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

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

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.

Cost of reducing top rate

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: here .

The estimated cost of increasing the single person tax credit of €1,630 by €100, €200, €300 and €400.

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:

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

Tax Yield for Cars and Medical Expenses Claims

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.

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.

Income Tax and PRSI paid by a single PAYE worker, 2002-2006

Income Tax* and PRSI** payable by a single PAYE worker, 2002-2006.

(Rounded to the nearest Euro)

* Assumes that the single person receives the personal allowance or personal credit and the PAYE allowance or Employee credit, as appropriate, in the year in question.

** Assumes the person is insured under Class A (full rate) PRSI and that the individual’s salary does not fluctuate from week to week over the course of the given year. The calculations do not include the Health Levy contribution of 2% applicable to all income over the threshold of €18,512 per annum for the tax years’ 2002-2004, €20,800 per annum for the tax year 2005 and €22,880 for the tax year 2006.