reliefs. Caution should be used in basing policy pronouncements on this data.

A married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit. Married couples and individuals with income chargeable to tax under both Schedule E and Schedule D have been classified in the following tables by reference to the Schedule under which the larger amount of income is taxable.

The designation of a tax rate to an income earner in the tables is based on identifying the top tax rate applying to the taxable income of each earner. To arrive at the figure for taxable income, the gross income is reduced by various relevant deductions and allowances such as capital allowances, losses, allowable expenses and retirement annuities. In some cases, these will reduce the taxable income to nil.

The information on incomes is based on income returns on Revenue records at the time the data were compiled for analytical purposes, representing about 96 per cent of all returns expected.

Income Tax 2003

Number of mainly PAYE income earners with incomes of €200,000 or greater
Range of Gross Income*	No net liability for income tax	Liable for tax at the standard rate (20%) or marginal relief	Liable for tax at the higher rate (42%)	Overall Total
	Single*	Married	Total	Single*	Married	Total	Single*	Married	Total
200,000	0	0	0	0	0	0	1	2	3	3
200,000 to 400,000	0	0	0	0	4	4	596	4,169	4,765	4,769
400,000 to 600,000	0	0	0	0	0	0	86	607	693	693
600,000 to 1,000,000	0	0	0	0	0	0	34	262	296	296
Over 1,000,000	0	0	0	0	0	0	41	237	278	278
	0	0	0	0	4	4	758	5,277	6,035	6,039

Income Tax 2003

Numbers of mainly self-employed income earners with incomes of €200,000 or greater
Range of Gross Income*	No net liability for income tax	Liable for tax at the standard rate (20%) or marginal relief	Liable for tax at the higher rate (42%)	Overall Total
	Single*	Married	Total	Single*	Married	Total	Single*	Married	Total
200,000	0	0	0	0	0	0	—	—	—	0
200,000 to 400,000	4	30	34	9	38	47	742	3,421	4,163	4,224
400,000 to 600,000	3	10	13	0	4	4	178	946	1,124	1,141
600,000 to 1,000,000	3	9	12	0	3	3	62	490	552	567
Over 1,000,000	1	3	4	2	3	5	34	179	213	222
	11	52	63	11	48	59	1,016	5,036	6,052	6,174

"Single" includes widowed persons

Paul McGrath

Question:

84 Mr. P. McGrath asked the Minister for Finance the number of self-employed workers in a number of income thresholds in each of the past five years. [31335/06]

Paul McGrath

Question:

95 Mr. P. McGrath asked the Minister for Finance the number of PAYE income earners in a number of income thresholds (details supplied) in each of the past five years. [31371/06]

Minister for Finance (Mr. Cowen)

I propose to take Questions Nos. 84 and 95 together.

I am informed by the Revenue Commissioners that the information requested by the Deputy is provided in the following tables. Self-employed income earners have been distributed over the same income ranges as PAYE earners. For the tax years 2002 and 2003, the numbers of income earners at all income levels in the tables are best estimates based on data from completed end-of-year returns but adjusted to take account of returns which had not been received when the data were compiled. For later years, the numbers of earners in the various ranges of income are based on the adjusted data for 2003 projected forward in accordance with macroeconomic data relating to actual and expected growth in wages and employment.

Distribution of PAYE income earners on tax records, including tax exempt individuals, by ranges of income

Range of Gross Income	2002	2003	2004	2005	2006
€10,000 or less	397,200	391,000	379,500	376,500	371,900
€10,001 — €20,000	394,400	386,300	375,600	370,800	365,400
€20,001 — €30,000	332,800	341,700	350,600	361,000	365,000
€30,001 — €40,000	206,500	220,900	239,700	261,600	277,300
€40,001 — €50,000	128,200	136,100	151,300	168,600	183,500
€50,001 — €70,000	125,600	139,800	158,500	181,700	203,100
€70,001 — €90,000	48,500	55,200	64,400	76,700	88,200
€90,001 — €100,000	12,600	14,600	17,000	20,400	23,900
€100,001 — €150,000	21,600	26,600	32,200	39,500	47,200
€150,001 — €200,000	5,300	6,300	7,300	8,800	10,400
€200,001 — €500,000	4,600	5,400	6,200	7,300	8,500
€500,000 — €1,000,000	500	500	600	700	800
Over €1,000,000	200	300	300	300	300
Total	1,678,000	1,724,600	1,783,200	1,874,100	1,945,500

Note: Figures in the table are rounded to the nearest hundred and any apparent discrepancies in totals are due to rounding of constituent figures.

