Finance

Finance questions

Posted November 19th, 2012

Data management in Department – 7th July 2015

To ask the Minister for Finance if he will report on those controls within his Department for the management of data and files, including all records relating to departmental and Government decisions; the changes that were introduced in 2011 to ensure the completeness of such records; and if the systems now in place are to be audited on a regular basis, to ensure they are working.

Reply

Minister for Finance (Michael Noonan)

My Department has a file management system which records all registered files for the Department of Finance and it provides a similar service to the Department of Public Expenditure and Reform on an administrative arrangement basis. Current and recent files are stored in the Government Buildings complex while the remainder are stored off site.  A detailed guidance manual on file management which sets out the requirements under the relevant legislation including the FOI Act, the Archives Act and the Data Protection Act has been issued to staff and is available on the intranet site.  The guidance manual clarifies the procedures and processes in dealing with data and files and is updated regularly and most recently earlier this year.

In early 2014, we reviewed our information needs as part of the ICT Strategy 2014-2015. This review focused on both our paper and digital records. A number of new information systems were identified.

A new electronic Records Management System was initiated in 2014 in cooperation with the Department of Public Expenditure and Reform and was developed by the Office of the Government Chief Information Officer. The aim was to provide a centralised system of storing digital files incorporating the existing filing structure but migrating most newly created official documents to storage in digital format rather than physical paper files. An adapted version of the existing file management system will remain in place for handling paper files which include documents that contain legally binding elements such as signatures or seals. This eDocs system will facilitate greater efficiencies in records management particularly in relation to the retrieval of documents and increased security and accountability for official files. An important element of the eDocs project was the assignment of Information Officers in each Division. The Information Officers have been given enhanced training on records management in order to support their teams and promote standard procedures across the Department.  This eDocs project is at pilot stage and is expected to be rolled out to the wider department shortly.

Another system introduced recently include a new eSubmissions system which replaces the paper system for creating and submitting internal Departmental submissions to me as Minister and to senior management.   This electronic submission recording system (eSubmission) records all relevant documentation, recommendations, decisions and notes in relation to submissions.

There is also a new ePQ system which is similar to the eSubmissions system which records all information in relation to the PQs received and the answers provided.

Government decisions are posted to eCabinet by the Government Secretariat. My office prints all decisions made by Government and these are provided to the Secretary General. All decisions in relation to Department of Finance sponsored memos are also sent to those officials involved in their drafting. Furthermore, all decisions relating to Government memos where my Department has returned observations are provided to those officials involved in the preparation of same.

Our file management process and procedures are subject to audit by the internal Audit unit in the Department of Public Expenditure and Reform who provides this service under an administrative arrangement with my Department.

Health insurance tax credits  – 25th June 2015

 To ask the Minister for Finance if he will reverse his decision regarding the tax credits and benefits associated to health insurance (details supplied).

Reply

Minister for Finance (Michael Noonan)

Since 16 October 2013, tax relief for medical insurance premiums has been restricted to the first €1,000 per adult and the first €500 per child insured. Any portion of premium paid in excess of these ceilings no longer qualifies for tax relief.  Prior to this, income tax relief for medical insurance premiums was provided at source, at the standard rate of income tax, on the entire premium amount regardless of cost. Therefore, the State was paying 20% of the cost of all private medical insurance premiums.

The cost of Income Tax relief in respect of medical insurance increased significantly in the years leading up to Budget 2014, estimated at €404 million in 2011, €448 million in 2012 and €463 million in 2013. Despite the increasing cost of the relief, the numbers insured were estimated to have reduced by approximately 150,000 over the same period, while at the same time the level of medical cover decreased on some policies. Against this background the increase in costs was unsustainable. If the relief had remained unchanged and the trend was to continue, it was estimated that the cost would have increased to approximately €1 billion per annum by 2020.

Notwithstanding the recent reform, the tax system is still supporting those who can afford private medical insurance with the cost of the relief estimated at €354 million in 2014. Effectively that means that some taxpayers who could never afford private health insurance, or who have had to give up their policies due to personal circumstances, are continuing to provide financial support via the tax system to those individuals who can afford such insurance.

It should be noted that the Commission on Taxation in its 2009 report recommended the retention of medical insurance relief but that it should be limited. The introduction in Budget 2014 of an upper ceiling on the amount of medical insurance premiums that qualify for tax relief achieved this recommendation.

It is unfair and unsustainable to allow unrestricted tax relief on private medical insurance premiums, particularly at a time when the general population has contributed so much to repairing the public finances. However, the new ceilings ensure a level of continuing support via the tax system for those who purchase medical insurance policies, while reducing Exchequer exposure to more expensive policies.

Redundancy payments – 9th June 2015

To ask the Minister for Finance the Revenue Commissioners’ views on a matter (details supplied) regarding a redundancy situation.

Reply

Minister for Finance (Michael Noonan)

I am informed by the Revenue Commissioners that all amounts paid to an employee by an employer in connection with an employment are fully liable to income tax and this includes any specific amounts, however described, in an employment contract.

As such, where an employment contract provides specifically for the payment of a sum on termination of employment, such an amount is fully within the charge to income tax.

An ex-gratia payment made on retirement or removal from an employment is generally made outside the terms of an employment contract and benefits from favourable tax treatment.

Should the company in question introduce a specific condition into its employment contracts to provide for specified payments on terminations, such payments will be fully taxed and will not benefit from the more favourable tax treatment available for ex-gratia payments.

Were these provisions to be amended, this could lead to employers and employees amending the terms of contracts to provide for reduced salaries and higher termination payments with a view to minimising income tax payable.  I therefore do not propose amending the current provisions.

In the United Kingdom the Revenue authorities may take the view that a redundancy payment is to be treated as earnings and, therefore, taxable. This will depend on the legal basis giving rise to the payment and will depend on the circumstances of each case.

Dublin’s tax contribution – 9th June 2015

To ask the Minister for Finance Dublin’s tax contribution to overall Exchequer finances in 2013.

Reply

Minister for Finance (Michael Noonan)

I am informed by the Revenue Commissioners that a wide range of statistical information is now available on the Commissioners’ statistics webpage at www.revenue.ie/en/about/statistics/index.html.

In response to the Deputy’s Question, detailed information regarding Dublin’s tax contribution to Exchequer finances can be found under the ‘Revenue Net Receipts by County’ heading at www.revenue.ie/en/about/statistics/net-receipts-by-county.pdf. This breakdown is available for receipts of VAT, PAYE, self-assessed Income Tax, Corporation Tax and Capital Gains Tax only.

This information is estimated on the basis of ‘bailiwick’ (meaning the jurisdiction or boundaries within which Revenue Sheriffs, County Registrars or their officers operate for the purposes of enforcement of tax debt).  Bailiwick broadly equates geographically with “county”.

It should be noted that the amount of tax attributed to a county may not necessarily be an indication of economic activity in that county for several reasons.  The liability of a trader to VAT is generally dealt with by reference to the location of the trader’s registered office, even though the economic activity may be carried on in another county.  An employer’s liability for PAYE is normally attributed to the county in which wages and salaries are paid, even though the employees may live or work in different counties.  Companies are associated on the tax record with the address of the head-office or branch with which contact is established for tax purposes, which may be different to the locations of other branches.

The distribution of the taxes in question can also vary from year to year as businesses move premises.  In considering the figures, it should also be noted that VAT receipts include only VAT internal (VAT on imports and VAT on products leaving tax warehouses are excluded).

Changes to VAT rates – 7th May 2015

To ask the Minister for Finance if he will explain the discrepancies in relation to Value Added Tax being charged by telecommunication companies (details supplied)

Reply

Minister for Finance (Michael Noonan)

The VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply.  The reduced VAT rate of 13.5% applies to the supply of gas and electricity in Ireland.  The majority of EU Member States apply a much higher VAT rate to the supply of gas and electricity as EU VAT law provides that the standard VAT rate should apply to these services.  However, as part of a derogation to EU VAT law, Ireland is entitled to retain a reduced rate to the supply of gas and electricity on the basis that we applied a reduced rate to the supply of domestic fuels on 1 January 1991.

Separately, in relation to telecommunication, internet and television broadcasting services provided by companies such as UPC or Vodafone, these services are subject to the standard rate of VAT which is 23% in Ireland.

In accordance with section 37(1) of the Value-Added Tax Consolidation Act 2010, the amount on which VAT is chargeable is the total consideration receivable by the supplier, “including all taxes, commissions, costs and charges whatsoever”, but not including the VAT itself.  This reflects EU VAT law, with which Irish tax law must comply.  In this regard, Article 78 of the EU VAT Directive provides that the taxable amount shall include “taxes, duties, levies and charges, excluding the VAT itself”.

In this respect, where the charge for a supply of service, such as an electricity bill, includes the Public Service Obligation (PSO) levy, VAT law dictates that VAT should be calculated on the PSO levy element of the charge as well as the charge for the service.  The same situation applies in respect of a service charge on other bills as outlined by the Deputy.

Pension threshold – 7th May 2015

To ask the Minister for Finance if he will examine a pension issue (details supplied).

Reply

Minister for Finance (Michael Noonan)

While it is not absolutely clear from the details supplied, I am assuming that the questions at issue relate to past changes that were made to the annual earnings limit which, along with age-related percentage limits, determine the maximum tax-relievable pension contributions that an individual can make in a tax year and to the 0.6% pension fund levy which I introduced in 2011.

In that regard, I am informed by the Revenue Commissioners that the earnings limit which was originally set at €254,000 in 2003 and increased through indexation to €275,239 by 2008, was subsequently reduced by the previous Government to €150,000 in 2009 and further reduced to its present level of €115,000 as part of a range of pension-related measures introduced in Budget and Finance Act 2011 by that administration.

It should be borne in mind that all of the pension-related changes made at that time were implemented against the very difficult and challenging budgetary situation which was facing the country and continued to face the country in the years that followed. It was clear that the tax base had to be broadened and tax expenditures curtailed or abolished if the serious financial and economic problems facing the country were to be addressed. Given the very significant cost of pension tax reliefs, such reliefs could not escape attention. Apart from contributing to the curbing of overall tax expenditures, the pension-related tax changes introduced also brought greater equity to the system by impacting for the most part primarily on higher earners.

Indeed, I have introduced further restrictions in this area by, for example, reducing the Standard Fund Threshold (SFT)   the maximum tax relievable pension fund at retirement   to €2 million from its previous level of €2.3 million with effect from 1 January 2014 and by changing the valuation factor used for establishing the capital value of defined benefit pension schemes from a standard factor of 20 to a higher age-related factor that varies with the individual’s age at the point at which pension benefits are drawn down. These changes to the SFT regime apply to pension arrangements across the board in both the private and the public sector.

In the same vein, the original 0.6% stamp duty levy on pension fund assets, which I introduced in 2011 and which ended last year, was used to fund the wide range of measures introduced in the Jobs Initiative to protect existing jobs and create new jobs. These include expenditure measures such as the Jobbridge and the Springboard schemes, as well as a number of tax and PRSI incentives, such as the reduction in the VAT rate from 13.5% to 9% for the tourism and hospitality sectors and the halving of the lower employer PRSI rate.  It is the case that the levy does not apply to unfunded public service pension schemes. However, the pensions of public servants have been subject to a public service pension reduction (PSPR) since 1 January 2011. The PSPR was introduced on 1 January 2011 under the Financial Emergency Measures in the Public Interest Act 2010. The PSPR is not a levy but is a pension cut affecting public service pensions, including those of former members of the Oireachtas and Ministers.

While the 0.6% pension fund levy has ceased and the lower 0.15% levy introduced for 2014 and 2015 will not apply beyond 2015, I have no plans to either repay the pension fund levy tax collected or to retrospectively reinstate the higher earnings limit for pension contributions, as may be implied in the details supplied with the question.

Overall, the restrictions in tax expenditures and the funds raised by way of the levy have helped to create the improving financial and economic position of the State. We have begun to see the benefits of this improving position as evident from the changes which I began in Budget 2015 and which will continue in future Budgets to reduce the income tax burden on low and middle income earners.

Changes to income tax system – 27th March 2015

Note: this comprises a number of PQs answered together

To ask the Minister for Finance the cost to the Exchequer, in terms of revenue foregone, if the standard rate of tax was decreased to 19%, and the entry point to the higher rate was increased by €1,000, to €34,800 for a single person, and by a similar amount for one-parent families, married couples with one income, and married couples with two incomes.

To ask the Minister for Finance the cost to the Exchequer, in terms of revenue foregone, if the standard rate of tax was decreased to 18%, and the entry point to the higher rate was increased by €1,000, to €34,800 for a single person, and by a similar amount for one-parent families, married couples with one income, and married couples with two incomes.

To ask the Minister for Finance the cost to the Exchequer, in terms of revenue foregone, if Pay-As-You-Earn workers, and self-employed persons, were treated equally for tax purposes, on incomes up to €15,000, €20,000, €25,000, and €30,000, all for a single person.

To ask the Minister for Finance the cost to the Exchequer, in terms of revenue foregone, if Pay-As-You-Earn workers, and self-employed persons, were treated equally for tax purposes, up to an income of €34,800, for a single person.

To ask the Minister for Finance the cost to the Exchequer, in terms of revenue foregone, if 80,000 less persons were paying universal social charge, at the lower rates.

To ask the Minister for Finance the cost to the Exchequer, in terms of revenue foregone, if the top rate of universal social charge for self-employed persons was abolished.

To ask the Minister for Finance the cost to the Exchequer, in terms of revenue foregone, if changes were introduced, that is, the standard rate of tax was decreased to 19%, and the higher rate of tax was decreased to 39%; the entry point to the higher rate was increased by €1,000, to €34,800 for a single person, and by a similar amount for one-parent families, married couples with one income, and married couples with two incomes; the bottom 80,000 payers of universal social charge were removed from the Charge; and income tax liabilities were calculated at the same rate for Pay-As-You-Earn and self-employed persons, up to a value of €25,000, in term of income earned.

Reply

Minister for Finance (Michael Noonan)

In relation to the questions regarding the cost of reducing the standard rate of income tax and increasing the entry point to the higher rate, I am informed by the Revenue Commissioners that the estimated first and full year cost to the Exchequer of decreasing the standard rate of income tax to 19% and increasing the standard rate band by €1,000 is €493 million and €667 million respectively. The estimated first and full year cost to the Exchequer of decreasing the standard rate of income tax from 20% to 18% and increasing the standard rate band by €1,000 is €894 million and €1.2 billion respectively.

In relation to the questions on the cost of equalising the tax treatment of PAYE and self-employed taxpayers at certain specified income levels, I assume that the Deputy wishes to ascertain the cost of extending the equivalent of the PAYE Credit to single self-employed individuals. The estimated cost to the Exchequer of extending the PAYE credit to such individuals on incomes of up to €15,000, €20,000, €25,000, €30,000 and €34,800 is €3 million, €13.5 million, €26.5 million, €38 million and €48 million respectively. It is important to point out that these estimates assume that the Deputy’s proposal specifically excludes the extension of the PAYE credit to self-assessed individuals that are married or civil partners.

The estimated first and full year cost of exempting 80,000 income earners from liability to the Universal Social Charge (USC) is €16 million and €22 million respectively. This is costed on the basis of removing the 80,000 cases with the lowest incomes currently paying USC from the charge.

The estimated first and full year cost to the Exchequer of removing the 3% USC surcharge on self-employed income in excess of €100,000 is €54 million and €125 million respectively.

In relation to the question regarding reducing both income tax rates by 1%, increasing the standard rate band by €1,000, removing a further 80,000 income earners from USC and extending the equivalent of the PAYE credit to self-employed persons with incomes up to €25,000, I am informed by the Revenue Commissioners that the first and full year cost to the Exchequer is estimated to be in the order of €695 million and €971 million respectively.

All figures above are estimates for 2015, using the actual data for the year 2012 (the latest year for which data are available) adjusted as necessary for income, self-employment and employment trends in the interim.  They are provisional and may be revised. A married couple or civil partners who have elected or have been deemed to have elected for joint assessment are counted as one tax unit.

Assistance-dogs for autistic children – 12th March 2015

To ask the Minister for Finance his views on treating assistance-dogs for autistic children, in the same way as guide-dogs for blind persons, in terms of the taxation system.

Reply

Minister for Finance (Michael Noonan)

Where a blind person maintains a trained guide dog, a sum of €825 per year is allowable in computing the gross eligible health expenses.  This is the equivalent of a tax credit of €165 and is only available in respect of fully trained guide dogs.

The qualification criteria for granting this additional relief is that the individual must be entitled to the Blind Person’s Tax Credit under section 468 of the Taxes Consolidation Act 1997 and also provide written confirmation from the Irish Guide Dogs Association that he or she is the registered owner of a trained guide dog.

To qualify for the Blind Person’s Tax Credit, an individual or the individual’s spouse or civil partner must have impaired vision to an extent specified in the legislation and certified by an eye specialist, i.e. a medical practitioner with an additional qualification in Ophthalmic Medicine or Ophthalmic Surgery, or a registered Optometrist.  A doctor’s certificate is not sufficient.

Relief in respect of health expenses is allowed in accordance with the provisions of section 469 of the Taxes Consolidation Act 1997.  In order to qualify for relief an individual must show that he or she has incurred health expenses for the provision of health care.  For the purposes of section 469 “health care” is the prevention, diagnosis, alleviation or treatment of an ailment, injury, infirmity, defect or disability.

Given that there is a requirement for certification by a qualified practitioner in order to obtain the Blind Person’s Tax Credit, the use of a fully trained guide dog to alleviate the disability is deemed to constitute a health expense and it is on this basis that this additional relief for health expenses is allowed.

I understand that autism assistance dogs are primarily trained to act to improve the behaviour of the child by promoting calmness and providing companionship. While these benefits are well testified, a medical basis that would bring such effects under the health legislation does not exist. Thus, the provision of assistance dogs for children with autism does not constitute the incurring of health expenses in the provision of health care as required by the legislation.

To allow relief for expenses incurred in this context would inevitably lead to calls for similar treatments, therapies or pet companions to qualify for tax relief, which would be outside the scope of the health expenses relief scheme.

Self-employed workers – 4th March 2015

To ask the Minister for Finance if he will provide details of the number of self-employed taxpayers schedule D case I or schedule D case II in each of the taxable income categories up to €10,000, €10,001-€15,000, €15,001-€20,000, €20,001-€25,000, €25,001-€30,000, €30,001-€35,000, €35,001-€40,000, €40,001-€45,000, €45,001-€50,000, €50,000-€55,000,€55,001-€60,000, €60,001-€65,000,  €65,001-€70,000 and more than €70,001

Reply

Minister for Finance (Michael Noonan)

I am advised by the Revenue Commissioners that a wide range of statistical information is now available on their enhanced statistics webpage at www.revenue.ie/en/about/statistics/index.html.

Information can be found at www.cso.ie/px/pxeirestat/pssn/rv01/homepagefiles/rv01_statbank.asp in relation to the Deputy’s question. This data may be accessed under the heading “Income Tax and Corporation Tax Distribution Statistics”, where table RVA01 shows gross income by range and by category of taxpayer (including self-employed cases).

This recently released facility provides breakdowns on the annual distribution of Income Tax from 2004 to 2012 using the Central Statistics Office data toolset. Whereas previously, information of this nature was provided by way of static tables in documents, these data are now published in a format which may be dynamically accessed by a range of user defined queries. Data for 2013 and 2014 are not available as yet but these webpages will be updated in due course.

If the Deputy requires assistance locating or interpreting the information on the Revenue webpages, the Commissioners are available to assist and may be contacted by email at statistics@revenue.ie.

Stolen cycle-to-work scheme bicycles – 2nd March 2015

To ask the Minister for Finance if he will amend the bike to work scheme in order that if a bike is stolen, a person has an opportunity to re-apply again once within the four year period, as long as a Garda statement has been provided.

Reply

Minister for Finance (Michael Noonan)

The purpose of the cycle to work scheme is to encourage more employees to cycle to and from work, or between work places, thereby contributing to lowering carbon emissions, reducing traffic congestion and improving health and fitness levels. Under the scheme an employer may provide an employee with a bicycle and/or cycle safety equipment without the employee being liable for benefit-in-kind taxation. However, where the expenditure by the employer exceeds €1,000, the excess amount is liable to tax.

The legislation only allows for one purchase of a bicycle in respect of an employee in a 5-year period irrespective of whether the bicycle was used for the full period or not. It operates on a self-assessing basis using straightforward rules.  Any deviation from the current system would involve additional administrative procedures for either or both Revenue and employers in relation to the verification of loss, theft, insurance recovery, etc. As this runs counter to the existing provisions which are administratively simple, it would not be appropriate to alter the existing scheme.

In any event, bicycles are normally covered as part of a general household insurance policy or some people may opt to have specific cover for it. Where an insurance policy pays out for a bicycle then the stolen one may be replaced at no cost to the individual.

Reform of budgetary process – 26th February 2015

To ask the Minister for Finance his plans to further reform the budgetary process; and if he is considering establishing an Oireachtas budgetary oversight office or budgetary scrutiny committee.

Reply

Minister for Finance (Michael Noonan)

There have been significant changes in the budget process over recent years as a result of the “Two Pack” and other reforms to the Stability and Growth Pact. These changes included moving the Budget date to October in coordination with other EU Member States. The Government is always considering initiatives that would improve the budgetary process, particularly in relation to multi-annual planning.

In this context, the Government is also considering the introduction of a Spring Economic Statement, which would incorporate the Stability Programme Update that must be submitted to the European Commission by the end of April each year.

The Deputy may be aware from my reply to a recent parliamentary question that I am considering a proposal for an independent office that would provide costings of alternative budgets on request from members of the Oireachtas.

At the moment, my Department provides costings in regard to taxation proposals on a confidential basis to assist parties in advance of general elections or budgets. However, these costings are limited by being provided on a static, individual basis without analysis of the general government implications or potential second round economic effects.

