Setback to hopes for tax breaks

THE cost of increasing tax bands in December’s Budget to keep ahead ofinflation has been put in the region of €300 million, according to Department of Finance estimates.

But hopes for a cut in personal tax rates took a dent when the department said a 1% reduction in the standard and higher rates would cost over €600m in a full year.

Figures prepared by the department show the Exchequer would take a €190m hit if personal tax credits went up by €100, or 6%, in this year’s Budget. Tax credits were bumped up by €60, or 4%, last year.

The figures also show an increase in tax bands, which govern the amount at which tax is paid at the standard 20% rate, would cost around €200m if last year’s 5% increase were to be matched.

But cutting the standard rate from 20% to 19% would force the Government to forego almost €450m in lost revenues in a full year, while a reduction in the top rate from 42% to 41% would result in an additional bill of €200m.

In a separate development, taxpayers have been granted an extension to next week’s deadline for filing tax returns.

The October 31 deadline falls on a bank holiday this year, but the Revenue Commissioners have confirmed that tax returns received before close of business on Tuesday, November 1, will be treated as having arrived on time.

The Collector General’s Office in Limerick will remain open until midnight tomorrow and again next Tuesday to deal with filings.