Distribution of Self-Employed income earners on tax records, including tax exempt individuals, by ranges of income

Range of Gross Income	2002	2003	2004	2005	2006
€10,000 or less	38,900	35,700	34,500	32,300	30,100
€10,001 — €20,000	47,500	44,100	43,200	40,500	37,600
€20,001 — €30,000	36,400	35,700	36,800	36,800	36,200
€30,001 — €40,000	24,100	24,300	25,800	26,500	27,400
€40,001 — €50,000	15,900	16,000	17,400	18,400	19,400
€50,001 — €70,000	17,500	18,400	20,300	21,900	23,900
€70,001 — €90,000	8,400	8,900	10,200	11,300	12,900
€90,001 — €100,000	2,600	2,700	3,100	3,500	4,100
€100,001 — €150,000	6,700	7,300	8,200	9,100	10,400
€150,001 — €200,000	3,100	3,200	3,500	3,800	4,300
€200,001 — €500,000	4,800	5,100	5,600	6,200	6,900
€500,000 — €1,000,000	900	1,000	1,100	1,300	1,500
Over €1,000,000	200	200	300	300	400
Total	207,000	202,600	210,000	212,000	215,000

Note: Figures in the table are rounded to the nearest hundred and any apparent discrepancies in totals are due to rounding of constituent figures.

Notes

1. It should be noted that the income ranges shown in the above tables relate to Gross Income.

Gross Income is income which:

is prior to deductions for capital allowances, interest paid, losses, allowable expenses, retirement annuities etc;

is after deduction of superannuation contributions by employees but not by the self-employed;

includes income of individuals whose total income falls below the exemption limits;

does not include certain other income which is not income for tax purposes or is exempt from tax such as profits or gains from stallion fees, profits from commercial forestry and certain income from patent royalties, certain investment income arising from personal injuries, child benefit, maternity benefit and unemployment assistance paid by the Department of Social, Community and Family Affairs, certain earnings of writers, composers and artists, bonus or interest paid under Instalment Savings Schemes operated by An Post, interest on certain Government securities, certain foreign pensions which are exempt from tax in the foreign paying country, portion of certain lump sums received by employees on cessation of their employment, statutory redundancy payments and certain military pensions; and

does not include or not fully include other income sources such as interest income that does not need to be declared or is not recorded (but from which tax has been deducted), unemployment benefit and disability benefit (non-recording of non-taxable amounts and of amounts taxed by restriction of repayments or indirectly through employers in the PAYE system), and the incomes of certain self-employed persons, including some farmers, as well as some individuals in receipt of pensions, who are not processed annually on tax records because their incomes are below the income tax thresholds.

2. A married couple who has elected or has deemed to have elected for joint assessment is counted as one tax unit.

3. The figures for the years, 2003, 2004 and 2005 have been revised from those quoted in the reply to the Deputy's question of the 27th October 2005 (Dáil Debates, Vol. 608, No. 5, Cols 1599-1602), to take account of more up-to-date base information and revised macro-economic projections of income levels and number at work which have become available. The figures for 2004 onwards are projected estimates and may be subject to further revision.

Paul McGrath

Question:

85 Mr. P. McGrath asked the Minister for Finance the estimated cost of reducing the top rate of income tax by 1 point and by 2 points. [31336/06]

Minister for Finance (Mr. Cowen)

By reference to the 2007 pre-Budget ready reckoner prepared by the Revenue Commissioners, the full year costs to the Exchequer of reducing the top rate of income tax by one percentage point and two percentage points are estimated to be €230 million and €460 million, respectively. These figures are provisional, subject to revision and estimated to the nearest €5 million. The ready reckoner is available on my Department's website, at www.finance.gov.ie.