Various models of this type of service and body already exist internationally, including independent bodies or offices under the aegis of parliaments. My current thinking is that this should by done by a unit within the ambit of the Oireachtas Commission and that it should then be independent of the Government and the Department of Finance.

Taxation of PAYE workers – 21st February 2015

To ask the Minister for Finance further to Parliamentary Question No. 65 of 11 December 2014 and incorporating the taxation model outlined in that question, if he will provide comparisons of the tax liabilities for individual PAYE workers between the current system as per budget 2015 and the proposed model, for the following incomes: €20,000, €30,000, €35,000, €45,000, €55,000, €70,000, €75,000, €100,000 and €150,000.

Reply

Minister for Finance (Michael Noonan)

The distributional analysis requested by the Deputy is set out in the table below.

Single Person, private sector employee taxed under PAYE. Full rate PRSI contributor.

To see the table please click here.

As can be readily seen from the table, if implemented, the proposal would have a negative effect on those earning €35,000 or less   around 60% of all income earners. The table illustrates the effect of the proposal in the case of a single individual assessed under the PAYE system.

As it is assumed in costing the proposal that all current tax credits and allowances are abolished, this effect would be amplified and extended in the case of married one earner couples. Furthermore, the very large benefits accruing to the better off under this proposal would undermine the progressivity that is inherent in the current income tax system.

As the Deputy will be aware, the Government is committed to reducing the marginal tax rate on low and middle-income earners, over a series of budgets, in a manner that maintains the highly progressive nature of the Irish tax system.

Capital Acquisitions Tax – 17th February 2015

To ask the Minister for Finance his plans for capital acquisitions tax following budget 2015

Reply

Minister for Finance (Michael Noonan)

Capital Acquisitions Tax (CAT) and various elements thereof, e.g. thresholds, will, like all other taxes be kept under review, particularly in the context of preparations for Budget 2016 and the consequent Finance Bill.

IBRC mortgages – 10th February 2015

To ask the Minister for Finance the actions he has taken to protect businesses and homeowners whose loans were previously in the Irish Bank Resolution Corporation and which have now been transferred to overseas venture funds.

Reply

Minister for Finance (Michael Noonan)

In relation to mortgage loans previously sold by IBRC, the Special Liquidators sought and received the agreement of bidders and the ultimate purchasers of IBRC mortgage loans to voluntarily comply with the terms of the Code of Conduct on Mortgage Arrears. I understand that these mortgages are currently being serviced in line with those terms.

Furthermore, the Department of Finance has prepared the Sale of   Loan Books to Unregulated Third Parties Bill in order to address concerns surrounding the continued applicability of the Code of Conduct on Mortgage Arrears after the sale of loan books to unregulated entities. Detailed engagement with the Attorney General’s office and the Central Bank on draft legislation has commenced and in July and August of this year, my Department ran a public consultation seeking views on its proposed legislation to protect consumers whose loans are sold to unregulated entities.

The Department of Finance received 18 submissions from a range of respondents from the financial services industry, consumer groups, public representatives and individuals and other stakeholders. Officials in my Department are carefully considering the submissions and it is anticipated that legislation will be published by the end of this year.

The relevant code of conduct that can apply to certain business borrower lender relationships is the Code of Conduct for Business Lending to Small and Medium Enterprises (SME Code). The application of the SME Code varies depending on whether the relevant purchasing entity of the commercial loans is a regulated entity or an unregulated entity. If the purchasing entity is a regulated entity, it is required to comply with the SME Code. If the purchasing entity is not a regulated entity, it is not required to comply with the SME Code.

In terms of context, unlike consumer lending, business lending is not an activity which, in and of itself, must be undertaken by a regulated entity i.e. an unregulated entity could be established for the sole purpose of lending to SMEs and this would not require authorisation, and would not be subject to any legislation or codes.

It is also important to note that the sale of these loans does not change the terms and conditions of the loan agreement in any way. Irrespective of who acquires the loan(s) they will be required to honour the legal terms and conditions of the existing loan agreement(s).

Tax free gifts – 21th January 2015

To ask the Minister for Finance if he will provide further details regarding the Finance Bill (details supplied).

Details: Following on from Michael Noonan moving in the Dail, on Thursday, of issues to do with the Finance Bill I wonder could you explain:  ‘the extent specified in the Act giving effect to this resolution. ‘The Resolution being: 22. THAT section 82 of the Capital Acquisitions Tax Consolidation Act 2003 (No. 1 of 2003), which provides for an exemption from capital acquisitions tax in respect of the receipt of money or money’s worth for support, maintenance or education under that section, be amended in the manner and to the extent specified in the Act giving effect to this resolution.

Reply

Minister for Finance (Michael Noonan)

Section 82 of the Capital Acquisitions Tax Consolidation Act 2003 exempts certain receipts from Capital Acquisitions Tax. Under section 82(2), normal and reasonable payments made by a disponer, during his or her lifetime, for the support, maintenance or education of their children (including the  children of a civil partner), or to a person to whom the disponer stands in loco parentis, or to a dependent relative of the disponer, are exempt from CAT.

This Section 82 exemption is being amended in this year’s Finance Bill, because the Revenue Commissioners in the course of carrying out Revenue compliance programmes have established that this exemption is being abused to provide significant tax-free gifts of money and assets to adult children far in advance of the intention of the exemption. In addition, it has also been brought to the Revenue Commissioners’ attention by a concerned tax practitioner that this exemption is subject to widespread abuse.

The full extent to which this exemption is being abused cannot be determined because CAT is a self-assessment tax and there is no obligation to submit returns to the Revenue Commissioners in respect of any benefit that is legally exempt from tax under Section 82.

The amendment to section 82(2) is intended to ensure, where there is a need to make provision for support, maintenance or education of children, that the exemption is confined to normal and reasonable payments made to minor children; to children under the age of 25 years who are in full-time education and to children regardless of age who are permanently incapacitated by reason of physical or mental infirmity from maintaining themselves.

It is important to note that, apart from this particular exemption, parents can make gifts to their children within certain limits, without giving rise to a CAT liability. For example, parents can each gift €3,000 in any year to each of their children (that’s €6,000 a year to each child if both parents wish to make such gifts). Parents can also gift the same amounts to partners of their children (e.g. fiancé, fiancée, daughter-in-law, son-in-law) free of CAT. In effect parents can gift up to €12,000 in each year to their children and partners in these circumstances.

Any such payments within these limits do not reduce the parent to child Group Threshold of €225,000, which remains intact for future larger gifts and inheritances.

Self-employed incomes – 13th January 2015

To ask the Minister for Finance if he will provide in tabular form the way a single, self-employed earner on an annual income of €15,000, €20,000, €25,000, €30,000, €40,000, €60,000, €100,000, €120,000, €150,000 and €200,000, will be affected by the income tax and universal social charge changes in 2015 compared to 2014 and if he will provide these figures in both cash terms and as a proportion of gross income; and if he will make a statement on the matter.

Reply

Minister for Finance (Michael Noonan)

The data requested by the Deputy is set out here.

It should be noted that the introduction of the 8% USC rate and the increase in the existing 10% USC rate to 11%, provided for in the Budget, are necessary measures to limit the maximum benefit from the package of tax measures to approximately €14 per week for any individual taxpayer. This ensures that those with very high incomes will only benefit to the same extent, as those with more modest incomes, reinforcing the highly progressive nature of the Irish income tax system.

The changes announced in the Budget will ensure that all those currently paying income tax and/or USC will see a reduction in their tax bill in 2015. I propose to continue this reform in future Budgets, subject to the required economic growth and the consequent fiscal space available to the Government.

Sale of mortgage loan books – 12th January 2015

To ask the Minister for Finance his views on correspondence (details supplied) regarding the sale of mortgage loans here to funds operating from a separate jurisdiction.

Reply

Minister for Finance (Michael Noonan)

By virtue of an exemption in Part V of the Central Bank Act 1997, an unregulated entity to whom a cash loan is transferred by a regulated entity is not subject to Central Bank supervision.

As Minister for Finance, I am committed to bringing forward legislation that protects consumers whose loans are sold to unregulated entities. The Government has reiterated this commitment on several occasions. In July and August of this year, my Department ran a public consultation seeking views on its proposed legislation to protect consumers whose loans are sold to unregulated entities.

The Department of Finance received 19 submissions from a range of respondents from the financial services industry, consumer groups, public representatives and individuals and other stakeholders. These have now been published on the Department’s website at http://www.finance.gov.ie/what-we-do/banking-financial-services/consultations/responses-public-consultation-process-consumer

Officials in my Department have carefully considered the submissions and are working with the Office of the Attorney General to progress this legislation . It is anticipated that it will be published by the end of this year.

As stated in the public consultation document, the mission of the Government is to ensure that consumers whose loans are sold by a regulated entity to a currently unregulated entity maintain the same regulatory protections as they had prior to the sale, including under various Central Bank Codes including the Code of Conduct on Mortgage Arrears (CCMA). The proposed legislation is not retrospective. However, it will apply to all owners of loans, regardless of when they were acquired, thus capturing entities which have already purchased loan books.

Tax Credit scheme for childcare – 5th December 2014

To ask the Minister for Finance his views regarding a tax credit scheme for childcare (details supplied).

Details:  I am about to become a mother.  Both I and my fiance have worked hard to save and buy a house last year.  We are both higher rate tax payers, and will pay the Property Tax, water charge etc because we understand that a functioning society means you pay for the services you use.  Despite the decrease in house prices and our relatively privileged position, it is a stretch for us to have bought a home close to my family, but we have been able to do this by taking lodgers.  We have waited longer than we might have liked to start a family, and financial considerations are a key reason for this.

I have a serious difficulty with your colleague Dr. Reilly’s views that a tax credit scheme for childcare is not to be considered as it would unfairly benefit higher earners and discriminate against stay at home mothers.  I work for a number of reasons.  Because I am a highly educated professional and I have a contribution to make to the society that paid for my education.  Because I want to show my children that education, work and bettering yourself are to be valued.  Because being a parent should not be at the exclusion of being a professional.  Last but not least, because we simply cannot afford to pay our mortgage on one salary.  I would be very surprised indeed if even a tiny percentage of couples of our generation living in Dublin can. Labeling the requirement for mothers to work as a choice is misleading.  There is no other option for the majority.

The economic model on which our society is based absolutely requires parents like my fiance and I to go to work and pay taxes.  It also absolutely requires some people to have children.  Without them, who  is to pay for your pension and mine?  If society wants people to work, it should not make it prohibitively expensive for them to do so.  Manageable childcare costs encourage women to go to work, develop their career, and stay in work.  They will contribute more in taxes over their lifetime.  They are less likely to fall behind or stall in their careers, making more skilled workers available to the economy.  Models better than ours, and which encourage the greater participation of both parents both to the family and the workplace, exist in just about every other European country.  

Last but not least, quality, affordable childcare has consistently been shown to be in the best interests of toddlers and pre-school children.  Those who have had it do better in school.  It is time for some joined up thinking on this point and the introduction of affordable and top class childcare for pre-school children.  If there is a better solution than a childcare tax credit, I am open to that.  However the current model of relying on those raising children to be the tax donkeys for the rest of society while paying exorbitant childcare costs is not sustainable.

Reply

Minister for Finance (Michael Noonan)

Tax relief is not available to parents in respect of crèche fees or childcare costs. However, I would like to assure the Deputy that the Government acknowledges the continuing cost pressures on parents, particularly those with young children. In recognition of these cost pressures, a number of support measures are in place to ease the burden on working parents. These include the Community Childcare Subvention (CCS) programme, which funds community childcare services to enable them to charge reduced childcare fees to qualifying parents, the Childcare Education and Training Support (CETS) programme which provides free childcare places to qualifying Solas and VEC trainees and the Early Childhood Care and Education (ECCE) programme which provides for a free pre-school year for children in the year before commencing primary school. Generous entitlements to paid and unpaid maternity leave as well as child benefit payments are also provided.

The Department of Social Protection provides financial support to families on low pay by way of the Family Income Supplement (FIS) and additionally to one-parent families through the one-parent family payment.

Furthermore, a Single Person Child Carer tax credit of €1,650 is available as well as an additional standard rate band of €4,000. This credit and band is payable to any single person with a child under 18 years of age or over 18 years of age if in full time education or permanently incapacitated.

A relief did exist in the form of a benefit-in-kind exemption, where childcare facilities were provided by an employer. However, this relief was abolished in Finance Act 2011. The Commission on Taxation recommended the abolition of this exemption, citing equity issues in relation to those parents whose employers did not provide such facilities.

I have no plans to introduce a tax relief for parents to assist with childcare costs. To provide such a tax relief could be seen to unfairly discriminate against those individuals who stay at home and look after their children. While wanting to encourage participation in the workforce, equally we cannot say to individuals who stay at home that they are making a less valuable contribution to society.

In addition, tax relief is only of benefit to those in the tax net and it is estimated that in 2014, 39% of income earners will be exempt from income tax altogether. It could also be argued that any tax relief would most likely be absorbed by childcare providers in the form of higher prices.

As the Deputy will appreciate, I receive numerous requests for the introduction of new tax reliefs and the extension of existing ones. In considering these, I must be mindful of the public finances and the many demands on the Exchequer given the current budgetary constraints. Tax reliefs, no matter how worthwhile in themselves, reduce the tax base and make general reform of the tax system that much more difficult.

Rebates for homes renting to students – 12th November 2014

To ask the Minister for Finance if he will provide details on the potential cost to the Exchequer of introducing a local property tax rebate or exemption for homes providing accommodation to students where there was a 25% exemption per student accommodated, 33% exemption per student accommodated, and 50% exemption per student accommodated.

Reply

Minister for Finance (Michael Noonan)

I am informed by the Revenue Commissioners that it is not possible to quantify the potential cost of introducing a Local Property Tax (LPT) rebate for homes providing accommodation to students, as LPT returns do not include information identifying properties with student tenants on which to base an estimate.

Freezing property tax rates – 30th October 2014

To ask the Minister for Finance if he will consider freezing any upcoming compulsory revaluation dates for the local property tax as per the legislation which determines periods at which homes must be revalued, in view of the rapidly increasing value in houses in Dublin.

Reply

Minister for Finance (Michael Noonan)

The Finance (Local Property Tax) Act 2012 (as amended) sets out how a residential property is to be valued for Local Property Tax (LPT) purposes. As LPT is a self-assessed tax, the amount of LPT due on a property is based on the self-assessed valuation at 1 May 2013 that was declared by the liable person when filing the 2013 LPT1 Return, and applies for the 4-year period until 2016.

The initial valuation of a property on 1 May 2013, assuming it was made in good faith, is valid from 2013 to 31 October 2016,  and will not be affected by any increase or decrease in property prices or other changes, including repairs or improvements made, during this period.  The next valuation date will be 1 November 2016.

The Deputy will be aware that section 20 of the Finance (Local Property Tax) Act 2012 (as amended) allows elected members of a local authority to pass a formal resolution to vary the basic rate of LPT by up to 15% for their functional area, which may result in a lower or higher LPT rate applying for 2015.

I am satisfied that the legislation provides certainty for homeowners, and I have no plans to amend the basis of valuation of property for LPT purposes.

Potential losses from stamp duty loopholes – 30 October 2014

To ask the Minister for Finance if it was obligatory in 2002 for a purchaser of a house to pay stamp duty on the contract if all of the purchase money had been paid to the vendor and there was no purchase deed and the purchaser was in occupation; if this was the law at the time; if the Revenue Commissioners pursued those builders for the stamp duty where they had breached this law; if the Revenue Commissioners were unaware of the practice at the time, when was it brought to their attention subsequently; the cause of the delay of the activation of prepared legislation in this area; and the amount of money lost to the State on development land as a result.

Reply

Minister for Finance (Michael Noonan)

I am informed by the Revenue Commissioners that stamp duty, which is mainly chargeable on instruments, such as deeds of conveyance or transfers of property, was mandatory in relation to instruments executed in 2002. Where an instrument was executed in 2002 stamp duty was generally payable within 30 days of its execution. Interest and penalties were applicable where an instrument was not stamped within this time limit. The person accountable for payment of stamp duty was the purchaser or  transferee.

I take it the Deputy’s  question  relates to a number of arrangements, such as the use of resting in contract, building licences and agreements for lease, whereby developers could, in effect, acquire and develop land without incurring a liability to stamp duty.  Legislation was introduced in Section 110 of Finance Act 2007 to address these matters, subject to a commencement order.  The then Minister for Finance commissioned a report on the potential effects of commencing these provisions. The report recommended that, on balance, the section should not be commenced at that time as it would have led to a rise in land prices with a knock-on increase in house prices, especially for first-time buyers, and possibly risked exacerbating the downturn in the property market.

The legislation was further amended by Section 82 of Finance (No 2) Act 2008, taking on board the recommendation of the report. The redrafted provision exempted public private partnership arrangements from the scope of the legislation and commencement was again made subject to commencement from a date to be appointed by the Minister for Finance. In the light of the economic climate at the time, commencement of the legislation was deferred.

The Deputy will be aware that, having regard to the subsequent reduction in the rates of Stamp Duty from up to 9% down to 1% to 2% and having regard to the economic climate in 2013, I introduced legislation (Section 78 of Finance Act 2013) which contained similar provisions to those not commenced in 2008.  The effect of these provisions is that if any of these arrangements were entered into on or after 13 February 2013, stamp duty would be payable on foot of the arrangements.

The cost to the Exchequer of the national debt – 9th October 2014

To ask the Minister for Finance the cost to the Exchequer of interest repayments on the national debt; the changes in comparison to the previous year and forecasts for next year; the amount these interest repayments will increase as a result of borrowing to fund the deficit in 2015

Reply

Minister for Finance (Michael Noonan)

Interest payments on the National Debt to end August 2014 amounted to €4,829 million. The Budget 2014 consistent profile forecast interest expenditure to end August 2014 of €5,220 million. This reduction of €390 million on profile is primarily due to the December 2013 bond-buy back which resulted in lower interest expenditure in the early part of 2014, lower than expected costs from bond issuance so far this year and a favourable rate reset on the floating rate bonds post-Budget last December.

However, as general government debt expressed as a percentage of gross domestic product is the standard metric internationally for assessing debt levels, this is the more appropriate metric to look at. General government debt is made up of National Debt and debt from all bodies classified within Government. Interest repayments to service the National Debt are sourced from the Central Fund and are shown on the Exchequer Statement under non-voted current expenditure. The service of debt from bodies classified within Government may be paid from own-resource income or from funding allocated to those bodies.

Budget 2014 forecast general government interest expenditure of €8,755 million in 2015 on an ESA 95 basis. This was revised down to €8,452 million in the April 2014 Stability Programme Update (SPU) primarily due to the changing interest rate environment. Budget 2015 will contain a further update to the estimate for interest expenditure in 2015 which will be on an ESA 2010 basis.

With regard to the portion of interest that relates to the deficit, the NTMA borrow not just to fund the expected deficit but also for repayments of other debt and as part of the overall debt management strategy.

Budget 2015 will also contain an updated figure for the projected underlying general government deficit in 2015. The Deputy should note the last published forecast in the SPU of €5,135 million was also prepared on an ESA 95 basis rather than the ESA 2010 basis that will be used in the Budget in October.

Tax biases regarding self-employed persons – 24th September 2014

To ask the Minister for Finance if he will address the following biases in the tax code viz self-employed persons (details supplied).

Details: Why does a self-employed person not receive the €1650 PAYE tax credit. If the answer is because the self-employed person can claim business expenses against their income, does this stand up when it comes to people earning less than €10,000 for example? Why does a PAYE worker on less than €352 per week get a full credit for PRSI purposes though they do not pay a PRSI contribution, but a self-employed person has to pay a minimum €500 PRSI contribution if their annual income is over €5000, but if it was less than this amount they would not be entitled to a PRSI credit? If a PAYE worker has more than one part-time job each paying below the €352 per week threshold, the nil PRSI contribution still applies even though they may be on a good income?

Reply

Minister for Finance (Michael Noonan)

The position is that the PAYE allowance, as it was then, was introduced in 1980 to improve the tax progression of PAYE taxpayers and to take account of the fact that the self-employed generally then had the advantage of paying tax on a preceding year basis. The argument was also made at the time that the general scheme of allowances for expenses discriminated against employees and in favour of other taxpayers.

There have been some changes since 1980. For example, the self-employed now pay tax on a current year basis. In addition, the PAYE allowance has become a tax credit. However, significant timing benefits remain, depending on the accounting period used by the taxpayer. In addition, the expenses regime remains somewhat more liberal than that afforded to employees and therefore the self-employed can actually pay less tax when compared to a PAYE worker on the same income.

Although employees who earn less than €352 per week are exempt from making an employee PRSI contribution, employers are obliged to make an employer’s contribution, which is currently 8.5%, on their behalf, provided the employee earns in excess of €38 per week. In the absence of a similar employer PRSI element to PRSI for the self-employed, the minimum self-employed PRSI contribution ensures that a contribution to the Social Insurance Fund is made in respect of all those who work. In return eligibility for certain generous Social Protection payments is accrued.

An employer is obliged, on making any payment of earnings or emoluments to an employee, to deduct from the earnings or emoluments the amount of PRSI which is due in relation to the employment with him or her.  If an employee works for different employers in the same income tax week, each employer is obliged to make deductions at the correct class of PRSI in relation to the employment with him or her only.

Section 13 (2) (a) of the Social Welfare Consolidation Act 2005 states “where in any contribution week a payment of not more than €352 per week (or the equivalent thereof) is made to or for the benefit of an employed contributor in respect of reckonable earnings of that contributor relating to an employment, a contribution shall not be payable by that employed contributor in respect of those earning from that employment”. Notwithstanding the above, the employer PRSI element remains payable.

Flood insurance for homes – 15th July 2014

To ask the Minister for Finance if his attention has been drawn to insurance companies refusing home insurance including but not limited to flood insurance in Dublin, based on a supposed risk of flooding even though there is no history or projected risk of flooding in the area in question.

Reply

Minister for Finance (Michael Noonan)

I am very much aware of the difficulties that the absence of flood insurance cover can cause to householders and businesses. However, neither I nor the Central Bank of Ireland, have the power to direct insurance companies to provide flood cover to specific individuals.

The provision of new flood cover or the renewal of existing flood cover is a commercial matter for insurance companies, which is based on a proper assessment of the risks they are accepting and the need to make adequate provisioning to meet these risks. As a matter of course, insurance companies carry out reviews of the risks they are prepared to insure against and sometimes make decisions to discontinue certain types of cover which they consider high risk. Insurance Ireland has indicated that 98% of policyholders have household insurance which includes flood cover.

Government policy in relation to flooding is focussed on the development of a sustainable, planned and risk-based approach to dealing with flooding problems.   The Office of Public Works (OPW) is carrying out an assessment of flood risk throughout the country under the National Catchment Flood Risk Assessment & Management (CFRAM) Programme.  This programme will include the  production of a comprehensive suite of flood risk maps and the development of flood risk management plans for the areas most at risk.  The plans will consider the best possible options, both structural and non-structural, for dealing with the risks on a long-term basis.

This commitment is underpinned by a very significant capital works investment programme which will see up to €225 million being spent on flood relief measures over a five year period from 2012 to 2016. Works are completed on a prioritised basis. Because of the cost and scale of these types of flood defence works, this approach will see benefits over the medium and long term.

The OPW and Insurance Ireland have agreed on a sustainable system of information sharing in relation to completed flood alleviation schemes. The outcome of this arrangement is that the insurance industry will have a much greater level of information and understanding of the extent of the protection provided by completed OPW flood defence works and will therefore be able to reflect this in assessing the provision of flood insurance to householders in areas where works have been completed.

The Deputy has raised the issue of flood insurance in the Dublin.  The OPW has been involved in a number of flood relief projects in various parts of Dublin.  The River Tolka scheme is completed and details of the completed works have been provided to Insurance Ireland.  Work is continuing on the River Dodder and River Wad schemes and work will begin soon on the River Poddle scheme.

My Department is undertaking a review of measures which could be taken to increase the availability of flood insurance cover, including the past experience and future proposals in other countries. In assessing these, care has to be taken that the proposed solutions do not put in place arrangements which, over time, would weaken the provision of commercial insurance cover by the market with possible negative long-term consequences for the economy.

I am advised that in cases where individuals are experiencing difficulty in obtaining flood insurance and believe that they are being treated unfairly it is open to them to contact the Insurance Ireland which operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to insurance. Their service can be contacted at (01) 676 1914 or by email at info@insuranceireland.eu

VAT rate on health products & natural remedies – 15th July 2014

To ask the Minister for Finance if he is considering a VAT rate of 23% on health products; and if this will include food or drink products that are viewed as natural remedies to certain conditions, or are taken as alternatives to other similar foods because of dietary requirements.

Reply

Minister for Finance (Michael Noonan)

VAT rates are governed by EU VAT law, with which Irish VAT law must comply. The EU VAT Directive generally provides that supplies of goods and services are chargeable to VAT at the standard rate but that lower rates are permitted in very limited circumstances. Food products can only benefit from the zero rating in accordance with Article 110 of the VAT Directive which permits the retention of the zero rate where the products were liable to VAT at the zero rate on and from 1 January 1991.

A range of food supplements and vitamins that encourage the maintenance of health, through the sustenance derived from a normal, healthy diet, benefit from the zero rate. However, a food supplement taken for the purposes of muscle growth or body mass increase, or for the purposes of weight reduction or bodily sculpture, cannot benefit from the zero rate. I would draw the Deputies’ attention to Revenue eBrief 70/2011 which contains additional detail in relation to the VAT rates of vitamins and food supplements.

I would further draw to your attention that paragraph 8 of Schedule 2 of the Value-Added Tax Consolidation Act 2010 provides that that the supply of tea and preparations derived from the crushed leaves of the tea plant when supplied in non-drinkable form is liable to VAT at the zero rate. The VAT applicable to herbal teas derived from plants other than the tea plant has been raised with me by the industry and the matter is subject to ongoing analysis.

Auditing of medical professionals by Revenue Commissioners   – 17th June 2014

To ask the Minister for Finance his views that the Revenue Commissioners should be paying the same attention to hospital consultants and medical professionals as it does to sole traders in terms of auditing their accounts and in view of the high number of medical practices that accept only cheque or cash payments; if a system of spot-checks on those who apply for tax back on medical expenses each year by furnishing their receipts might be a way of initiating this; and if he will make a statement on the matter.

Reply

The Minister for Finance (Michael Noonan)

The Deputy will be aware that the Revenue Commissioners have responsibility for the administration, collection, enforcement and audit aspects of all taxes and duties and that they are independent in the application of the Tax and Customs Acts.

The Revenue Commissioners have informed me, however, that their approach to selecting cases for intervention is based on the presence of various risk indicators and other information available. This type of targeted intervention gets the best results while minimising unnecessary contact with compliant taxpayers.  The process of identifying risky sectors and taxpayers is greatly enhanced by the computerised Risk Evaluation Analysis and Profiling System (REAP) developed by Revenue. REAP contains considerable information on all self- assessed taxpayers and is used to profile business sectors and to categorise taxpayers in accordance with defined risk criteria. It also allows for the screening of all tax returns against sectoral and business norms and provides a selection basis for checks or audits. This effectively means that 100% of self-assessed taxpayers, including medical professionals, are risk assessed a number of times a year.

Revenue has a prioritised focus on those sectors that have traditionally been susceptible to tax and duty evasion such as cash businesses.  This includes risk evaluating medical consultants and other such professionals. In conducting this risk assessment, Revenue uses all sources of information available, including third party data sources like payments from the General Medical Services Board and other valuable transactional level data including invoices and receipts.  These sources are used particularly to corroborate information provided on tax returns.

I am also informed by the Commissioners that they are constantly reviewing their methods of identifying compliance risks and, where they establish potential additional data sources they seek legislative change to gain access to such data.  In that regard, since 2013 Revenue is provided annually with details of all credit and debit card payments from the merchant acquirers who handle such transactions.  This source of data, when matched against Revenue’s register, is helping to identify those medical professionals and others who may operate on a cash only basis.  However, because there are costs associated with the operation of debit/credit cards, there can be valid reasons for a business to decide not to accept them.

I am satisfied that the Revenue Commissioners are even-handed in the pursuit of non-compliers whether they are professionals or other sole traders and base their interventions on objective risk criteria.  As an indication of compliance activity in the area of medical professionals, Revenue has provided me with the following information, based on a wide ranging definition of medical professionals including General Medical Practitioners, consultants, surgeons, physiologists, psychiatrists and other specialist medical activities:

Compliance Interventions Medical Professionals
2014 (to April) 2013
No. of Compliance Interventions 242 469
Yield €6.3m €3.3m

Furthermore, the Deputy may wish to note the following data from Revenue’s quarterly published defaulters’ list specifically relating to hospital consultants and other medical professionals,

2014 (Q.1) –    3 with a yield of €3.1m

2013             10 with a yield of €1.6m

2012 –              7 with a yield of €2.7m

I am also confident that the Revenue Commissioners are pursuing programmes that maximise voluntary compliance and deal in a very determined way with tax non-compliance, particularly in relation to cash businesses.  Of course, if the Deputy has any information that would help target medical professionals engaging in potential income suppression activities, I would encourage him to pass this information on to the Commissioners.

Increases in variable rate mortgages – 26th June 2014

To ask the Minister for Finance if he will provide assurances that he will not allow banks here to impose any further increases in variable rate mortgages while the ECB rate remains as low as it is; and if he will make a statement on the matter.

Reply

Minister for Finance (Michael Noonan)

Firstly, I must confirm to the Deputy that neither the Central Bank nor I have any responsibility for any variation in the variable mortgage interest rate charged by regulated financial instutions.  The lending institutions in Ireland – including those in which the State has a significant shareholding – are independent commercial entities. I have no statutory role in relation to regulated financial institutions passing on the European Central Bank interest rate change or to the mortgage interest rates charged.  It is a commercial matter for each institution concerned.  It is not appropriate for me, as Minister for Finance, to comment on or become involved in the detailed mortgage position of mortgage holders.

The Central Bank has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations.  The Central Bank has no statutory role in the setting of interest rates by financial institutions, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act, 1997.

The mortgage interest rates that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned.  This interest rate is determined taking into account a broad range of factors, including European Central Bank base rates, deposit rates, market funding costs, the competitive environment and an institution s overall funding.

However, as part of the Central Bank s work on mortgage arrears, lenders were asked to consider all avenues to help customers in arrears, including interest rate reductions.

Addressing the variable rate mortgage problem – 11 June, 2014

To ask the Minister for Finance the number of persons in the covered institutions, by institution, on a variable rate mortgage; if he has spoken to any of the public interest directors in these institutions in relation to the matter of increasing variable rates, in contradiction to the trend of rate reductions from the ECB over the past three years; if he will provide the percentage of mortgage holders, by institution, in default or mortgage distress that are on variable rate mortgages; if the Regulator carried out an impact analysis in 2011 on this issue as instructed by Government; and if the banks have justified to the Regulator or the Central Bank of Ireland the reason for the increase in variable rates, and his views on same.

REPLY

The Minister for Finance (Michael Noonan):

As the Deputy will be aware I have met with the Boards of the Covered Institutions on a number of occasions. As part of the general discussions that have taken place at these meetings issues relating to mortgages have been discussed. The Central Bank has requested that the Deputy provide further details on the information that he is requesting to ensure that it provides the exact information the Deputy is requesting. The covered institutions have also provided the following information.
AIB
All relevant data in relation to AIB s mortgage portfolios, including arrears data, for December 2013 are made on pages 71 to 119 of AIB s 2013 Annual Financial Report, published on 5 March 2014. AIB hasn’t changed its variable rates for existing customers since June 2013. The Central Bank of Ireland requires the Board of AIB to consider the impact of arrears, prior to approving a residential mortgage variable rate increase. Forecasting models are run to access the impact for any rate increases on affordability and subsequent impact on arrears and losses.
Bank of Ireland
As a public company Bank of Ireland provides extremely comprehensive disclosures on its Irish mortgage portfolios in its annual reports and in its investor presentations which are available on its website http://www.bankofireland.com/investor and http://www.bankofireland.com/fs/doc/wysiwyg/boi-year-end-2013.pdf
Permantent TSB
Ptsb has c. 163,000 Residential Mortgage accounts of these c. 82,000 are on a variable rate mortgage. Ptsb has c. 41,500 Residential Mortgage accounts in forebearance or default. Of these c. 22,000 are variable (so 13.6% of ptsb mortgages are variable and in forebearance/default or 53% of their mortgages in forebearance/default are variable).
a. Changes to any of the bank’s mortgage rates go through a full Governance process including approval by ALCO and sign off by the ptsb Board. This is part of the bank’s normal commercial operations and does not require, nor is it part of their approval process to obtain Regulator approval. In the same way the bank adjusts pricing on their deposit products without Regulator approval.
b. The decision on where to set the bank’s Variable Mortgage Rates is driven by a range of commercial and customer considerations including cost of funding, competitor rates, their assessment of the risk/return trade off, Regulatory and Stakeholder requirements
c. Ptsb reduced its SVR rate from 4.69% to 4.34% in July 2012 and maintained this at 4.34% until June 2014 when it was adjusted to 4.5%.
d. Since the bank’s last rate cut in July 2012 it has significantly reduced its funding from the ECB and replaced it with more expensive deposits and market funding. While this increased pressure on the bank’s profitability they maintained the SVR rate. This was influenced by the factors in (b) including the competitive environment the bank operates in.
e. The bank has also made some small changes to their variable rates driven by their competitive positioning.

Calculating mortgage lending based on the average value of a house over a fixed period of time as opposed to its current market value? – 27th May 2014

To ask the Minister for Finance if he has considered proposals for re-structuring lending practices in the mortgage market whereby mortgage lending would be calculated in terms of the average value of a house over a fixed period, say twenty years, for which the money is being borrowed, rather than calculating the loan in terms of the present day value of the house which may not reflect the longer term value of the asset.

REPLY.

The Minister for Finance (Michael Noonan):

The decision on the approval of a mortgage for a borrower is a commercial decision for the lending institution concerned. It is important that each lending institution is allowed to properly and independently assess the risks that it is considering when deciding whether to approve a loan.

The Central Bank of Ireland (CBI) has advised me that Chapter 5 of its Consumer Protection Code contains provisions relating to assessing suitability and affordability of credit, including for example, a provision which obliges lenders to carry out an assessment of affordability to ascertain the personal consumer’s likely ability to repay the debt over the duration of the agreement.  The affordability assessment must include, inter alia, a test on the basis of a 2% interest rate increase, at a minimum, above the interest rate offered to the personal consumer.

The Central Bank of Ireland does not comment on the commercial decisions or policies of regulated entities. However, the Central Bank (Supervision and Enforcement) Act 2013 was passed last year and enhances the Central Bank’s regulatory powers, drawing on the lessons of the recent past. It strengthens the ability of the Central Bank to impose and supervise compliance with regulatory requirements and to undertake timely prudential interventions.

The Act also provides the Central Bank with greater access to information and analysis and underpins the credible enforcement of Irish financial services legislation in line with international best practice.

My Department is committed, under the ‘Construction 2020’ strategy, to examine international best practice and develop proposals for additional models of mortgage financing in Ireland, to ensure sustainable levels of mortgage lending in the medium term, and report to the Cabinet Committee on Mortgage Arrears and Credit Availability in November 2014.  In the first instance the concept of a mortgage insurance scheme will be examined. The objective of any scheme would be to ensure adequate availability of mortgage finance on affordable terms for new completions, particularly for ‘First Time Buyers’. In doing so I would aim to provide the certainty needed to support greater levels of investment in new housing, with the associated benefits for the construction sector and ultimately for the consumer.  Once this examination has been completed and presented to me I will consider the next steps.

Emulating the UK approach to prevent the development of poor lending practices? – 27th May 2014

To ask the Minister for Finance if he is considering adopting a similar approach to the UK in its implementation of a recent mortgage market review that aims to place more responsibility on mortgage lenders and prevent poor lending practices to develop.

REPLY.

The Minister for Finance (Michael Noonan):

Mortgage lending decisions must be undertaken on a sustainable and prudential basis by financial institutions and must conform fully with the regulatory requirements, both in relation to the financial institution itself, and also with regard to the safeguarding of the borrower’s interests.

The Central Bank of Ireland (CBI) has advised me that the Consumer Protection Code 2012 (CPC) contains important protections for borrowers, by imposing ‘Knowing the Consumer and Suitability’ requirements on lenders. Lenders are required to assess affordability of credit based on the individual circumstances of each borrower.

The CPC contains provisions relating to assessing suitability and affordability of credit, including for example, a provision which obliges lenders to carry out an assessment of affordability to ascertain the personal consumer s likely ability to repay the debt over the duration of the agreement.  The affordability assessment must include, inter alia, a test on the basis of a 2% interest rate increase, at a minimum, above the current interest rate offered to the personal consumer.

The CBI has also published internal sustainability guidelines in June 2013 (updated in Sept 2013) which sets out important factors to consider when assessing if modifications proposed by a lender are sustainable solutions for mortgages arrears cases. Included with the guidelines the CBI has set out its expectations in relation to the assessment of borrower affordability of sustainable solutions. Affordability needs to be based on both their current and prospective future servicing capacity for all borrowings. According to the guidance, assumed prospective future increases in the debt servicing ability of the borrower must be credible and conservative.

Additional measures to assist first time home buyers? – 30th April 2014

To ask the Minister for Finance the additional measures he is considering to assist and prioritise first time home buyers over investors when purchasing property.

REPLY.

The Minister for Finance (Michael Noonan):

As the Deputy will appreciate, mortgage lending decisions must be undertaken on a sustainable and prudential basis by financial institutions and must conform fully with the regulatory requirements, both in relation to the financial institution itself, and in particular to the safeguarding of the borrower’s interests. This includes ensuring that the affordability of the mortgage is assessed.

I am not considering any specific initiatives which would favour first time buyers over other borrowers. However as with all of these issues, these matters remain under review in the context of changing market dynamics and availability of Exchequer resources.

Dealing with the banks on the issue of variable rate mortgages? – 30th April 2014

To ask the Minister for Finance if there has been any progress by his Department or by the office of the Financial Regulator or by the Central Bank of Ireland in dealing with the banks on the issue of variable rate mortgages, the cost of which have risen disproportionately in recent years and contrary to market forces.

REPLY.

The Minister for Finance (Michael Noonan):

Firstly, I must confirm to the Deputy that the lending institutions in Ireland – including those in which the State has a significant shareholding – are independent commercial entities. I have no statutory role in relation to regulated financial institutions passing on the European Central Bank interest rate change or to the mortgage interest rates charged. It is a commercial matter for each institution concerned. It is not appropriate for me, as Minister for Finance, to comment on or become involved in the detailed mortgage position of mortgage holders.

The Central Bank has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations. The Central Bank has no statutory role in the setting of interest rates by financial institutions, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act, 1997.

The mortgage interest rates that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned. This interest rate is determined taking into account a broad range of factors, including European Central Bank base rates, deposit rates, market funding costs, the competitive environment and an institution s overall funding.

However, as part of the Central Bank s work on mortgage arrears, lenders were asked to consider all avenues to help customers in arrears, including interest rate reductions.

What would it cost to widen the tax bands to ease pressure on taxpayers? – 15th April 2014

To ask the Minister for Finance if he will provide figures on the expected loss to the Exchequer in income tax if the entry point to the marginal rate of tax is increased by €10,000; if he will provide figures on the way the potential increase in person’s disposable income as a result of such a change might be distributed within the economy for example the amount that might be returned to the Exchequer through indirect taxation, and at what amount; the anticipated impact on employment might be; the expected changes in the national deficit, and in the general Government debt position; and if he will provide these forecasts at every additional hypothetical increase of €10,000 in the entry point to the marginal rate until that entry point is €82,800.

Reply

The Minister for Finance (Michael Noonan):

I assume that the Deputy refers to an extension of the standard rate income tax band, which would apply similarly to single and widowed persons, as well as to single person child carers. The proposed extension to the standard rate band is assumed to also apply to married couples and civil partnerships. On this basis, I am informed by the Revenue Commissioners that the full year cost to the Exchequer, estimated by reference to 2014 incomes, of increasing the standard rate tax band by €10,000, €20,000, €30,000, €40,000 and €50,000, while also maintaining the current monetary differences between the single persons standard rate band and the various other classes of tax bands, is shown here.

These figures are estimates for 2014, using the latest actual data for the year 2011 adjusted as necessary for income and employment trends in the interim.  They are provisional and may be revised.  A married couple or civil partners who have elected or have been deemed to have elected for joint assessment are counted as one tax unit.

In assessing the potential impact on the economy of such a measure, research produced by the ESRI as part of the Medium-Term Review: 2013-2020 of July 2013 (p 117-118) in informative.  Using the HERMES macroeconomic model, the ESRI tested the economic impact of an adjustment in income tax rates such that it would yield an additional €1 billion income tax in the first year of the adjustment, with the rate unchanged thereafter.  The results of the research suggest an income tax multiplier of 0.4 that is, a €1 billion change in income tax effects GDP by about €400m million.  Employment would be impacted by about 0.1 per cent in the first year and 0.5 per cent over the forecast horizon.

The relatively low multiplier likely reflects the open nature of Ireland’s economy and the fact that increased demand would ‘leak out’ through imports to a certain extent.  The simulations also include the assumption that some part of a reduced tax burden would be saved rather than spend by households.  The simulations suggest that the annual deficit would increase by 0.5 percentage points of GDP and general government debt by just over 2 per cent of GDP, over a six-year horizon.

Sale of IBRC assets to result in improved redundancy conditions for former staff? – 15th April 2014

To ask the Minister for Finance if the better than expected sale of Irish Bank Resolution Corporation assets will result in improved redundancy conditions for former staff of IBRC, as originally provided for upon the establishment of IBRC and prior to these terms being changed to facilitate the wind-down of IBRC.

Reply

The Minister for Finance (Michael Noonan):

I have been advised by the Special Liquidators that, as in any liquidation, the employees of IBRC were entitled to apply for a statutory redundancy payment, a payment in respect of accrued but unused annual leave and a statutory notice payment, subject to the limits prescribed by statute. The Special Liquidators confirm that employees have now received these payments.

The option to support the previous severance terms of employees is not a choice available to the Special Liquidators as the level of redundancy payments for employees is prescribed by statute.

Making primary school fees tax deductible? – 1st April 2014

To ask the Minister for Finance if he is considering making primary school fees tax deductible particularly in areas where there is insufficient capacity in local free schools to meet local demand.

Reply

The Minister for Finance (Michael Noonan):

Section 473A of the Taxes Consolidation Act 1997 provides for tax relief at the standard rate of income tax (20%), subject to certain minimum thresholds, in respect of qualifying fees paid by an individual for a third-level education course, including a postgraduate course.

Qualifying fees mean tuition fees in respect of an approved course at an approved college and includes what is referred to as the “student contribution”.  No other fees e.g. administration fees, examination fees, capitation fees, qualify for tax relief.  Tuition fees that are, or will be, met directly or indirectly by grant, scholarship, employer contribution or other means are deducted in arriving at the net qualifying fees.

I have no current plans to introduce tax relief for fees paid to private primary or post-primary schools.

Charges for cancellation of a credit card? – 25th March 2014

To ask the Minister for Finance if it is the case that there is a charge from the Government for cancelling a credit card with a bank in this jurisdiction; the amount that charge is; the way it is calculated; and the justification for the charge.

Reply

The Minister for Finance (Michael Noonan):

There is no charge from the Government for cancelling a credit card with a bank in this jurisdiction.