Paul McGrath

Question:

86 Mr. P. McGrath asked the Minister for Finance the estimated cost of increasing the single person tax credit of €1,630 by €100, €200, €300 and €400. [31337/06]

Minister for Finance (Mr. Cowen)

The increases mentioned in the question are assumed to apply in similar measures to single and widowed persons and to include the normal consequential increases in the tax credit for lone parents. These amounts doubled are assumed to apply to married couples. On this basis, and by reference to the 2007 pre-budget ready reckoner prepared by the Revenue Commissioners, the full-year costs to the Exchequer of the increases mentioned by the Deputy are estimated as follows:

Increase in personal tax credit	Estimated full-year cost
Single/Married	€m
€100/€200	205
€200/€400	405
€300/€600	610
€400/€800	815

These figures are provisional, subject to revision and estimated to the nearest €5 million.

The ready reckoner is available on my Department's website, www.finance.gov.ie.

Paul McGrath

Question:

87 Mr. P. McGrath asked the Minister for Finance the estimated cost of increasing the PAYE allowance of €1,490 by €100, €200, €300 and €400. [31338/06]

Minister for Finance (Mr. Cowen)

By reference to the 2007 pre-budget ready reckoner prepared by the Revenue Commissioners the full year costs to the Exchequer of the increases mentioned by the Deputy are estimated as follow:

Estimated full-year cost	€m
€100	140
€200	280
€300	420
€400	560

These figures are provisional, subject to revision and are estimated to the nearest €5 million.

The ready reckoner is available on my Department's website, www.finance.gov.ie.

Paul McGrath

Question:

88 Mr. P. McGrath asked the Minister for Finance the estimated cost to the Exchequer in 2003, 2004 and 2005 of tax relief on medical expenses. [31339/06]

Minister for Finance (Mr. Cowen)

I am informed by the Revenue Commissioners that the most recent year for which complete information is available on cost to the Exchequer and numbers of claimants for tax relief in relation to medical expenses is for the income tax year 2003. In that year an estimated number of 172,700 claimants availed of the tax relief for medical expenses at an estimated cost to the Exchequer of €82 million.

Paul McGrath

Question:

89 Mr. P. McGrath asked the Minister for Finance the number of PAYE workers and self-employed who pay benefit-in-kind on company cars in each of the past five years; and the yield to the Exchequer on this tax for each of those years. [31340/06]

Minister for Finance (Mr. Cowen)

I am informed by the Revenue Commissioners that the information requested by the Deputy in respect of benefits-in-kind arising from the provision of cars in each of the four years up to 2003, the latest year for which the relevant figures are available, is set out below.

Year	Benefits-in-Kind	Tax Yield for Cars
	Numbers	Estimated Tax Yield
	€m
2000/2001	45,000	79.2
2001 (short tax “year”)	43,500	56.2
2002	45,300	82.7
2003	43,100	81.6
2004	not available	not available

The figures for the years to 2003 are based on returns made by individual PAYE taxpayers. New procedures introduced from 1 January 2004 mean that employers are now required to account for PAYE, PRSI and Health Contributions on the taxable value of certain benefits-in-kind and other non-cash benefits provided by them to their employees. Provision was made for the return of this information in the form P35 for 2004 due for filing by employers in February 2005. Technical enhancements to the Revenue computer system to enable this data to be captured and reported are close to finalisation. However, as details of taxable benefits are required in aggregate form only on the P35 return it will not be possible to separately identify different types of benefits.

The above figures include income earners whose main source of income is assessable to tax under Schedule D (self-employed) but who also have income from an employment subject to PAYE in respect of which a benefit-in-kind arises. It should be noted that as PAYE taxpayers were charged to tax on their earnings in the period from 6 April to 31 December 2001 and self-employed taxpayers were assessed to tax for the short "year" on 74% of the profits earned in a 12 month accounting period, the income figures will not be directly comparable with those of earlier or later years.

Question No. 90 answered with QuestionNo. 82.