I am informed by the Revenue Commissioners that Section 124 of the Stamp Duties Consolidation Act 1999 provides for an annual stamp duty charge of €30 on credit cards.  The charge is applied where a credit card account is maintained with a financial institution at any time during the 12 month period ending on 1 April in any year.

A financial institution is required to furnish to the Revenue Commissioners a statement showing the number of credit card accounts maintained by the financial institution at any time during the 12 month period ending on 1 April and to pay the annual charge of €30 in respect of such accounts.

The financial institution recoups the amount of the stamp duty from the card account holder on 1 April or, if it hasn t already been charged, at the time that the account is closed during the 12 month period. Where the stamp duty charge has been paid in respect of a credit card account which has been closed, a further charge will not be payable in respect of the same 12 month period where a replacement credit card account is opened with another financial institution.

Property Tax Exemptions – 6th March 2014

To ask the Minister for Finance if he will provide a list of all exemptions to the local property tax.

Reply

The Minister for Finance (Michael Noonan):

Part 2 of the Finance (Local Property Tax) Act 2012 (as amended) outlines the exemptions that are available from Local Property Tax (LPT).  I am advised by the Revenue Commissioners that details of these exemptions were also provided on page 10 of the Guide to LPT, which was issued to all property owners in March/April 2013.  The Deputy may also find the following link from the Revenue website helpful: http://www.revenue.ie/en/tax/lpt/exemptions.html as it provides additional details of the various exemptions from the tax.

Efforts to eliminate diesel smuggling – 27th February 2014

To ask the Minister for Finance his plans to cease the practice of colour coding of diesel and replace the current scheme for farmers with a rebate system, or some other system, in order to eliminate the illegal diesel smuggling industry which operates at a huge cost to the State in terms of revenue forgone and the waste of Government resources.

Reply

The Minister for Finance (Michael Noonan):

I am advised by the Revenue Commissioners who have responsibility for the collection of mineral oil products tax and for tackling the illicit trade in mineral oil products that the system of marking gas oil (diesel) has been an efficient means of delivering a tax rebate on a product used by a very large number of users across a wide range of uses.  These uses extend well beyond agriculture to include the propulsion of trains, the operation of construction and industrial machinery, commercial sea navigation (including fishing) and for commercial and home heating purposes.  Any change in the existing system would therefore impact across a wide range and huge number of users.

A change to a rebate system would involve the establishment of an expensive repayments system. This would give rise to significant costs and place an administrative burden on oil traders, users and the Revenue Commissioners. It would also pose significant cash-flow costs for those currently using marked gas oil.  In addition, repayment schemes by their nature are very vulnerable to abuse. The introduction of a wide-ranging scheme such as that proposed would not necessarily offer greater security against fraud than the current arrangements. If fuel for off-road use was not marked under the proposed new system, it could be diverted easily for road use; if it was marked, it could be laundered as at present.  It would also be the case that marked fuel from Northern Ireland would continue to be available and could be laundered by fuel criminals.  For these reasons, I am not proposing the cessation of current marking system or the introduction of a wide-ranging rebate system such as that proposed.

While it is inherently difficult to estimate the extent of any illegal activity and there is no reliable estimate of the scale of illegal activity in the fuel sector, Revenue recognises that the laundering of the marker from marked gas oil represents a significant threat to the exchequer and to the legitimate trade. For this reason, Revenue has made action against this illegal activity one of its priorities and is implementing a comprehensive strategy to tackle the problem. Revenue’s strategy includes the following elements:

–       The licensing regime for auto fuel traders was strengthened with effect from September 2011 to limit the ability of the fuel criminals to get laundered fuel onto the market;

–       A new licensing regime was introduced for marked fuel traders in October 2012, which is designed to limit the ability of criminals to source marked fuel for laundering;

–       New requirements in relation to fuel traders’ records of stock movements and fuel deliveries were introduced to ensure data are available to assist in supply chain analysis;

–       Following a significant investment in the required IT systems, new supply chain controls were introduced from January 2013. These controls require all licensed fuel traders, whether dealing in road fuel or marked fuel, to make monthly electronic returns to Revenue of their fuel transactions. Revenue is using this data to identify suspicious or anomalous transactions and patterns of distribution that will support follow-up enforcement action where necessary;

–       An intensified targeting, in co-operation with other law enforcement agencies on both sides of the border, of enforcement action against suspected fuel laundering operations; and

–       following a joint process, Revenue and HM Revenue & Customs in the UK have identified a new product to mark rebated fuels in a move that will boost the fight against illegal fuel laundering in both jurisdictions.

Revenue also works with fuel sector representative bodies, which have been very supportive of the range of measures introduced to combat fuel laundering, to improve the integrity of the distribution system and minimise the risk of fraud. In support of this, I introduced a provision in the Finance (No. 2) Act 2013 that will make a supplier who is reckless in supplying rebated fuel for a use connected with excise fraud liable for the duty evaded. This new provision will strengthen Revenue’s hand in dealing with those traders supplying fuel recklessly to dubious customers.  Revenue has recently published guidelines for mineral oil traders which will assist them in identifying and avoiding such transactions.

Revenue chairs the Hidden Economy Monitoring Group and has established regional sub-groups to facilitate traders reporting suspicious matters through their representative associations on a confidential basis.  This information can assist Revenue in closing down the illicit trade by identifying traders supplying fuel to launderers and by identifying outlets that are selling laundered diesel.

Revenue’s enforcement strategy in the fuel sector has already yielded significant results.  In the period from mid-2011 to end January 2014, 123 filling stations were closed for breaches of licensing conditions.  Since the beginning of 2011, over 2.7 million litres of fuel have been seized and 29 oil laundries detected and closed down, including 9 oil laundries in 2013.

Property tax adjustment allowed by local authorities – 13th February 2014

To ask the Minister for Finance if the local property tax adjustment allowed by local authorities is the maximum cumulative increase/decrease permissible in a given year or over a period of years, that is, could it be reduced by 15% every year; and, if it will be the local authorities or central Government responsible for setting the basic rate at the next valuation in 2017.

Reply

The Minister for Finance (Michael Noonan):

Section 20 of the Finance (Local Property Tax) Act legislation enables local authorities to increase or decrease the rate of local property tax by a  local adjustment factor  on properties located in their area.  This factor cannot exceed +15% or -15% of the central national rate.

The Minister for the Environment, Community and Local Government may make regulations regarding the setting of the local adjustment factor.

Section 17 of the Act provides for a central national rate of 0.18% on the first €1m in value and 0.25% on the portion of the value above €1m (where no banding will apply). Any adjustment to the central rate would require an amendment of the Act.  As I advised the House during the debate on the Finance (Local Property Tax) Bill, the central national rate will not vary for the lifetime of this Government.

Publishing decisions made in the public interest by the Financial Regulator – 13th February 2014

To ask the Minister for Finance if it should be the practice of the Financial Regulator to publish the main decisions made by the office during the year that are in the public interest.

Reply

The Minister for Finance (Michael Noonan):

The Central Bank is statutorily obliged to publish information on the main issues addressed during the year including information on how it carried out its regulatory and supervisory activities.

In accordance with Section 32L of the Central Bank Act 1942 (as amended), the Central Bank is required to prepare an Annual Performance Statement on its financial regulatory activities undertaken during the previous year within four months of the end of each financial year.

In accordance with Section 32K of the Central Bank Act 1942 (as amended), the Central Bank is required to prepare an Annual Report on its activities during the year within six months after the end of each financial year,

Both of these documents are laid before each House of the Oireachtas.

Furthermore, under Section 33BC of the Central Bank Act 1942 (as amended), the Central Bank must publish, subject to certain confidentiality requirements, the particulars of a prescribed contravention that is being or has been committed. The publication would normally include:

  • the name of the regulated entity on whom a sanction has been imposed;
  • details of the prescribed contravention(s) in respect of which the sanction has been imposed;
  • details of the sanction imposed; and
  • the grounds upon which the findings are based

In addition, the Central Bank publishes annually, in summary form, information on its actions under Part IIIC of the Central Bank Act 1942 (as amended).

Number of cigarette seizures per month since January 2013 – 11th February 2014

To ask the Minister for Finance if he will provide an update on the number of cigarette and tobacco seizures in each month since January 2013; the amount of cigarettes and tobacco seized in each month since January 2013; and if he will make a statement on the matter.

Reply

The Minister for Finance (Michael Noonan):

I am advised by the Revenue Commissioners that the numbers of seizures of cigarettes and tobacco, and the quantities seized, each month since January 2013 are as detailed in the following table (click here.)

Combating the illegal tobacco trade is, and will continue to be, a high priority for the Revenue Commissioners and they are committed to maintaining their extensive programme of action against all stages of the supply chain for illicit products. Every effort will continue to be made to seize illicit products, and to ensure that those involved in the illicit trade are brought to account before the Courts for their criminal activities.

Excise returns by category since 2012 – 11th February 2014

To ask the Minister for Finance if he will provide a breakdown of excise returns by category and by month from January 2012 to January 2014.

Reply

The Minister for Finance (Michael Noonan):

I am informed by the Revenue Commissioners that the breakdown of excise receipts by category and by month from January 2012 to December 2013 is as shown in the tables below. Please note that the receipts shown for 2013 are provisional and are subject to revision. Information for January 2014 is not available yet.

Click here to view table.

Tax exemptions for activities that promote a healthy lifestyle – 11th February 2014

To ask the Minister for Finance if he has considered extending the principles of the cycle to work scheme to other activity areas, for example gym membership, to further help promote healthier lifestyles amongst the general population.

Reply

The Minister for Finance (Michael Noonan):

The Cycle To Work scheme  was introduced by  Finance (No. 2) Act 2008 and specifies that bicycles and associated safety equipment provided by employers to employees will be treated as a tax exempt benefit-in-kind subject to certain conditions being met.

One of the benefits envisaged from the scheme was indeed that more people cycling to and from work would improve health and fitness levels, however it was primarily intended to be an environmental measure. The scheme complements the Taxsaver commuter scheme and, by encouraging more employees to commute by bicycle, reduces traffic congestion and lowers carbon emissions.

While all such schemes are kept under review by my Department I have no plans at present for an extension along the lines proposed by the Deputy.

Loss of property tax revenue due to exemptions for 2013 buyers – 4th February 2014

To ask the Minister for Finance if he will ask the Revenue Commissioners if it is the case that there will be a loss to the Exchequer as a result of a reinterpretation of the local property tax legislation that will now see all buyers in 2013 receive an exemption from paying LPT; if so, what the anticipated loss will be; and the way this breaks down over each consecutive year.

Reply

The Minister for Finance (Michael Noonan):

The legislation governing the administration of Local Property Tax (LPT) provides for a number of exemptions from LPT, two of which are particularly relevant to those who purchased a residential property during 2013.  Firstly, under section 9 of the Finance (Local Property Tax) Act 2012 (as amended) any new and previously unused residential property that was purchased from a builder or property developer between 1 January 2013 and 31 October 2016 will be exempt from LPT up to the end of 2016.

The second relates to the exemption under section 8 of the 2012 Act (as amended), which is the exemption to which the deputy refers. It was originally intended that this exemption would only apply to first-time buyers, which is clear from the heading to the section: “Exemption for first-time buyers”. The Explanatory Memorandum to the Bill (prior to enactment) also states that the exemption applies to first-time buyers. The Deputy may recall that mortgage interest relief was phased out on mortgages taken out after 31 December 2012 and this measure was a transitional provision to help first-time buyers in the first year after the abolition of mortgage interest relief.

However, as written, the exemption benefits any buyer, not just a first-time buyer. The result is that a person who purchased a second hand house in 2013 and occupies it as a sole or main residence is entitled to the exemption under section 8 regardless of whether she or he is a first-time buyer. The exemption will apply up to the end of 2016, provided the purchaser does not sell or otherwise transfer ownership of the property and continues to live in it as his or her sole or main residence. Accordingly, there will be some occasions where a purchaser of a second hand property in 2013 will not qualify for the exemption, for example, where the property is being let by the purchaser.  The Deputy’s assertion that all buyers of residential properties in 2013 will now receive an exemption from LPT is therefore not correct.

Revenue has advised me that the section 8 exemption applies to a clearly defined group of property owners, who are being identified using Stamp Duty records. These fall into three broad groups:

– those who purchased a residential property between 1 January 2013 and 1 May 2013 and paid the 2013 LPT liability. These purchasers may be entitled to a refund of the 2013 payment and, subject to certain conditions, may be exempt for 2014 to 2016 LPT,

– those who purchased a residential property between 2 May 2013 and 1 November where the purchaser paid the 2014 LPT liability. These purchasers may be entitled to a refund of the LPT for 2014 and, subject to certain conditions, may be entitled to an exemption for 2015 and 2016 LPT, and

– those who purchased a residential property between 2 November 2013 and 31 December 2013. These purchasers, subject to certain conditions, may be entitled to an exemption for 2015 and 2016 LPT.

There is a significant amount of work involved in identifying individuals who bought in 2013 and who may be entitled to claim the exemption. When this work is completed Revenue will write to these individuals and will provide advice on what action should be taken where the individual confirms that she or he qualifies for the exemption and wishes to claim it. Good progress is being made on identifying those who may be eligible and the letter from Revenue will clearly indicate what the purchaser will need to do to claim the exemption.

Regarding the potential impact on the Exchequer, as a result of the increased number of purchasers who will qualify for the section 8 exemption, the potential loss is not likely to be significant as part of the overall LPT yield. Revenue has advised that an accurate figure will only be available when those who receive the letter from Revenue respond by claiming the section 8 exemption for 2013 and/or 2014, as appropriate. Revenue expects to be in a position to provide indicative figures during April 2014.

In relation to the potential impact on the LPT yield for 2015 and 2016, Revenue advises that reliable figure for these years will only become available after 2014 as qualification for the exemption will be conditional on the individual continuing to satisfy the exemption conditions. In this respect, Revenue has advised that where an owner lets or sells his or her property the exemption will cease to apply from the next liability date.

Reimbursement of physiotherapy expenses in the Taxes Consolidation Act – 4th February 2014

To ask the Minister for Finance if he is considering an amendment to the Taxes Consolidation Act 1997 in relation to the reimbursement of physiotherapy expenses (details supplied)

Reply

The Minister for Finance (Michael Noonan):

The Deputy may be aware that this issue was discussed at length during the passage of the recently enacted Finance (No. 2) Act 2013, during which I indicated that I was not prepared to provide for the change at the current time on the grounds of additional cost to the Exchequer. Therefore, the amendment was considered already and I do not propose to revisit the matter in the short term.

Data management controls in the Department of Finance – 28th January 2014

To ask the Minister for Finance if he will report on those controls within his Department for the management of data and files all records, relating to Departmental and Government decisions; the changes introduced in 2011 to ensure the completeness of such records; and if the systems now in place are to be audited on a regular basis to ensure they are working.

Reply

The Minister for Finance (Michael Noonan):

In response to the Deputy question my Department has a comprehensive set of guidelines in place in relation to record management within the Department.  Following a recent internal audit process the guidelines were reissued to all staff members in March 2013 to insure that all members of staff were brought up to date with the file management procedures in operation within the Department.  The procedures outline to staff what records should be kept on official files, how to register official files on the Departments file management system and how to manage files that are in current use within their section. It also advises staff on how to manage e-mailed correspondence.

Each Division within the Department has been assigned specific file series which they use to register  official  files  on the Department file tracking system and it is the  responsibility of each Division within the Department to ensure that Departmental decisions and Government decisions  effecting  the work  of the Department  are recorded on the appropriate official  file  to ensure  that any  following  up action to be taken on foot  of such  decisions  is available for future reference.

Investigations into Custom House Capital – 28th January 2014

To ask the Minister for Finance the position regarding investigations into the Directors of Custom House Capital; the likelihood of investors in CHC receiving any return or compensation for their investments; if he will provide details as to the Destiny Property 118 Fund and whether or not it made any investments; if it was invested in the purchase of a building in Glasgow; who now owns this building; the role the Central Bank has at present in denying the release of information to those who invested with CHC; the reason the appointed receivers are not allowed to release information to claimants in this matter; the status of the investor compensation company; and the reason investors who made appropriate claims have not heard from them to date.

Reply

The Minister for Finance (Michael Noonan):

The Deputy will be aware that the Central Bank maintains a page on its website where it provides up to date information on Custom House Capital (“CHC”). This can be accessed at https://www.centralbank.ie/press-area/press-releases/Pages/UpdateonCustomHouseCapital.aspx.

The Deputy will also be aware that the  Investor Compensation Company Limited ( ICCL ), established under the 1998 Investor Compensation Act, also maintains a page on its website with relevant updates for investors in CHC who may be eligible to claim compensation from the investor compensation fund. This can be accessed at  http://www.investorcompensation.ie/current_cases_004.php. This page is reviewed and updated on a weekly basis and all claimants have been advised that they should consult the ICCL s website for relevant updates.

In relation to the compensation which investors in Custom House Capital may receive, I would like the Deputy to note the following:

– As of 23rd January, 2014, the ICCL had received certified statements from the Administrator in respect of 428 claims and has paid compensation to those claimants amounting to €6,624,280.  All compensation payments were made by the ICCL within 2 weeks of having received the relevant certified statement.

– The ICCL has received 1,969 claims from former clients of CHC.  All claimants received an acknowledgement from the ICCL following receipt of their claim.  All claimants would subsequently have received a confirmation that their claim had been passed to the Administrator, Kieran Wallace, who would verify and certify their claim in due course.  The legislation provides that it is the Administrator, not the ICCL, who checks the validity of each claim and determines the level of compensatable loss to be paid.  I understand the Administrator had indicated that this will be a protracted process given the complexity of the reconciliation process.

In relation to the release of information regarding the case and the respective roles of the Central Bank and the Liquidator, I would like the Deputy to note the following:

– Upon presentation of the Final Inspectors Report to the High Court Justice Hogan ordered that CHC be wound up immediately.  Copies of the Final Report have been provided to the Minister for Justice and Equality, to the Director of Public Prosecutions, to the Director of Corporate Enforcement, to the Revenue Commissioners and to the Garda Commissioner.  At the time the High Court outlined that the only solution in the CHC case was an immediate court sanctioned liquidation where the Liquidator would take steps to conserve the assets of the company and to ensure that payments out were made to creditors in a manner authorised by law.  The High Court reviewed the position of Mr Kieran Wallace for this role and confirmed his appointment as Liquidator with immediate effect.

– The Central Bank s investigation into Custom House Capital Ltd (in Liquidation) and persons concerned in its management has been on-going since the publication of the Final Report to the High Court by Court Appointed Inspectors dated 19 October 2011.  Following consultation with An Garda Siochána, the Central Bank s investigation has been deferred pending completion of investigations by An Garda Síochána.

– As identified in the Final Inspectors Report, there was large scale misuse of client holdings and systematic deception by CHC that caused uncertainty surrounding the legitimate ownership of all client holdings.  As a result, this is not a routine liquidation and, in the interests of all clients, the legitimate ownership of holdings must be established before any payment or return of holdings can be made to any client.  The situation is further complicated by the fact that in many cases these holdings form part of various pension arrangements (e.g. ARFs, PRSAs) which are subject to additional legislation.  Directions imposed on CHC by the Central Bank are in place to ensure that misleading information is not issued to clients about individual client holdings pending completion of reconciliation work by the Official Liquidator.

– As also set out in the Final Report of the High Court Inspectors, the sub-management arrangements entered into between CHC and Horwath Bastow Charleton Wealth Management Ltd sought to protect against a diminution in the value of remaining client holdings and provide a mechanism for (a) maximising a recovery of funds for clients and (b) providing transparency and ensuring fairness in the return of assets to clients.  The Liquidator remains responsible for all reconciliation work carried out in respect of CHC related client holdings.

– In light of the above I cannot comment on details pertaining to any particular fund held by CHC, whether relating to any investments made by the fund, assets held by the fund, etc.

– The process of establishing legitimate ownership of all investments involves a significant and lengthy reconciliation of client holdings that takes time to fully complete.  As mentioned above, Mr Kieran Wallace of KPMG was appointed Official Liquidator by and is accountable to the Court for the conduct and completion of the liquidation of CHC.

Combining annual tax returns with a property tax return – 28th January 2014

To ask the Minister for Finance the reason it was not decided to combine an annual income tax return with a property tax return.

Reply

The Minister for Finance (Michael Noonan):

I am informed by the Revenue Commissioners that the introduction of the Local Property Tax (LPT) in 2013 was the largest extension of self-assessment in the history of the State, with over 1.3 million taxpayers obliged to file LPT Returns and pay the tax.  Given the significant numbers to whom the new tax applied, its introduction needed to be carefully planned and considered, particularly as respect the obligations on property owners to self-assess the value of their property, file the appropriate tax return and make their payment of tax.  This had to be achieved in the very challenging timeframe set for Revenue by the Government.

There are several reasons why a single tax return for both income tax and LPT was not considered practical when LPT was being introduced.  The Deputy will be aware that the Government decided in July 2012 that LPT was to commence in 2013 on a half-year basis.  The LPT 1 return filing date in 2013 of 7 May 2013 (or 28 May, for online filers) was specifically chosen because it allowed the various administrative arrangements for different aspects of LPT, including the range of payment options provided by Revenue, to be put in place before the 2013 LPT payment due date of 1 July 2013.  The Deputy will be aware that the Income Tax return filing date for those taxpayers who were required to file a 2012 income tax return was 31 October 2013 and if LPT declarations were included in this return, it would have made the introduction of a half-year LPT charge for 2013 impossible.

Another issue that makes the Deputy s suggestion impractical is that residential property owners who are obliged to file an LPT1 Return, are not necessarily obliged to file an Income Tax return. For example, the vast majority of PAYE customers, the unemployed, non-residents and those in receipt of the State pension are not obliged to file an annual return of income, where they have no other taxable income sources.  Moreover, the LPT legislation requires that only one LPT Return should be filed for a property so where there are multiple owners of a property, the designated liable person is responsible for filing the LPT Return and paying the tax.  In many instances of multiple properties, I am advised by Revenue based on analysis they have conducted on LPT Returns filed to date, the designated liable person is not obliged to file an Income Tax Return.

The Revenue Commissioners have a strong track record in simplifying the administrative processes, as far as they possibly can, for all of the taxes and duties for which they have responsibility.  In the administration of LPT, Revenue has sought to make it as easy as possible for residential property owners to understand and comply with their LPT obligations.  This strategy has been very successful as evidenced by the compliance rate of 91% achieved for 2013.

I am satisfied that combining the LPT Return with the annual Income Tax Return would not have proved beneficial to the taxpayer or to Revenue.  Infact, it would have placed an unnecessary, additional compliance burden on some taxpayers, most likely increased the number of customer contacts for Revenue and potentially compromised the excellent voluntary compliance levels that have been achieved.

Finally, as I have set out above, introducing a single return, even on a limited basis, to cater for Income Tax and LPT would require a significant restructuring of either the Income Tax or LPT provisions and I am do not believe that the impact of such changes would be justified for any potential benefits.

No. of people paying PAYE in 2012 who did not file an income tax return that year – 28th January 2014

To ask the Minister for Finance the number of persons paying PAYE in 2012 but who did not file an income tax return for that year.

Reply

The Minister for Finance (Michael Noonan):

I am advised by the Revenue Commissioners that a PAYE taxpayer is regarded, generally, as an individual whose:

-Main source of income is taxed within the PAYE system and
-Non-PAYE income (if any) e.g. rental income, dividends, etc. is taxed by reducing their tax credits and tax rate bands, and
-Gross non-PAYE income is less than €50,000 and their net non-PAYE income (if any) is €3,174 or less.

At the end of 2012, there were approximately 2.3 million individuals taxed under the PAYE system on some or all of their income, representing about 1.7 million cases, when account is taken of the joint assessment basis.

The Deputy will be aware that the PAYE system has been designed so that by the end of each tax year in most instances the correct amount of tax will have been deducted and they will neither be due a refund of tax nor owe any tax.  PAYE taxpayers, therefore, are not required to complete an annual tax return (Form 12 for PAYE taxpayers) unless they are requested to do so by an Inspector of Taxes under Section 879 Taxes Consolidation Act 1997.  They are entitled, if they so wish, to submit a Form 12 Return of their own volition which a number of PAYE taxpayers do annually, principally in the context of a change in circumstances or to claim a tax credit or a tax refund.

I am further advised that to date approximately 34,500 tax returns have been received from PAYE taxpayers as defined above in respect of the year 2012.

However, many people taxed under PAYE are also taxed under the self-assessment system for example because they have additional income sources or are jointly assessed with a self assessed individual.  These taxpayers are required under the Taxes Consolidation Act to complete an annual tax return (Form 11).  To date, almost 254,000 cases with a PAYE income have completed a Form 11 for 2012.

The Commissioners also inform me that they are planning to release an online Form 12 for PAYE taxpayers during the first half of 2014.

Use & payment of consultants by Permanent TSB – 28th January 2014

To ask the Minister for Finance if Permanent TSB used public procurement processes in engaging consultants; and the consulting spend in the past twenty four months.

Reply

The Minister for Finance (Michael Noonan):

Permanent TSB (“PTSB”) is not legally required to comply with public procurement rules but it has informed me that it follows industry best practice in relation to procurement in that all large consultancy assignments are subject to competitive tenders, detailed contract negotiations and appropriate governance, including Board approval.

As the Deputy may be aware PTSB has undertaken a wide variety of projects in the past two years including, inter alia, a rebuilding of its arrears management capability, the development of a Restructuring Plan, the separation from Irish Life and the recruitment of a new management team. I am informed by PTSB that this has led to an increased requirement for third party expertise including the use of consultants.

PTSB’s 2012 Annual Report and Financial Statements, published on their website, set out in detail the level of Restructuring Costs incurred during 2012, including:

– €14 million of costs associated with proposed asset disposal initiatives, separation of the Irish Life Group and the final phase of the 2011 transformation project
– €53 million of costs associated with professional and contractor projects in relation to the restructuring of the group

In addition 2012 Operating Costs included €9 million of consulting costs.

I am advised by PTSB that it is currently in a close period and it is not appropriate to disclose information relevant to its financial performance in 2013 at present. PTSB has informed me that this information will be included in PTSB’s Annual Report and Financial Statements which will be published in March 2014. PTSB has advised me that the level of spend on Restructuring Costs is significantly reduced in 2013 compared to 2012.
As the Deputy will be aware there is a Relationship Framework in place with PTSB. Under the Relationship Framework PTSB is recognised as a separate economic unit with independent powers of decision. The Board and management team retains responsibility and authority for determining the bank’s strategy and commercial policies and conducting its day-to-day operations.

Vendor financing options for new infrastructural projects – 16th January 2014

To ask the Minister for Finance if he has considered any vendor financing options for the implementation of new infrastructural projects here as an alternative to new borrowing or the use of national investments funds for same given that major international companies maintain capital reserves for investment in such projects.

Reply

The Minister for Finance (Michael Noonan):

As the Deputy is no doubt aware, in July 2012 the Minister for Public Expenditure and Reform, Brendan Howlin T.D., announced on behalf of the Government a €2.25 billion Infrastructure Stimulus Programme aimed at promoting jobs and growth.

It is intended that projects in the Stimulus Programme to a value of €1.4 billion will be provided through Public Private Partnerships (PPPs). The funding of the PPPs is expected to come from the European Investment Bank (EIB), Ireland’s National Pensions Reserve Fund (NPRF), domestic banks and other sources of funding such as institutional investors, and is additional to the existing Exchequer-funded investment programme. The planned PPP investment will be directed towards projects that meet key infrastructural needs and are in line with the priorities identified in the Government’s Investment Framework, covering education, health, justice and transport.

In relation to the funding to be made available to PPPs by the NPRF, the Government has announced the creation of the Ireland Strategic Investment Fund (ISIF) to channel investment from the NPRF towards productive investment in sectors of strategic importance to the Irish economy. Within its existing statutory investment policy and in line with the ISIF announcement, the NPRF has undertaken a number of investments and initiatives under which NPRF capital will be invested on a commercial basis in Ireland. The NPRF has in particular committed to invest in infrastructure (€250 million) and PPP projects (€118 million). Legislation to establish the ISIF which will absorb the resources of the NPRF is being prepared and I expect to be in a position to bring it before the Oireachtas in the first quarter of this year.

The Deputy raised the use of vendor financing to fund infrastructure projects, a form of financing in which the vendor lends money to be used by the purchaser to buy the vendor’s products or property. This is a model being adopted by the National Asset Management Agency (NAMA) who have announced plans to advance, over the years 2012 to 2016, at least €2 billion in vendor finance to purchasers of commercial property securing its loans. NAMA has agreed to fund six transactions with a combined value of €375 million through the vendor finance initiative and a number of other vendor finance transactions are at an advanced stage. NAMA has published an information guide on vendor finance, which is available on the NAMA website, http://www.nama.ie/?wpfb_dl=282. Clearly, vendor financing is an option particularly suited to NAMA’s function in selling off the property on its books. However, I am happy to confirm that the Government remains committed to exploring alternative means of financing capital projects, including vendor financing.

Property Tax Payment Receipts – 19th December 2013

To ask the Minister for Finance if it is his intention to request Revenue to issue receipts to those paying the property tax in 2013 so as to ensure complete records for the purposes of future house sales and so on and that receipts are being issued for 2014.

Reply

The Minister for Finance (Michael Noonan):

I am advised by Revenue that receipts are available in all circumstances where a person pays Local Property Tax (LPT) via its online service. However, since July 2011 paper receipts are no longer issued in respect of tax payments. This decision was taken on the basis that the vast majority of taxpayers conduct business with Revenue via its online service. The online service facilitates direct access to payment information and therefore customers have no need for a paper receipt. The change has resulted in significant cost savings in terms of postage, stationery and staff resources. While customers who pay and file using the paper LPT Return do not receive manual receipts, they have evidence of payment through their own financial institution records.

This arrangement now also applies to LPT, and customers who file online receive an electronic acknowledgement and have ongoing access to their return and payment details. The only exception in regard to paper receipts is where a person pays LPT online through the telephone Helpline 1890 200 255. In such circumstances a paper acknowledgement issues within two weeks.

I am also advised that where customers pay via third party payment services providers (An Post, Omnivend and Payzone) they receive receipts for each payment made.

On the provision of LPT payment clearance in the context of property sales, I am informed that Revenue provides a ‘look up’ facility to vendors or their representatives via online access to the relevant LPT return and payment details.

This service, which is fully secure, provides solicitors/agents with instant access to the LPT data of clients. The security aspect is controlled through the use of various access codes, which are provided to the solicitor/agent by Revenue (through the online system) or by the property owner. Alternatively, the property owner can access his/her own LPT payment and return history and print copies of the details for the solicitor/agent. Where the access codes are not readily available for any reason the property owner can contact the LPT Branch at 1890 200 255.

I commend Revenue for providing this secure digital facility to enable the conveyancing process to proceed seamlessly. When combined with Revenue’s eStamping system, this provides a modern and secure digital platform to facilitate timely compliance with tax obligations arising as a result of the transfer of residential properties. I strongly support Revenue’s approach to eservices which is fully in accordance with the Government’s digital strategy.

Finally I am advised that comprehensive guidelines on LPT obligations in the context of property sales or transfers are available on the Revenue website. Instructions for solicitors/agents on how to access the ‘look up’ service are also available on the website at: http://www.revenue.ie/en/tax/lpt/sale-transfer-property.html.

Advising Irish banks against a rise in interest rates – 5th December 2013

To ask the Minister for Finance if it his intention to advise Irish banks against any rise in interest rates in view of continuing reductions by the European Central Bank.

Reply

The Minister for Finance (Michael Noonan):

I, as Minister for Finance, have no statutory role in relation to the mortgage interest rates charged by regulated financial institutions.  It is a commercial matter for the banks concerned.

The Central Bank has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations.  The Central Bank has, however, no statutory role in the setting of interest rates by financial institutions, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act, 1997.

The mortgage interest rates that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned.  This interest rate is determined taking into account a broad range of factors, including European Central Bank base rates, deposit rates, market funding costs, the competitive environment and an institution’s overall funding.

Making the Property Tax deductible against rental income – 5th December 2013

To ask the Minister for Finance further to Parliamentary Question No. 106 of 12 November 2013, if he intends to make property tax paid in respect of a rented property deductible for income tax or corporation tax purposes.

Reply

The Minister for Finance (Michael Noonan):

As advised in my reply to Parliamentary Question No. 106 of 12 November 2013, the inter-departmental group, chaired by Dr Don Thornhill, set up to consider the design of a property tax (the “Thornhill Group”) recommended that the Local Property Tax paid in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates.

The group recognised the considerable pressures on the public finances and the need to bridge the gap between expenditure and revenue, and, for this reason, suggested that consideration be given to phasing in deductibility over a period of years.  The group also considered that it was for Government, having regard to the prevailing budgetary situation, to decide on the time span for phasing-in deductibility and on what percentage of LPT to allow as a deduction from gross rents for tax purposes.

The Government accepted the recommendation of the Thornhill Group in principle, but has not considered the manner or the timing in which this will happen.

Temporary mortgage interest relief for those on higher rate mortgages – 5th December 2013

To ask the Minister for Finance if he has considered introducing mortgage interest relief temporarily for those on higher rate mortgages for example those on non-tracker mortgages paying above 1.5%, as an interim measure until the economy returns to higher growth levels.

Reply

The Minister for Finance (Michael Noonan):

The position is that in Finance Act 2010, mortgage interest relief was extended up to end of 2017 for those whose entitlement to relief was due to end in 2010 or after.  Therefore, tax relief will continue to be available in respect of interest paid by an individual on qualifying home loans taken out on or after 1 January 2004 and on or before 31 December 2012, regardless of whether they are considered first-time buyers or non-first-time buyers.

As the Deputy will be aware, this Government is committed to helping address the particular problems faced by those that bought homes at the height of the property boom between 2004 and 2008. In this regard, in Budget 2012, I fulfilled the commitment in the Programme for Government to increase the rate of mortgage interest relief to 30 per cent for first time buyers who took out their first mortgage in that period. This was the period during which house prices peaked.

A mortgage holder will qualify for the increased rate if they made their first mortgage interest payment in the period 2004 to 2008 or if they drew down their mortgage in that period. In addition, the increased rate of tax relief for first time buyers who took out their first mortgage in that period will continue up to and including the 2017 tax year.

A qualifying loan for mortgage interest relief is one which without having been used for any other purpose, is or are used in the purchase, repair, development or improvement of a claimant’s principal private residence.

 I have no plans to increase or widen the scope of relief.   As you will appreciate, I receive numerous requests for the introduction of new tax reliefs and the extension of existing ones. You will also appreciate that I must be mindful of the public finances and the many demands on the Exchequer given the significant budgetary constraints.  Tax reliefs, no matter how worthwhile in themselves, reduce the tax base and make general reform of the tax system that much more difficult.

Reducing the burden of childcare costs – 4th December 2013

To ask the Minister for Finance his views on allowing working parents to claim childcare costs in full against their earned incomes for both tax and USC.

Reply

The Minister for Finance (Michael Noonan):

The Government acknowledges the continuing cost pressures on parents, particularly those with young children. In recognition of these cost pressures, a number of support measures are in place to ease the burden on working parents. These include the Community Childcare Subvention (CCS) programme, which funds community childcare services to enable them to charge reduced childcare fees to qualifying parents, the Childcare Education and Training Support (CETS) programme which provides free childcare places to qualifying FÁS and VEC trainees and the Early Childhood Care and Education (ECCE) programme which provides for a free pre-school year for children in the year before commencing primary school. Generous entitlements to paid and unpaid maternity leave as well as child benefit payments are also provided.

The Department of Social Protection provides financial support to families on low pay by way of the Family Income Supplement (FIS) and to one-parent families through the one-parent family payment.

In addition, a One Parent Family tax credit of €1650 is provided. This credit is payable to any single person with a child under 18 years of age or over 18 years of age if in full time education or permanently incapacitated.

The Universal Social Charge (USC) was introduced in Budget 2011 to replace the Income Levy and Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and raise revenue to reduce the budget deficit.  It is a more sustainable charge than those it replaced and is applied at a low rate on a wide base with very few exemptions.

In Budget 2012 I announced that those earning less than €10,036 would no longer be subject to the Universal Social Charge. This in itself has removed almost 330,000 individuals from the charge and is of particular benefit to the low paid.

I have no plans to introduce any further tax reliefs for childcare costs.

Reducing the burden of healthcare costs for the elderly – 4th December 2013

To ask the Minister for Finance his views on allowing elderly persons to claim healthcare costs, including health insurance premiums, against their tax and USC.

Reply

The Minister for Finance (Michael Noonan):

Firstly, I would point out that persons aged 65 and over can avail of the age tax credits or the age exemption limits. For the years of assessment 2013 and 2014, in order to qualify for the income tax exemption a single individual’s income must be less than €18,000 or in the case of a married couple or civil partners, €36,000.

These exemption limits are increased by €575 in respect of each of the first 2 qualifying children and by €830 in respect of each subsequent qualifying child living with the claimant.

In addition, section 469 of the Taxes Consolidation Act 1997, provides for income tax relief in respect of qualifying expenses incurred in the provision of health care in a tax year against the income tax paid by an individual for that year.

Health care is defined as the prevention, diagnosis, alleviation or treatment of an ailment, injury, infirmity, defect or disability, and includes care received by a woman in respect of a pregnancy.  It does not include routine ophthalmic treatment, routine dental treatment, or elective cosmetic surgery.

Relief at the standard rate of income tax is available to all taxpayers, regardless of age for such expenses where they have not been reimbursed under a medical insurance policy. However, the cost of maintenance or treatment in a nursing home, which provides 24-hour nursing care on-site, is available at the claimant’s marginal rate of income tax.

Further details in relation to relief for health expenses are set out in leaflet IT6 which is available on the Revenue website at http://www.revenue.ie/en/tax/it/leaflets/it6.html.

Tax relief is also provided at the standard rate of income tax, regardless of age, for medical insurance premiums paid to cover a range of medical expenses. Since 2004, the relief also covers premiums paid on dental insurance policies for non-routine dental treatment. For the payments to qualify for relief, they must be made to an authorised insurer listed in the Register of Health Benefit Undertakings, established under the Health Insurance Act 1994.

Since 2001, the relief is granted under a tax relief at source system to all holders of medical insurance irrespective of whether or not they have a tax liability to offset the value of the relief. The subscriber pays the premium net of tax relief and the insurer obtains a refund of the relevant amount from the Revenue Commissioners.

As you will be aware, from 16 October 2013, tax relief for medical insurance premiums has been restricted to the first €1,000 per adult and the first €500 per child insured.  Any portion of premium paid in excess of these ceiling will no longer qualify for tax relief. The new ceilings will ensure continuing support via the tax system for those who purchase standard policies, while reducing Exchequer exposure to more expensive policies.

It should be noted that there is no relief against Universal Social Charge for either health expenses or medical insurance premiums. However, it should be noted that payments from Department of Social Protection such as the State Pension are exempt from the Universal Social Charge (USC).    In addition, individuals aged 70 and over, provided their total income does not exceed €60,000, are not liable to the top rate of charge and payments from the Department of Social Protection will not be taken in to account in determining if an individual has exceeded the €60,000 threshold.

Forecasting data on the potential economic effects of USC abolition – 26th November 2013

To ask the Minister for Finance further to Parliamentary Question No. 178 of 5 November 2013 (see below) if he will provide the forecasting data referred to, regarding the modelling of household disposable income in aggregate terms and projections for the way this income is allocated between spending and savings, as well as the impact of these decisions on tax revenue and employment, where disposable income of €4 billion in aggregate terms was realised in the economy.

Original PQ: To ask the Minister for Finance if his Department conducts modelling to forecast the way potential increases in a persons disposable income might be distributed within the economy in the present climate; for example if €4 billion was to be realised in the wider economy by way of abolition of the USC, the way this might impact upon the economy in terms of the percentage going into savings, debt repayments, the purchase of goods and services and so on; and the way this might translate in terms of additional VAT receipts, greater activity in the domestic economy and job creation in small and medium enterprises.

Reply

The Minister for Finance (Michael Noonan):

To begin, I would again stress that, given the current fiscal position of the State, there is no real scope for a large-scale revenue stimulus on the scale proposed by the Deputy.

When assessing the potential impact on the economy of such a measure, my Department must weigh the short-term benefits on economic output against the impact on the public finances. In this regard research produced by the ESRI as part of its Medium-Term Review of July 2013 (pg. 117-118) is informative. Using the HERMES macroeconomic model, the ESRI tested the economic impact of a series of fiscal shocks to the economy. It includes simulations of the impact of a €1 billion adjustment in income tax, which is economically similar to the USC.

The results of the research suggest an income tax multiplier of -0.6 – that is, a €1 billion reduction in income tax results in additional GDP of about €600m million over the forecast horizon. Employment would be impacted positively by about 0.5 per cent.

The relatively low GDP multiplier likely reflects the open nature of Ireland’s economy and the fact that increased demand would ‘leak out’ through imports. The simulations also include the assumption that some part of a reduced tax burden would be saved rather than spent by households. This positive impact on output must be balanced against the impact on the public finances exerted through lower tax revenues. The simulations suggest that the deficit would increase by 0.5 percentage points of GDP and general government debt by just over 2 per cent of GDP, both by the end of the forecast horizon.

Given Ireland’s current fiscal position, we must necessarily ask if such a measure would be prudent and whether it could be sustained over the medium-term. Through the fiscal adjustment measures that the Government has implemented, stability has been restored to the public finances, the economy is growing and data from the second quarter of the year show jobs being created in the last four quarters. Irish sovereign yields are now at about 3½ per cent, a fraction of the highs of over 14 per cent reached in summer 2011. The improvement in yields is due in large part to the Government’s fiscal strategy which has seen consistent deficit reduction. A reduced cost of borrowing for the Government reduces the interest bill which has to be paid by the taxpayer.

Costs of transferring Newbridge Credit Union’s accounts & systems to PTSB – 26th November 2013

To ask the Minister for Finance if he will provide a breakdown of the cost of transferring the accounts and systems from Newbridge Credit Union to PTSB; if this figure is in the region of €4 million; and the way this amount was arrived at.

Reply

The Minister for Finance (Michael Noonan):

The financial incentives agreement – FIA – between the Central Bank and permanent tsb dated 10 November 2013, contains a provision for the Credit Institutions Resolution Fund to cover up to €4.25 million in restructuring and integration costs incurred by PTSB as part of the transaction.

Under the FIA restructuring costs cover all vouched costs, including VAT, reasonably and necessarily incurred by PTSB which directly relate to the development, establishment and maintenance of a recovery and underwriting function in PTSB with respect to the loans transferred under the High Court Transfer Order. Integration costs cover all vouched costs reasonably and necessarily incurred by PTSB as a direct result of the transfer.

Under the FIA, restructuring costs are capped at €3 million and integration costs are capped at €1.25 million, and costs claimed must be incurred by PTSB within 2 years of the date of the FIA. The FIA is available on the Central Bank website at www.centralbank.ie.

Property tax liability for houses sold in 2013 – 20th November 2013

To ask the Minister for Finance the position regarding payment of the property tax where a house is sold in 2013, but the contract is not finalised before 1 November 2013, thereby making the vendor liable for the charge in 2014 although they would no longer own nor occupy the property in that tax year; if the vendor is entitled to a refund from Revenue in any circumstance; if the purchaser is entitled to a refund from Revenue where the tax for 2014 formed part of the sale agreement on the understanding at the time that there was a liability on the property, but which is no longer the case following recent clarification from Revenue regarding exemptions for non-first-time buyers.

Reply

The Minister for Finance (Michael Noonan):

In accordance with the Finance (Local Property Tax) Act 2012 (as amended), liability for Local Property Tax (LPT) will arise where a person owns a residential property on the liability date, which was 1 May 2013 for 2013 and for subsequent years, 1 November in the preceding year.

As I informed the House in my replies to a number of Questions on this matter, most recently in my reply to Questions Nos. [49518/13] and [49556/13] on 19 November 2013, where a liable person sells their residential property between 2 November 2013 and 31 December 2013, provided that they owned the property on 1 November 2013, they will be liable to pay LPT on that property for 2014.  I also noted that detailed guidance on LPT issues arising in the context of the sale or transfer of a residential property was prepared by the Revenue Commissioners in consultation with the Law Society and is available on the Revenue website athttp://www.revenue.ie/en/tax/lpt/sale-transfer-property.html.

For a tax such as LPT to function properly, legislation must specify a liability date for the tax to have application for a particular year.  Whatever date is prescribed, the question of liability when there is a change of ownership has to be managed, and I expect that the LPT liability involved is likely to be factored in during negotiations between the parties on the sale price and the closing date of a particular contract.

An individual selling a property will often be purchasing another property at around the same time.  While a vendor who owns a property on 1 November 2013 is liable for the 2014 LPT on that property, if s/he does not purchase another property before 1 November 2013 s/he will not be liable for the 2014 LPT on that “replacement” property – whoever is the owner as of 1 November 2013 will be liable.

I am advised by the Commissioners that no refund of 2014 LPT arises in the case of a vendor who owned the residential property on 1 November 2013, as s/he is the liable person on the relevant liability date.  A purchaser who buys a residential property after 1 November 2013 is not liable for LPT for 2014 and as such, the question of a refund of LPT does not arise.  However a person who purchases a residential property after 1 November 2013 but on or before 31 December 2013 may qualify for an exemption from LPT for 2015 and 2016 provided they occupy the property as their sole or main residence and continue to do so until the end of 2016.

Payment of the property tax by credit/debit card – 12th November 2013

To ask the Minister for Finance the reason those paying the property tax for 2014 using a credit or debit card cannot pay the tax in the year in which it is due; and if he will consider extending the deadline for such payments to the end of January 2014 or later.

Reply

The Minister for Finance (Michael Noonan):

Similar questions concerning payment of the 2014 LPT liability have been raised by a number of Deputies previously and I provided a detailed reply on 5 November to Questions Nos. 143 [47110/13], 202 [46491/13], 214 [46815/13], 215 [46879/13], 216 [46881/13], 229 [46999/13], 232 [47059/13], 239 [47101/13], and 252 (47136/13) which addresses many of the issues raised by Deputies in these Questions.

There is no requirement on any property owner to pay their 2014 LPT before 1 January 2014. Furthermore, the Revenue Commissioners have made payment options available which provide property owners with options to pay in phased payments during 2014 or in one single debit from their current account as late as 21 March 2014. Property owners are fully entitled to change their chosen payment method for 2014, and also entitled to apply for a deferral of the tax if they consider that they are entitled by reference to their financial circumstances, by completing the LPT return on paper or online.

I am satisfied that the range of payment options are such that no property owner has to pay their LPT liability for 2014 before the end of this year unless they choose to do so and I note that the Chairman of the Revenue Commissioners informed the Joint Oireachtas Committee on Finance, Public Expenditure and Reform that large numbers of property owners have been successfully filing returns and selecting a payment option for 2014. The Committee was also informed that, due to the volume of queries regarding Local Property Tax (LPT) payment methods from people who filed their 2013 return on paper, the Commissioners have extended the 2014 paper LPT filing deadline from 7 to 14 November 2013.

Reduced VAT rates for the entertainment industry – 12th November 2013

To ask the Minister for Finance if he has considered extending the reduced 9% VAT rate to the entertainment industry.

Reply

The Minister for Finance (Michael Noonan):

As you will be aware, the 9% reduced VAT rate applies to tourism related activity in order to promote that industry. In this context, various entertainment services already apply at the 9% rate, including admissions to cinemas, theatres, certain musical performances, museums, art gallery exhibitions, fairgrounds/amusement parks, open farms, historical houses. The use of sporting facilities, including green fees charged for golf and subscriptions charged by non-member-owned golf clubs, also apply at the 9% rate.

Furthermore, live theatrical or musical performances are exempt from VAT, where alcohol drink is not available in the venue during the performance.

Admission to and promotion of dances is liable to VAT at the 23% standard rate. In addition, services by artists, bands and disc jockeys to a venue promoter are also liable to VAT at 23%. The VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. The EU VAT Directive does not allow for the possibility of a reduction in the VAT rate to 9% for the promotion of dances and the provision of such music services.

Income tax for the self-employed – 5th November 2013

To ask the Minister for Finance the reason a self-employed person pays more income tax than a PAYE earner when the Government is trying to incentivise entrepreneurial activity.

Reply

The Minister for Finance (Michael Noonan):

For the purpose of this reply, it is assumed that the Deputy is referring to entitlement to the PAYE tax credit. On that basis, the position is that the PAYE allowance, as it was then, was introduced in 1980 to improve the tax progression of PAYE taxpayers and to take account of the fact that the self-employed generally then had the advantage of paying tax on a preceding year basis. The argument was also made at the time that the general scheme of allowances for expenses discriminated against employees and in favour of other taxpayers.

There have been some changes since 1980. For example, the self-employed now pay tax on a current year basis. In addition, the PAYE allowance has become a tax credit. However, significant timing benefits remain, depending on the accounting period used by the taxpayer. In addition, the expenses regime remains somewhat more liberal than that afforded to employees and therefore the self-employed can actually pay less tax when compared to a PAYE worker on the same income.

Not withstanding the above, to extend the PAYE tax credit to the self-employed would also be extremely costly to achieve. However, as the Deputy is aware, I did announce in my Budget Speech a package of 25 measures costing over €500m to promote jobs and growth. I believe that these measures will assist new business and small business and provide support for employers in almost every sector.

Incentivising entrepreneurship through changes to capital gains tax – 5th November 2013

To ask the Minister for Finance if he is considering making a distinction in the capital gains tax regime to incentivise entrepreneurial activity by way of returns to investors versus returns from investment in non-productive speculative activity.

To ask the Minister for Finance the way planned changes to the capital gains tax regime for 2014 in terms of entrepreneurial relief are to be monitored over the course of 2014 in terms of their effectiveness.

Reply

The Minister for Finance (Michael Noonan):

I propose to reply to questions 135 and 137 together as they relate to the same matter.

The CGT entrepreneurial relief provided for by Finance (No 2) Bill 2013 will apply to active entrepreneurs who invest in new businesses, engaged in relevant trading activities (as defined), carried on by them personally or through qualifying companies controlled by them in which they are full-time working directors. The relief is intended to apply to productive enterprises that will generate employment and will not therefore apply to passive investors or to investments in passive activities.

The benefit of the proposed entrepreneur relief will arise on the ultimate disposal by qualifying entrepreneurs of the chargeable business assets in which they invest. These chargeable business assets must be held for a minimum of three years and the other applicable conditions must be satisfied to qualify for relief.

Taxpayers are required to include in their tax returns details of chargeable assets acquired each year. However, it will only be on a future disposal that entitlement to the relief can be determined. Accordingly, it will be 2017 at the earliest, before any tax relief under this provision will arise. From 2017, the relief may be claimed by qualifying entrepreneurs in their tax returns. These returns will require appropriate details in relation to the relief so that statistical information will be available to establish the extent to which the relief is availed of.

Improving the Employment and Investment Incentive Scheme – 5th November 2013

To ask the Minister for Finance his views on whether that the EIIS scheme is too complicated and if he will provide an update on the changes that are planned to improve take-up of this scheme in 2014 and the way their effectiveness is to be measured throughout the year.

Reply

The Minister for Finance (Michael Noonan):

The Employment and Investment Incentive (EII) is a tax incentive which provides income tax relief for investment in certain corporate trades. Relief is initially available to an individual at 30%, with a further 11% tax relief available where it has been proven that employment levels have increased at the company at the end of the holding period. The EII commenced on 25 November 2011. Prior to this the Business Expansion Scheme (BES) was in operation.

As part of Budget 2013 I announced a 10 point tax reform plan to help small business. One of the measures in this plan was the extension of the EII from its current expiration date of the end of 2013 to the end of 2020 in order to provide certainty to investors and companies.

In addition to the extension of the scheme, I also announced the inclusion of hotels, guest houses and self-catering accommodation in the EII, subject to certain conditions.

In the recent Budget I also announced that the EII will be removed from the high earners’ restriction for a period of three years in the hope that it will stimulate further investment in SMEs.

I do not consider the scheme to be too complicated. When the EII was introduced in 2011, it greatly simplified the application process when compared to the process that had been in place under the BES.

Making the Employment and Investment Incentive more competitive – 5th November 2013

To ask the Minister for Finance if he has considered adapting the EIIS scheme to make it more competitive similar to the EIS scheme in the UK.

Reply

The Minister for Finance (Michael Noonan):

According to the UK Revenue website, the UK Enterprise Investment Scheme (EIS) provides 30% relief for investment in qualifying companies where shares are held for a minimum of three years.

The Employment and Investment Incentive (EII) is broadly similar to the EIS. However, the level of tax relief available is more generous than the UK scheme.

The EII provides tax relief of 30% on investments made in small and certain medium-sized enterprises, including early stage enterprises, with the possibility of a further 11% tax relief at the end of the three year holding period. This additional 11% relief is not subject to the high earners’ restriction.

In addition, as part of the recent Budget, I announced that the initial 30% relief will be removed from the high earners’ restriction for a period of three years in order to encourage further investment in SMEs.

The incentive was previously known as the Business Expansion Scheme and was significantly amended in 2011 to target limited Exchequer resources towards job creation. As part of these changes, access to the incentive was made available to the majority of small and medium-sized companies.

Amount raised in USC in 2014 – 22nd October 2013

To ask the Minister for Finance the amount of revenue he anticipates the universal social charge will bring in in 2014; and if he will provide a breakdown of this figure per income earner and tax band.

Reply

The Minister for Finance (Michael Noonan):

The Universal Social Charge (USC) is collected by the Revenue Commissioners as a component of Income Tax. In Budget 2014, it is forecast that Income Tax receipts of €17,045 million will be collected in 2014 and it is expected that the yield from the USC will account for just over €4 billion of that overall forecast.

I am informed by the Revenue Commissioners, that while the necessary detailed basic data is not compiled in such a manner as would enable an income distribution of expected receipts to be provided, a modelled distribution of the estimated amount of USC, due for the tax year 2014, by reference to projected incomes for 2014, has been compiled and is set out in the table below.

I am also informed by the Revenue Commissioners that the figure for total USC provided in the table is a projected estimate of the total USC liability in respect of the tax year 2014 and is not intended to correspond to the cash receipts expected to be collected in the corresponding calendar year. Figures of cash receipts are subject to timing arrangements and can also be distorted by cash flow adjustments.

The figures are estimates from the Revenue tax forecasting model using actual data for the year 2011, adjusted as necessary for estimated income and employment trends in the interim.

These are, therefore, provisional and likely to be revised.

It should be noted that the numbers of income earners shown in the table counts a married couple who has elected or has been deemed to have elected for joint assessment as one tax unit, although USC is an individualised charge and as such the estimated liability is calculated on the basis of individual incomes. Income range values commence in the table at €10,036, which is the point of income at which liability to USC commences.

It should be noted that Gross Income is as defined in the Revenue Statistical Report 2011.

To see table, click here.

As previously indicated the necessary detailed basic data is not compiled in such a manner to enable expected receipts to be broken down by tax band.  I trust that the data broken down by income bands as shown will be of assistance to the Deputy.

Exemptions to capital gains tax for entrepreneurs – 8th October 2013

To ask the Minister for Finance if he has considered introducing an exemption to capital gains tax along the lines of the ‘entrepreneurs’ relief’ currently in place in the UK (details supplied).

Details: In 2010 the UK introduced an exemption to Capital Gains Tax known as ‘Entrepreneurs’ Relief.’ This provides a 10 million pound lifetime capital gains allowance that will be taxed at only 10 per cent, with some simple eligibility limitations to exclusively target entrepreneurs eg. you must actually have worked in the company and own at least 5 per cent of it.

Reply

The Minister for Finance (Michael Noonan):

Preparations for Budget 2014 and the consequent Finance Bill are ongoing. It would not be appropriate for me to comment on what changes, if any, may be introduced in capital gains tax or other taxes. I will, however, bear in mind the Deputy’s suggestion in my preparations for the Budget.

Property Tax raised by each city and county council – 1st October 2013

To ask the Minister for Finance the amount of property tax that has been raised this year and the anticipated amount to be raised in a full year, broken down by electoral constituency and by local authority.

Reply

The Minister for Finance (Michael Noonan):

I am advised by the Revenue Commissioners that compliance data for Local Property Tax (LPT) are only available broken down by city and county councils nationally and the most up to date figures available are published on the Revenue website at http://www.revenue.ie/en/tax/lpt/lpt-preliminary-data.pdf. More up-to-date data will be published in due course.

The Commissioners further advise it is not possible to state at this point the precise amount of LPT which is expected to be collected for 2013 or 2014 for each local authority. There are a numbers of factors which could affect that figure, including the continuation of the very strong level of voluntary compliance that was achieved in 2013, the impact of Revenue’s national compliance programme to follow-up on those liable persons who have failed to meet their LPT obligations for 2013 and the on-going level of deferrals of LPT. However, since the LPT charge for 2013 was for a half year, a reasonable estimate at this stage in respect of 2014 would be to double the published figures for each local authority.

9% VAT rate for tourism related services – 1st October 2013

To ask the Minister for Finance if calculations of the cost of the 9% VAT reduction to the Exchequer at circa €350 million each year takes in to account increased activity in the relevant sectors and the financial benefit to the economy in that same year, including not just money spent in these areas but revenue generated and also jobs created and the exchequer benefit of this.

Reply

The Minister for Finance (Michael Noonan):

The 9% reduced VAT rate for tourism related services was introduced in July 2011 as part of the Government Jobs Initiative. The measure was designed to boost tourism and create additional jobs in that sector. The measure was estimated to cost €120 million in 2011, €350 million in 2012, €350 million in 2013, and €60 million in 2014. The cost of the VAT reduction was offset by the 0.6% levy on pension fund, a measure which is due to expire next year. As the rate was introduced as a temporary, targeted measure, failure to revert the 9% rate to 13.5% would give rise to a significant annual Budget shortfall that would have to be found elsewhere.

After a sharp fall in activity in the years to 2011, some of the sectors impacted by the reduced VAT measure have experienced growth in employment. This is down to a number of factors, including the overall stabilisation in domestic demand over the period. The attractiveness of Ireland as a tourist destination has also been positively impacted by the improvement in price competitiveness due to inflation at or below the euro area average for the last five and a half years. It should be stressed that all factors, including the economic impact and the cost of the measure, are taken into consideration when analysing possible tax changes.

Any proposal to maintain reduce the VAT rate from the 13.5% rate will be considered in the context of the Budget.

USC rates for those over 70 – 1st October 2013

To ask the Minister for Finance his views on a matter regarding Universal Social Charge rates for those over 70 years of age (details supplied).

Details: For those over 70 years of age on an aggregated income of €60,000 or less, USC rates are 2% on the first €10,036 and 4% on the balance but for those on an aggregated income of over €60,000, USC rates are 2% on the first €10,036, 4% on the next €5,980 and 7% on the balance. This means that if income is €60,0001, an additional €1,319 is payable. I would suggest that the 7% rate should apply only to that portion of the income over €60,000.

Reply

The Minister for Finance (Michael Noonan):

As the Deputy will be aware, when the USC was introduced in Budget 2011, those aged 70 years and over were not liable to the top rates of charge. The maximum rate of charge for such individuals was 4% irrespective of the level of their income, unless they had self-employment income in excess of €100,000 for a tax year, in which case the maximum rate was increased to 7% on the amount of income in excess of €100,000. However, given the current budgetary constraints and the need to raise revenue, the Government decided in Budget 2013 that the reduced rates of USC for those age 70 years and over, and medical card holders, with an income in excess of €60,000, would be discontinued from 1 January 2013.

Although the introduction of a step effect is never ideal, it is necessary to achieve the desired yield. Similar step effects can also be seen for the threshold at which the 2% rate of USC applies.

It is important to point out that payments from the Department of Social Protection such as the State Pension are exempt from the USC. Furthermore, such payments will not be taken in to account in determining if an individual has exceeded the €60,000 threshold.

This measure ensures equity between all citizens with incomes in excess of €60,000.

Voice recording legislation for the financial services sector – 24th September 2013

To ask the Minister for Finance if he has considered a proposal (details supplied) regarding voice recording legislation in the financial services sector; and if he will make a statement on the matter.

Details: In November 2011 the Financial Standards Authority in the UK enacted legislation stating:

“with effect from 14th November 2011 it will be compulsory for all UK regulated financial services firms to record all “relevant conversations” whether in the form of landline or mobile/cell telephone calls, or electronic communications such as e mail, SMS and instant messaging”

Irish law does ensure the recording of certain fixed/landline calls but holds no such requirement in relation to mobile, as you can imagine, this presents a very easy method for individuals to circumvent the regulations. The reason UK legislators have brought this successfully to force had been around a number of insider-trading cases, where traders & brokers simply made calls from their mobile phones knowing they couldn’t be monitored or caught.

Considering the number of high profile failures and issues we have had on the financial and banking front, I would have thought that a simple regulatory practice such as this would be on top of the list for the Government and regulators.

Reply

The Minister for Finance (Michael Noonan):

The issue of telephone recording by financial service providers, including its application to mobile telephony, is dealt with through EU legislation. Under the current MiFID (‘MiFID I’), there is Member State discretion in relation to imposing a mandatory obligation on investment firms to record telephone conversations relating to client orders. Under the transposing MiFID Regulations (Statutory Instrument 663 of 2007) the Central Bank may, following consultation, ‘impose additional obligations on investment firms relating to the recording of telephone conversations or electronic communications involving client orders’. 

The Deputy should be aware of current EU legislative developments in relation to this issue, as, without prejudice to the current powers of the Central Bank, these will determine the shape of any future legislation in this area. In this regard, the issue of telephone recordings featured in the discussions under the Irish Presidency on the Markets in Financial Instruments Directive (‘MiFID II’) and the Market Abuse Regulation (MAR).

The Irish Presidency secured a Council agreement in MiFID II and an agreement between Council and European Parliament in relation to the MAR. The provisions in relation to telephone recording by investment firms and other financial services providers were strengthened in both files. In relation to MiFID II, the Council text obliges investment firms to record telephone conversations and electronic communications relating to client orders and when dealing on own account, and to take all reasonable steps to prevent an employee or contractor from using privately-owned equipment which the investment firm is unable to record or copy. In relation to market abuse, which I understand is both the main focus of the Deputy’s question and primary driver of the UK legislative changes referred to, the MAR agreement ensures that the competent authorities can require the handing over of existing recordings of telephone conversations, electronic communications or other data traffic records held by investment firms, credit institutions or other financial institutions.

The transposition or implementation date for the MAR has not yet been determined as a technical alignment MiFID II will be required when the negotiations between the Council and the European Parliament have concluded on that file. At that point, there will be certainty as to the obligations and discretions of Member States on this issue.

Following the adoption of both MiFID II and MAR my Department and the Central Bank, as the competent authority, will be in a position to best determine the precise legislative amendments that are required, or where Member State discretion is allowed for, are most appropriate.

Homeowners in negative equity unable to rent elsewhere – 24th September 2013

To ask the Minister for Finance his plans to alter the current state of affairs whereby those homeowners whose property is in negative equity find it difficult to rent elsewhere (details supplied).

Details: Those whose property is in negative equity and wish to rent out this property and live in rental accommodation elsewhere (in order to accommodate a growing family or find employment in another locality). These people face NPPR charges, no longer benefit from mortgage interest relief and can only benefit from a 75% deduction on rental income from their residential property.

Reply

The Minister for Finance (Michael Noonan):

The position is that mortgage interest relief is available in respect of interest paid on qualifying loans taken out on or after 1 January 2004 and on or before 31 December 2012 and such relief applies up to and including the tax year 2017.

As you may be aware, mortgage interest relief is available, at varying rates and subject to certain ceilings, in respect of interest paid by an individual on a loan used by that individual for the purchase, repair, development or improvement of his/her sole or main residence.

Finance Act 2009 introduced a cap of 75% on the amount of interest on loans used to purchase, improve or repair rented residential property, that can be deducted in computing rental profit for tax purposes. The restriction applies to interest accruing on or after 7 April 2009. It does not apply to loans in respect of rented commercial property.

I am advised by the Revenue Commissioners that rental profit for tax purposes is the gross rental income less allowable expenses incurred in earning that rent. In computing the amount of rental profit, only those deductions that are specified in section 97(2) of the Taxes Consolidation Act 1997 are allowable as deductions against the gross rental income. The main deductible expenses are:

– any rent payable by the landlord in the case of a sub-lease;

–  the cost to the landlord of any goods provided or services rendered to a tenant;

– the cost of maintenance, repairs, insurance and management of the property;

– the interest paid on borrowed money used to purchase, improve or repair the property (which, in the case of residential property, is restricted to 75% of the interest and is subject to compliance with PRTB registration requirements for all tenancies that existed in relation to the property in the relevant year); and

– payment of local authority rates.

In addition, wear and tear capital allowances are available in respect of the capital expenditure incurred on fixtures and fittings provided by a landlord for the purposes of furnishing rented residential accommodation. These allowances are granted at the rate of 12.5% per annum of the actual cost of the fixtures and fittings over a period of 8 years.

The NPPR charge would be a matter for the Minister for the Environment, Community and Local Government.

It is the standard practice for the Minister for Finance to review all tax expenditures and reliefs in the run up to annual Budget. It is also 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.

A freephone number for Revenue – 18th September 2013

To ask the Minister for Finance if he is considering introducing a freephone number to contact Revenue in view of the fact that mobile devices cannot avail of the current freephone number and so many households no longer have landlines.

Reply

The Minister for Finance (Michael Noonan):

I am advised by the Revenue Commissioners that they provide freephone contact numbers for certain specific services.  For example, Revenue operates a Confidential Freephone line (1800 295 295) for reporting information regarding the smuggling of drugs and the smuggling or illicit sale of tobacco, alcohol or road fuel. The annual Revenue Budget helpline (1800 314 414) is also a freephone number.

I am further advised that the Revenue website provides comprehensive lists of contact numbers for various offices around the country including details of low cost telephone numbers (1890 LoCall) for their most popular services. Where these contact details are presented, the Revenue website also clearly indicates that rates charged for the use of 1890 (LoCall) numbers may vary among different service providers and recommends that customers only ring 1890 numbers using a landline as calls made using mobile phones may be expensive.

The Revenue Commissioners also advise that they are continually seeking ways to reduce telephone call costs for customers contacting them and in this context they are currently exploring alternative telephone service options.

Meeting with the Irish Society of Chartered Physiotherapists – 17th July 2013

To ask the Minister for Finance his plans to meet representatives of the Irish society of Chartered Physiotherapists to discuss amending Section 469 of the Taxes Consolidation Act 1997.

Reply

The Minister for Finance (Michael Noonan):

Income tax relief in respect of health expenses is allowable in accordance with section 469 of the Taxes Consolidation Act 1997. This legislation provides for tax relief for health expenses incurred in the provision of health care. Health care is defined for the purposes of that legislation as the prevention, diagnosis, alleviation or treatment of an ailment, injury, infirmity, defect or disability and includes care received by a woman in respect of pregnancy. Health care does not include routine ophthalmic or dental treatment.

The section provides that tax relief must be either for the costs of the services of a practitioner, defined as a person registered on the register established under the Medical Practitioners Act 2007, or diagnostic procedures carried out on the advice of a practitioner, which includes “physiotherapy or similar treatment prescribed by a practitioner”. Eligibility for tax relief is limited to expenses relating to treatment considered necessary and appropriate by a qualified practitioner.

Section 469 of the Taxes Consolidation Act 1997 consolidated all previous legislation pertaining to relief for health expenses, in particular section 12 of Finance Act 1967 which introduced the relief in the first instance. That section also required that physiotherapy or similar treatment be prescribed by a practitioner before qualifying for relief. This requirement has, therefore, been part of the qualifying criteria since the introduction of relief for health expenses and I am advised by the Revenue Commissioners that guidance and instructions to staff have remained unchanged in this regard.

This issue was raised during the debates in the Seanad on Finance Bill 2013, during which I agreed to re-examine the matter during the course of this year.

My officials are currently in the process of examining the issue and have requested additional information from the Irish Society of Chartered Physiotherapists to assist them in the examination of the matter. To date, the additional information sought has not been provided.
Furthermore, I am advised that the Irish Society of Chartered Physiotherapists recently met with the Minister for Health, Dr. James Reilly T.D., on this issue and I am currently awaiting his views on the issue.

When the analysis is completed and the findings are presented to me, I will make any necessary decisions in the context of Finance (No. 2) Bill 2013.

Universal Social Charge (Pension Deductions) – 21st June 2013

To ask the Minister for Finance if it is possible that some persons will end up paying the universal social charge on their pension twice (details supplied)..

“I am currently payying into a pension and I am charged USC on that amount (but not PAYE). My understanding is when I become in receipt of that pension I will also need to pay USC on my pension. Surely the fact that I will end up paying USC on my pension twice is unconstitutional? I would appreciate a bit of clarity on the matter as I have spoken with my payroll department and revenue and both agree that the double taxation seems a bit strange.”

Reply

The Minister for Finance (Michael Noonan):

The position is that the Universal Social Charge (USC) was introduced from 1 January 2011 to replace the Income Levy and the Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and raise revenue to reduce the budget deficit.

The USC is an annual tax payable on an individual’s total income in a year, subject to a number of exemptions and reliefs. In particular, an individual is not liable to pay USC where his or her total income in the tax year does not exceed €10,036. In addition, payments from the Department of Social Protection such as the State Pension are exempt from the USC and such payments will not be taken in to account in determining if an individual has exceeded the €10,036 threshold.

In addition, individuals in receipt of a full medical card or aged 70 and over, provided their total income does not exceed €60,000, are not liable to the top rate of charge.

In computing the USC payable in a year, contributions to a pension fund are not taken into account to reduce the amount of USC payable as would be the case with income tax. As such, the USC payable by an employee is charged on the person’s gross income.

Pensions other than state pensions, made by any state or territory, form part of an individual’s income for USC purposes.

Offsetting the Local Property Tax against Home Repairs – 11th June 2013

To ask the Minister for Finance if he is considering offsetting the liability of the local property tax against the cost of home repairs (details supplied).

“The tax will lead to properties falling into disrepair as people who can’t afford to pay the tax will not be able to do necessary maintenance as they struggle to find money for the tax. If we have to have this unfair tax there should be some sort of system where by you can offset half of your liability against repairs. The repairs would be carried out by registered and tax compliant trades men thus creating employment. The revenue would still get some income by getting half, or what ever percentage was not used in repairs and the property stock of the state would be maintained to a higher standard as people would be more inclined to pay for the upkeep of their houses then to pay the government this unfair levy.”

Reply

The Minister for Finance (Michael Noonan):

The Government decided a universal liability to the LPT should apply to all owners of residential property with limited exemptions. Limiting the exemptions available allows the rate to be kept low for those liable persons who do not qualify for an exemption. There are provisions permitting deferral of the tax in certain circumstances, targeted at cases of need where there is genuine inability to pay the tax.

There is no provision for offsetting liability against home repairs, nor is it proposed to introduce such a relief.

Making Home Maintenance and Repairs Tax Deductible – 23rd May 2013

To ask the Minister for Finance if he is considering making the cost of home maintenance and repairs tax deductible, as is done in Sweden, in order to eliminate the growing black economy.

Reply

The Minister for Finance (Michael Noonan):

It is a longstanding practice of the Minister for Finance not to comment on any tax matters that might be the subject of Budget decisions. However, I will consider the Deputy’s proposal in the context of the forthcoming Budget and Finance Bill.

In addition, I would draw the Deputy’s attention to existing grants available from the Sustainable Energy Authority of Ireland (SEAI) for energy efficiency works completed in homes. These grants are available where approved contractors are employed to complete the relevant works.

The Way Student Residences will be valued for the Local Property Tax – 16 April 2016

To ask the Minister for Finance the way student residences are to be valued for the local property tax.

Reply

The Minister for Finance (Michael Noonan):

The Finance (Local Property Tax) Act 2012 (as amended) defines the chargeable value of a residential property as “the price that the unencumbered fee simple of the property might be expected to fetch on a sale on the open market were the property to be sold on the valuation date in a particular year in a manner that would secure the best possible price for the property and with the benefit of any access to the property that would have existed prior to the sale.” The open market valuation applies to all types of residential property and student residences are no different.

As Local Property Tax (LPT) is a self-assessed tax, the liable person for a particular property is obliged to determine the market value of the property on 1 May 2013. If there are particular characteristics of the property relating to it being a student residence that would be expected to positively or negatively affect its market value, these should be taken into account in establishing the market value of the property.

I am informed by the Revenue Commissioners that, because of the particular ownership arrangements that were put in place to facilitate investment in some of the properties that were constructed under the student accommodation tax incentive scheme, a person may not own an individual residential unit but may instead own a share in all of the residential units in a particular development. This type of ‘co-ownership’ arrangement does not have any effect on valuation for LPT purposes and each residential unit should be valued separately. However, only one person will be designated by the Revenue Commissioners to submit the LPT Return form and to pay the tax.

In cases where the student residences are owned by a college or other educational institution, it is the college that is responsible for valuing the residences and paying the LPT. Again, this has no effect on valuation.

Exempting Student Residences from the Local Property Tax – 16 April 2013

To ask the Minister for Finance if he is considering an exemption for student residences from the local property tax.

Reply

The Minister for Finance (Michael Noonan):

The Finance (Local Property Tax) Act 2012 sets out how the tax is to be administered and provides for the collection of Local Property Tax (LPT).

Student residences will be subject to LPT unless the premises qualify for an exemption or relief for any other reason. I have no plans to introduce a specific exemption for student residences.

Extending the Local Property Tax Deadline – 16 April 2013

To ask the Minister for Finance if he is considering extending the local property tax deadline beyond the 7 May 2013 for written submissions and the 28 May 2013 for electronic submissions for persons who receive their local property tax return form late from the revenue.

Reply

The Minister for Finance (Michael Noonan):

The Finance (Local Property Tax) Act 2012 (as amended) sets out how the tax is to be administered and provides that a liability for Local Property Tax (LPT) will arise where a person owns a residential property on the liability date which will be 1 May 2013 for the year 2013.

A key aspect of the work undertaken by Revenue was the development of a comprehensive Register of residential properties in the State. This Register is being used to issue correspondence to property owners and work is still in progress to ensure, as far as possible, that all property owners will be contacted. On 11 March this year, Revenue commenced the issue of LPT Returns to owners of 1.66 million properties. I am informed by the Revenue Commissioners that by 10 April, LPT Returns had issued for about 96% of residential properties on the Register.

I am further advised by the Commissioners that LPT is a self-assessed tax and therefore liable persons are obliged to calculate the tax due based on their assessment of the market value of their property, file their Return by the relevant deadline and pay the tax due. This obligation applies to all owners whether or not they receive a Return from Revenue. Where an owner is not on Revenue’s Register a Return will not issue. However, they are still obliged to complete and file a Return by the relevant deadline (7 May for paper filers and 28 May for electronic filers).

As part of its media campaign Revenue will advise property owners this week that, if they have not yet received a Return from Revenue, they should contact Revenue’s LPT Helpline on 1890 200 255 or access the online system on Revenue’s website to file their LPT Return. I have been advised by the Commissioners that even where a property owner has not received a Property ID and PIN code from Revenue, they will still be able to file their Return online.

As the Deputy is aware, LPT is payable on 1 July, and Revenue has put in place a wide range of payment options to enable liable persons to select the one that best suits their circumstances, including payment by instalments in various ways. The logistics of ensuring that paper LPT returns are processed in time to enable the payment arrangements selected by the liable person to be put in place in time for the payment date are significant, and accordingly it is necessary to maintain the filing dates of 7 May for paper filers. The filing date of 28 May for online filers is the defacto extension.

The LPT paper return is very short – just two pages. The on-line system is easier than paper, with built in prompts and calculators. In either case it will be possible for liable persons to quickly complete and submit a return.

I can confirm that I have no plans to extend the deadline for submitting Local Property Tax returns beyond the dates mentioned.

A Revenue Email for Local Property Tax Queries – 16 April 2013

To ask the Minister for Finance if he is considering putting in place a revenue email address to cater for email queries regarding local property tax.

Reply

The Minister for Finance (Michael Noonan):

I am advised by the Revenue Commissioners that customers may email their queries to the LPT Branch at the following email address: lpt@revenue.ie. This email address was recently published on the Revenue website.

Extending the reduced VAT rate for certain goods and services beyond 2013 – 16 April 2013

To ask the Minister for Finance if is he considering extending the reduced VAT rate for certain goods and services beyond the 31 of December 2013.

Reply

The Minister for Finance (Michael Noonan):

Any proposals to maintain the 9% rate into 2014 will be considered in the context of Budget 2014.

Profits and Repatriated Profits of Foreign Retailers – 26th March 2013

To ask the Minister for Finance if it is possible to ascertain the profits earned by foreign retailers operating here; and if he will distinguish between the element that remains here and that which is repatriated abroad.

Reply

The Minister for Finance (Michael Noonan):

I am informed by the Revenue Commissioners that the relevant information available is the total amount of gross trading profits returned by all companies trading in the retail sector and referenced under NACE Codes 4711 to 4799 and also code 4532. This includes retail sales of motor vehicles. The available information is derived from corporation tax returns for the year 2010, the latest year for which the necessary detailed information is available.

The gross trading profits returned by companies with these NACE codes was €2.4 billion for 2010.

The sector identifier used on the tax records is based on the 4 digit “NACE code (Rev. 2)” which is an internationally recognised economic activity code system. 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. NACE code classifications on tax records are compiled by reference to the primary area of economic activity reported by individual and corporate taxpayers on their own behalf and the taxes collected are allocated to those codes without reference to the precise economic activity which generated them. While the accuracy of the NACE codes on tax records is sufficient to underpin broad sector-based analyses there will undoubtedly be some inaccuracies at individual level. This should be borne in mind when considering the information provided. The sector identified for this reply represents the closest equivalents in the NACE code system to the sector mentioned in the question.

I am also informed by the Revenue Commissioners that it is not currently possible to separately identify from their records the amount of these profits that relate to foreign owned companies nor to identify the amount of these profits that are repatriated abroad.

The CSO has recently broken down economic activity by foreign-owned multinational sectors and indigenous – http://www.cso.ie/en/media/csoie/releasespublications/documents/economy/2011/fmeos20062011.pdf.

The threshold for inclusion in the foreign-owned category is if 85 per cent or more of the turnover for the sector is accounted for by foreign-owned multinationals. For Ireland this includes software, chemicals and some other sectors, but not retail.

On the issue of profits, it is assumed that foreign-owned retailers generally repatriate profits abroad. However in net terms some profits will remain in Ireland, to the extent that shareholders of these firms are Irish residents.

Household Income and the Property Tax – 13th March 2013

To ask the Minister for Finance if he is considering other ways of taking into account household income when calculating property tax.

For Minister for Finance, Michael Noonan’s reply please click here.

Making the Property Tax deductible against rental income- 13th March 2013

Reply

Minister for Finance ( Michael Noonan):

As I stated in my reply to a parliamentary question from Deputy Grealish yesterday (12 March 2013), the Inter-departmental group, chaired by Dr Don Thornhill to consider the design of a property tax (the “Thornhill Group”), recommended that the Local Property Tax (LPT) paid in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates. However, the Group recognised the considerable pressures on the public finances and the need to bridge the gap between expenditure and revenue. For this reason, the Group suggested that consideration be given to phasing in deductibility over a period of years. The Group also considered that it is for Government, having regard to the prevailing budgetary situation, to decide on the time span for phasing-in deductibility and on what percentage of LPT to allow as a deduction from gross rents for tax purposes.

There is no provision in the current legislation for such deductions. While it is the intention of the Government to introduce such a provision on a phased basis, neither the manner in which this will happen or the timing have yet been decided.

The Impact of the Property Tax on the Market- 13 March 2013

To ask the Minister for Finance if his Department has calculated the potential effect the property tax will have on the property market.

Reply

Minister for Finance ( Michael Noonan):

Work carried out by researchers in the Economic and Social Research Institute (ESRI) before the introduction of the Local Property Tax concluded that a property tax at a rate of 0.4% would result in a small increase in the user cost of housing, thereby putting some downward pressure on housing demand. The Local Property Tax rate of 0.18% (for houses up to €1m in value) is less than half the rate used in the ESRI analysis, and, as such, the impact on housing demand is likely to be minimal.

In addition, the property rental market is a competitive market, with many suppliers and renters. Upstream costs such as the Local Property Tax are likely to be passed through in the rental market and as such will not create a disincentive to purchase houses relative to renting.

Excise returns by category (Jan 2011 – Feb 2013) – 12th March 2013

To ask the Minister for Finance if he will provide a breakdown in excise returns by category and by month from January 2011 to February 2013.

Reply

The Minister for Finance ( Michael Noonan):

The breakdown in excise returns by category and by month from January 2011 to February 2013 can be seen here

Tackling the illegal cigarette trading business – 19th February 2013

To ask the Minister for Finance his plans to tackle the illegal cigarette trading business, in particular the open selling of cigarettes in pedestrianised areas of the city centre.

Reply

The Minister for Finance ( Michael Noonan):

I am informed by the Revenue Commissioners that combatting the illegal tobacco trade is, and will continue to be, a very high priority for them. The Commissioners’ “Strategy on Combating the Illicit Tobacco Trade (2011-2013)”, which is published on the Revenue website (www.revenue.ie), includes a wide range of measures designed to target those engaged in the supply and sale of illicit tobacco products and very significant resources will be devoted to this issue in 2013.

This multi-faceted strategy includes:
· the ongoing analysis of the nature and extent of the problem,
· developing and sharing intelligence on a national, EU and international basis,
· the ongoing review of operational policies by a high-level group within Revenue that is chaired by one of the Commissioners personally,
· the development of analytics and detection technologies, and
· the optimum deployment of resources at both point of importation and within the country to intercept and seize contraband products and to prosecute those involved.

As regards Dublin city centre, Revenue actively monitors the illegal tobacco trade and has identified certain areas as particular black spots for the sale of illicit tobacco products. Revenue is currently engaged in an ongoing range of measures targeting those involved. Officers routinely conduct high visibility patrols aimed at disrupting the sale and supply of tobacco products in areas in question. In November 2012, Revenue increased the number of patrols in the areas concerned. Revenue’s presence in these areas has also been bolstered by the deployment of both the tobacco dog unit and marked vehicles during certain targeted operations. In 2012, 5 cases were referred for prosecution in relation to illegal trading in tobacco products in the city centre. Revenue expects a number of further prosecutions for such cases to come before the courts in 2013. Moreover, in tandem with ongoing high visibility patrols of the area, Revenue personnel are actively engaged in covert surveillance and test purchasing for the purpose of gathering intelligence with a view to identifying and prosecuting the suppliers of illicit tobacco products in the areas concerned.

At a national level, interception of illicit tobacco products is achieved through a combination of risk analysis, profiling, intelligence and the screening of cargo, vehicles, baggage and postal packages. Revenue officers also target the illicit trade at the post-importation level by carrying out intelligence-based operations and random checks at retail outlets, markets and private and commercial premises.

Revenue works in close cooperation with other relevant agencies, both nationally and internationally. There is extensive cooperation between Revenue and An Garda Síochána. The relevant agencies in the State and in Northern Ireland work closely together, through a cross-border group on tobacco enforcement, to combat the organized crime groups that are responsible for a large proportion of the illegal tobacco market. In addition, cooperation takes place with other Revenue administrations and with the European Anti-Fraud Office, OLAF, in the ongoing efforts to tackle the illicit trade in tobacco products at international level.

Considerable success has been achieved by Revenue in combating the illegal trade. Details of the quantities of cigarettes seized each year since 2005 are set out in the following table.

Year -Quantity of cigarettes seized (millions)

2005 – 51.3

2006 – 52.3

2007 – 74.5

2008 – 135.2

2009 – 218.5

2010 – 178.4

2011 – 109.1

2012  – 95.6

The quantity of cigarettes seized in a given year can be influenced significantly by the occurrence of a particularly large seizure or seizures. For example, the quantity of cigarettes seized in 2009 includes one exceptional seizure of some 120 million cigarettes that were uncovered on a vessel at Greenore, Co. Louth.

Moreover, the Revenue Commissioners have had considerable success in detecting and prosecuting persons involved in the illicit trade. For example, in 2012, there were 57 convictions for tobacco smuggling, resulting in 26 custodial sentences being handed down by the Courts (of which 7 were suspended) as well as fines totalling €93,550. In addition, there were a further 75 convictions connected with the sale or keeping for sale of unstamped tobacco products, resulting in 21 custodial sentences (14 of which were suspended) as well as fines of €153,050.

Revenue is committed to ensuring that the highest possible levels of seizures of illicit products are achieved on an ongoing basis, and that those responsible for the smuggling, supply or selling of illicit products are prosecuted, and will ensure that this work continues to have the high priority that has been accorded to it to date.

Amount to be raised from increase in excise on bottles of wine – 19th February 2013

To ask the Minister for Finance the amount that is expected to be raised from the increase in excise duty on a bottle of wine introduced in Budget 2013.

Reply

The Minister for Finance ( Michael Noonan):

The €1 increase on excise duty on a bottle of wine announced in Budget 2013 is expected to yield €60 million.

Nuclear Weapons (Prohibitions of Investments) Bill 2012 – 7th February 2013

To ask the Minister for Finance if he will consider transporting elements of the Nuclear Weapons (Prohibitions of Investments) Bill 2012 into one of the forthcoming Finance Acts thereby prohibiting investment of public moneys in companies that are involved in the manufacture of nuclear weapons, their components or delivery systems and compelling the National Pension Reserve Fund to divest circa €10 million of public money that the fund currently has invested in such companies.

Reply

The Minister for Finance ( Michael Noonan):

As the Deputy will be aware, the Government announced the establishment of the Strategic Investment Fund (SIF) in September 2011. The SIF will channel commercial investment from the National Pensions Reserve Fund (NPRF) towards productive investment in the Irish economy, following appropriate changes to the legislation under which the NPRF operates. As well as money from the NPRF, the SIF will seek matching commercial investment from private investors and target investment in areas of strategic significance to the future of the Irish economy.

In the light of these proposed changes, I would not intend at this time to bring forward proposals for legislation to amend the investment mandate of the NPRF in the way envisaged by the Deputy.

Property tax paid in respect of rental property deductible for income tax purposes?  –  6th February 2013

To ask the Minister for Finance further to Parliamentary Question No. 86 of 16 January 2013, if he intends to make property tax paid in respect of a rented property deductible for income or corporate tax purposes; if this provision will be introduced on a phased basis; and the way that such phasing will work..

Reply

The Minister for Finance ( Michael Noonan):

The Thornhill Group, the interdepartmental group chaired by Dr Don Thornhill to consider the design of a property tax, recommended that “at least a portion” of the Local Property Tax paid in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates.

This is not provided for in the Finance (Local Property Tax) Act 2012 but it is the intention of the Government to introduce deductibility of LPT on a phased basis. The manner or timeframe in which this will happen has not been decided. Such change would be provided for by way of primary legislation.

Employment practices in the civil service – 6th February 2013

To ask the Minister for Finance if there are any retired public sector workers from his Department, or any other part of the public sector, currently on his Department’s payroll, for example, for sitting on a committee or preparing a report, but not exclusively these two areas; the number on the payroll; the cost to his Department; the services being delivered for this money; and the way that the positions were originally advertised.

Reply

The Minister for Finance ( Michael Noonan):

Information regarding the number of retired public servants who have been re-hired is detailed in the Appropriation Accounts. The Appropriation Accounts are available online at www.audgen.gov.ie. One former staff member is providing contractual services to this Department and is paid at a per diem rate.

I am advised by the Revenue Commissioners that having examined their Personnel records, Declarations received following the implementation of the Public Service Pension Related Deduction, and Declarations under Section 51 (Duty to make declarations, etc.) of the Public Service Pensions (Single Scheme and Other Provisions) Act 2012, that they have one such case, a retired member of the Defence Force is currently employed by Revenue, he is in receipt of a Defence Forces Pension, they have no record of any other such case.

USC rates for the self-employed – 16th January 2013

To ask the Minister for Finance the reason self-employed persons pay a higher rate of universal social charge on their earnings.

Reply

The Minister for Finance ( Michael Noonan):

The USC was introduced from 1 January 2011 and replaced the Income and Health Levies. The marginal rate for each of these levies was 6% and 5%, respectively, or 11% in total. The marginal rate for the USC was 7%. Taken in isolation the introduction of the USC, therefore, would have had the effect of reducing by 4 percentage points the top marginal tax rates for both PAYE and self-employed income earners paying at those rates. At the same time, the PRSI ceiling for PAYE taxpayers, which then stood at €75,036, was abolished which had the result of increasing by 4 percentage points the top marginal tax rate for PAYE taxpayers. So the two changes – the introduction of the USC and the abolition of the PRSI ceiling-taken together meant that the marginal tax rate for PAYE taxpayers remained unchanged.

In the case of the self-employed, there was no PRSI ceiling as the PRSI income ceiling for the self-employed had been abolished in Budget 2001. Therefore, without further change, the introduction of the USC would have reduced the top marginal rate for these taxpayers by 4 percentage points and would have had the unintended effect of benefiting high earning self-employed income earners, resulting in some high earning self-employed income earners actually making a gain from Budget 2011 in comparison to all other taxpayers.

To avoid the situation in which the top marginal rate for PAYE taxpayers remained unchanged while self-employed taxpayers benefited from a reduction of that rate by 4 percentage points, two further changes were made. A higher rate of USC of 10% was introduced for the self-employed in respect of income in excess of €100,000 and an additional 1 percentage point was added to the self-employed PRSI rate. This restored the self-employed top marginal tax rate to 55%, (41% income tax, 7% USC, an additional 3% USC on income over €100,000 and 4% PRSI), which is where they were in 2010 and ensured that high earning self-employed income earners did not actually make a gain from Budget 2011 in comparison to all other taxpayers.

Note (i): the ‘marginal’ rate of tax equates to the top rate of tax which an individual is paying.

Note (ii): the 10% rate of USC only applies to income over €100,000. The standard rates of Universal Social Charge apply to income under €100,000 and are:
– 2% on the first €10,036
– 4% on the next €5,980
– 7% on the balance.
An individual whose total income for a year does not exceed €10,036 is exempt from USC.

Note (iii): Self-employed individuals with income of less than €100,000 and PAYE employees pay tax, USC and PRSI at the same marginal rate of 52%.

Interest restriction on residential lettings – 16th January 2013

To ask the Minister for Finance his views on correspondence regarding the residential investment mortgages issue.

Reply

The Minister for Finance ( Michael Noonan):

This question relates to the interest restriction applying to residential lettings, whereby the deductibility of interest in computing taxable rental income from residential property (insofar as it would otherwise be allowable) is limited to 75% of such interest.

This restriction was introduced in the April 2009 supplementary budget as part of an urgent revenue-raising package aimed at stabilising the public finances. The reduction in the level at which interest could be claimed for residential rental properties reduced the cost of this relief to the Exchequer by an estimated €95 million in a full year.

The context in which the 2009 measure was introduced, i.e. the need to stabilise public expenditure, still exists. Under the terms of the EU/IMF Programme of Financial Support for Ireland, the State is committed to further substantial reductions in public expenditure.

Pension fund access for the self-employed – 16th January 2013

To ask the Minister for Finance his plans to allow self-employed persons to have access to their pension funds in the same way that those who have made voluntary contributions to their pensions; and if he will make a statement on the matter.

Reply

The Minister for Finance ( Michael Noonan):

In my Budget 2013 speech, I announced that I would make provision in Finance Bill 2013 for persons making Additional Voluntary Contributions (AVCs) used to supplement their main scheme retirement benefits to withdraw up to 30% of the value of those contributions. Any amounts withdrawn will be subject to tax at the individual’s marginal rate. The option will be available for 3 years from the passing of the Finance Bill.

This is a restricted measure which will enable rather than incentivize certain individuals to access part of their pension savings beyond their regular or compulsory pension contributions. I do not wish to damage future pension provision and it is important that individuals continue to provide for their retirement. For these reasons, I have no plans to extend the measure beyond AVCs.

Pension fund investment – 16th January 2013

To ask the Minister for Finance his views on correspondence related to pension fund investment.

Reply

The Minister for Finance ( Michael Noonan):

I assume from the details supplied that the Deputy is referring to small self-administered pension schemes (SSASs).

I am advised by the Revenue Commissioners that SSASs are a particular type of occupational pension scheme in respect of which special requirements apply in relation to their approval, operation and supervision. The reason for these requirements is to ensure that such schemes are “bona fide” established for the purposes of providing retirement benefits. The concern in this regard reflects the fact that, as such schemes are generally one member schemes – that member typically being a proprietary director – there is potential for a conflict of interest to arise. This is because the individual is not only the sole member of the scheme but is also normally the owner of the company sponsoring the scheme and a trustee of the scheme.

In order to achieve and maintain tax-exempt approved status under tax law and Revenue rules such schemes must, for example, appoint an independent professional pensioneer trustee who cannot be removed without prior Revenue approval and who must be a co-signatory on all financial transactions of the scheme. In addition, the scheme must submit annual accounts and regular actuarial reports to Revenue. Revenue rules also place strict limitations on the investment options open to such schemes. These include a prohibition on loans to the scheme member and on self-investment in, for example, the employer’s assets and restrictions on property investment.

As regards property investment, while such investments are permitted, the vendor must in all cases be at arm’s length from both the scheme and the employer including its directors and associated companies. Property disposals by a scheme must equally be on an arm’s length basis.

The proposal being put forward by the Deputy is that these property related restrictions should be relaxed so that a member of a small self-administered pension scheme could sell an investment property to his or her scheme with a view to divesting him or herself of distressed property assets, with the property then becoming part of their long term pension investment.

While I can appreciate the reasoning behind this proposal, I think it is important not to lose sight of the purpose of supplementary pension saving and the generous tax incentives that the State continues to provide to encourage it. The sole purpose of pension savings is to provide relevant benefits to the scheme member at the point of retirement or indeed earlier in the event of retirement on ill-health grounds. The activity envisaged under the proposal might not represent a prudent investment in many cases and could put the availability of those benefits when needed at undue risk. The regulatory and tax regimes governing the activities of supplementary pension provision are designed to encourage an individual to save for a pension and also to protect and secure those savings until they are needed in retirement. Those savings are not available for any other secondary purpose such as resolving financial difficulties of the scheme member, however unfortunate and difficult those situations can be.

I also appreciate that the proposal is well intentioned. However, it would be difficult, if the rules governing investment by SSASs were relaxed in the manner suggested, to resist calls for a broader relaxation to allow, for example, equally distressed assets such as family or holiday homes to be acquired by a pension scheme or to permit investment in the employing company to stave off short term cash flow difficulties. In other words, it could be a first step towards a dismantling of the very rules that are in place to protect an individual’s pension savings.

For all these reasons I would not be in favour of this proposal.

AIB transfer of €1.1. billion of assets to pension fund – 16th January 2013

To ask the Minister for Finance the Governments position on the transfer by AIB of €1.1 billion of its assets to its pension fund.

Reply

The Minister for Finance ( Michael Noonan):

The Deputy will be aware that the asset transfer to AIB’s pension scheme was directly linked to the bank’s Early Retirement and Voluntary Severance Programme and was essential for the bank to be able to fund these plans. It was not connected with addressing any existing deficit in the bank’s pension fund.

The achievement of these staff reductions in the bank is expected to result in annual savings to AIB in excess of €200m which is a critical component of AIB’s plans to return to long term viability. It is highly likely, that in the absence of this arrangement, the bank would have been unable to achieve its target staff departure figures on a voluntary basis which would have required the need for significant numbers of compulsory redundancies and brought with it associated industrial relations difficulties.

The nature of the transfer concerned also had an added advantage for the bank in that the loan assets concerned were indented for disposal as part of the bank’s deleveraging commitments.

Possible property tax exemptions – 18th December 2012

To ask the Minister for Finance if there will be provisions in the property tax for properties (details supplied).

those who are not earning but are residing in a property due to divorce proceedings, meaning that their level of income is not reflected in the price of the house

Reply

The Minister for Finance ( Michael Noonan):

The Finance (Local Property Tax) Bill 2012, as published, provides for exemptions from and deferral of payment of Local Property Tax in certain circumstances. There is no blanket exemption in cases of divorce.

A system of voluntary deferral arrangements focused on particular categories of householders will be implemented to address cases where there is an inability to pay the LPT under specific conditions.

Deferrals can only be claimed where the liable person’s income is below the relevant threshold.

A full deferral is available where –
· Gross income does not exceed €15,000 (single) and €25,000 (couple).
· For income stressed owner occupiers an adjusted gross income limit will apply – where gross income is below the relevant income limit (€15,000/€25,000) plus 80% of mortgage interest, deferral will be available up to end 2017.

A partial deferral may be available where the income or adjusted income is €10,000 above the income limit (€15,000/€25,000/or adjusted with to permit deferrals of up to 50% of LPT liability.

Interest will be charged on deferred amounts at c. 4% per annum (simple interest). Deferred LPT and interest will have to be discharged on the sale/transfer of the property.

The deferral system as recommended in the Thornhill report and as modified in the Bill focuses on the ability to pay the tax and is based on the income of the liable person.

Fuel rebate for bus and coach companies – 18th December 2012

To ask the Minister for Finance further to Parliamentary Question No. 174 of 15 May 2012, if he will be granting a fuel rebate to Ireland’s bus and coach companies.

Reply

The Minister for Finance (Michael Noonan):

The proposal to introduce an auto-diesel excise duty relief for licensed road hauliers that I announced in the Budget is confined to licensed and tax compliant hauliers.

However, I have received a number of submissions from, and on behalf of, private coach operators seeking to have this relief extended to them. I will consider this proposal in the context of the Finance Bill. It is worth noting that one of key arguments for introducing a rebate for the haulage industry is the fact that a large quantity of fuel purchased by this industry is purchased abroad thus generating no tax revenue for the State. A rebate should encourage hauliers to start purchasing their fuel in Ireland thus leading the measure to be more revenue neutral. Such an argument does not exist for the coach industry.

The fuel rebate scheme proposed is governed by the terms of Council Directive 2003/96/EC of 27 October 2003 which limits its application to auto diesel used in defined categories of road vehicles.

I will be informing the European Commission of the rebate measure once it is introduced.

Tax breakdown – 18th December 2012,

To ask the Minister for Finance if he will consider modifying the various statements issued by the Revenue to persons so that these would state the total tax paid by a person as a percentage of their income as well as providing the various breakdowns under the different headings.

Reply

The Minister for Finance ( Michael Noonan):

I am assuming that the Deputy’s question is linked to the proposals contained in the Tax Transparency Bill which he introduced in the Dáil on 29 March last. In my contribution to the debate during the Second Stage on 9 November 2012 I referred to the costs and extensive administrative changes needed to advance the proposals contained in the Bill at the level of individual taxpayers.

The position is that the Revenue Commissioners do not issue any statements to the vast majority of taxpayers on the lines suggested and as part of their modernisation programme, are actively working to reduce the incidence of such statements. For example, while taxpayers in the self assessment system, mainly consisting of the self-employed, are currently provided with an annual Notice of Assessment form by Revenue, it simply sets out what the taxpayer has filed in his/her annual return of income. Such taxpayers are in a better position than Revenue to calculate tax and other deductions as a percentage of income. Furthermore, Finance Act 2012 introduced provisions, with effect from October 2014, removing the requirement for Revenue to issue an annual Notice of Assessment form to each taxpayer on receipt of their tax return.

For taxpayers from whom tax is collected through the Pay As You Earn system, the Form P21 Balancing Statement, setting out the amount of taxable income and the amount of tax paid, is issued almost exclusively at the request of the taxpayer, often to provide evidence of income for other parts of the public sector. Revenue is working with two public sector bodies to reduce the need to issue these statements by providing information directly, which has been outlined for the Deputy in the reply to a related Parliamentary Question today.

The Deputy will be aware that for PAYE taxpayers, the Form P60 they receive each year from their employer or pension provider contains all the required details – income tax, PRSI,USC and in future Local Property Tax – to enable them to carry out the percentage calculation if they so wished.

To the extent that they are issued, which will decline, the statements referred to above are already very detailed documents containing significant amounts of complex information. Revenue is constantly looking at ways to make the statements shorter and easier for the taxpayer to understand. Including the type of information sought by the Deputy on these statements would involve a major re-draft of the documents concerned and would cost a significant amount of money to develop. I am not satisfied that the benefits to be derived from implementing the Deputy’s proposals would outweigh the costs involved and I would have concerns that the documents would become so congested that they would be less informative for the taxpayer and would lose their impact.

 Valuation of a property for the LPT that can’t get insurance – 18th December 2012,

To ask the Minister for Finance if he will review a case regarding the assessment of the value of certain properties for the local property tax (details supplied).

Assessment of value of properties that suffered from flooding and subsequently cannot get flood insurance.

Reply

Minister for Finance ( Michael Noonan):

Revenue will provide guidance on how to value property early next year, and will engage in a comprehensive information campaign, including writing to residential property owners in March 2013 enclosing a detailed explanatory booklet on the operation of the Local Property Tax (LPT), valuation procedures and payments methods, as well as an LPT Return form for completion. The initial valuation of property, to be assessed as on 1 May 2013, will be valid up to and including 2016. This will provide certainty for taxpayers.

Benefits for IBRC employees – 18th December 2012

To ask the Minister for Finance if he will provide a detailed breakdown of any non salary entitlements or benefits going to current and new employees of the Irish Bank Resolution Corporation as part of their terms of employment.

Reply

The Minister for Finance ( Michael Noonan):

I have been advised that IBRC can confirm that a large volume of information regarding remuneration structures across the Bank has been recently supplied as part of the Mercer Remuneration Review as commissioned by the Department of Finance. This information is currently being analysed as part of the review.

As the findings from this review have not yet been published it would therefore be inappropriate for the Bank to supply this information in advance of the Department’s full review and subsequent publication.

The Revenue Commission and means testing for State benefits – 18th December 2012,

To ask the Minister for Finance further to Parliamentary Question No. 151 of 11 December 2012, if he will provide more detailed information on the work being undertaken by the Revenue Commissioners with a Government Department and a public sector agency regarding means testing for State benefits.

Reply

Minister for Finance ( Michael Noonan):

The Deputy will be aware that the level of a person’s annual income is one of the criteria that is taken into account in the means assessment process. I am advised by the Revenue Commissioners that they have been examining the feasibility of putting in place arrangements for verifying the annual income details of individuals electronically in the context of a means assessment. Such verification would be on foot of a request, which is supported by appropriate legislation, from a public sector organisation. As well as minimising the burden on the individual who is the subject of the means assessment, this process would also provide third party verification of the income provided by the individual who is being means assessed.

I am further advised that discussions are well advanced with the Health Services Executive (HSE), for the purposes of medical card applications, and the Department of Education & Skills, for the purposes of third-level educational grant applications, whereby Revenue would provide, following a request from either organisation, an electronic confirmation of the amount of an individual’s annual income where that individual has applied for either a medical card or an educational grant.

In the case of the HSE, enabling legislation is required before any form of data exchange can take place and I understand that this is planned for 2013. In the case of the Department of Education & Skills, the required legislation is already in place and how the data exchange process would operate in practice is under active discussion.

I fully welcome this initiative that is being undertaken by Revenue, the HSE and the Department of Education & Skills. It is an excellent example of inter-agency collaboration that is a key part of the public service reform agenda. When it is up and running, it will offer significant savings to the citizen as it will reduce the amount of physical documentation that they have to provide to the means assessor and it should result in a quicker service, it will also minimise potential instances of fraud and error in applications for medical cards and third-level grants and will benefit the public sector organisations concerned by reducing unnecessary contacts with citizens.

 Vehicle registration tax for electric vehicles – 11th December 2012,

To ask the Minister for Finance if he has considered extending the vehicle registration tax for electric vehicles beyond December 2012.

Reply

The Minister for Finance ( Michael Noonan):

The VRT reliefs for electric vehicles (up to €5,000), plug-in hybrid electric vehicles (up to €2,500), and hybrid and flexible fuel vehicles (up to €1,500), which were due to end on 31 December 2012, have been retained for a further 12 months to end December 2013.

The Minister’s view on a tax proposal – 11th December 2012,

To ask the Minister for Finance if he has considered the merits or demerits of a tax initiative (details supplied).

Details:

Many public servants and private sector employees retired with their employment related pension, from which tax was deducted if relevant. Most had never made a tax return as PAYE employees. When they reached 66 years they qualified for the state pension. They still did not make tax returns even though this was additional income.

If everyone was required by law to make a tax return, we would have no need for means testing debates, as the tax system would look after this.

Reply

The Minister for Finance ( Michael Noonan):

The Deputy’s question, essentially, is whether everyone might be required to submit a tax return. The position is that in general, individuals whose income is taxed under the PAYE system are not required to submit a tax return annually because by and large it is not necessary. As the Deputy will be aware, the PAYE system successfully operates to deduct the correct amount of tax in a seamless way from the vast bulk of PAYE employees and pensioners, and their taxable income is reported to Revenue by the employer/pension provider after the end of the tax year. In addition, I am advised that the current practice of the Revenue Commissioners is to issue annual returns to specific groups of PAYE taxpayers whom they regard as potentially higher risk cases. To my mind, this is an efficient and appropriate approach to this matter.

The alternative would require up to 2 million people to prepare and submit tax returns for no obvious benefit, and I would be concerned about the administrative and cost burden on both taxpayers and Revenue if the law was changed to make it mandatory for all PAYE employees to file an annual tax return.

Regarding State pensioners, I am advised by the Revenue Commissioners that the majority of taxpayers do report details of their State pension entitlements to Revenue, even though they are not obliged to file an annual tax return but, in any event, Revenue now receives information on pensions paid by the Department of Social Protection (DSP). This data exchange allows for the automatic deduction of tax by employers and pension providers on these pensions in appropriate cases.

Finally, mandatory tax returns would be unlikely to remove the need for means testing, given that means and income are not necessarily the same. However, the Revenue Commissioners further advise that they are currently working with one Government Department and one public sector agency, both of whom conduct means-testing for State benefits to develop an interface that will allow those organisations get a full picture of all income returned to Revenue by the person concerned.

Government Contracts – 6th December 2012,

To ask the Minister for Finance the percentage of Government contracts that are awarded to non-Irish companies; the percentage of these that go to EU companies; if he will provide details as to the percentage of contracts awarded by other EU Governments outside of those countries to EU based companies in order that we can compare Ireland’s performance in this regard.

Reply

The Minister for Finance (Michael Noonan):

In response to the Deputy’s question my Department does not keep a central record of the nationality of companies that are awarded contracts to provide goods or services to my Department. My Department awards contracts to companies based on the procurement guidelines outlined on the Government e-tender website managed by the Office of Public Works National Procurement Service. The relevant website address is as follows: http://www.etenders.gov.ie/about_us_main_en-GB .

The Minister’s view on a residential letting scheme idea – 5th December 2012,

To ask the Minister for Finance his views on a residential scheme (details supplied).

Abolishing the rule that allows residential investors to write-off only 75% of their interest charge against their rental income (as opposed to owners of other types of property – commercial or industrial say – who can write-off 100% of their interest against rental income).

Reply

Minister for Finance (Michael Noonan):

The interest restriction of 75% applying to residential lettings was introduced in the April 2009 supplementary budget as part of an urgent revenue-raising package aimed at stabilising the public finances. The context in which the 2009 measure was introduced, i.e. the need to stabilise public expenditure, still exists. Under the terms of the EU/IMF Programme of Financial Support for Ireland, the State is committed to further substantial reductions in public expenditure.

I am informed by the Revenue Commissioners that a breakdown between rent received from residential property and other types of property is not sought or provided in tax returns. However based on personal income tax returns filed by non-PAYE taxpayers for the year 2010, the latest year for which this information is available, and making certain assumptions about the data it is estimated that the estimated cost of restoring the level at which individuals can claim interest repayments against tax for residential rental properties from 75% back to 100% could be in the region of €112m in a full year. The estimated cost is based on assuming that tax relief was allowed at the top income tax rate of 41% and the figure provided could therefore be regarded as the maximum Exchequer cost in respect of those taxpayers. This figure is subject to adjustment in the event of late returns being filed or where returns already filed are subsequently amended.

As rental income of companies is returned as net of interest on borrowings, the figures for interest are not separately distinguishable and there is, therefore, no basis on which an estimate of the cost in respect of companies can be given.
It should be noted that any corresponding data returned by PAYE taxpayers in the income tax return form 12 is not captured in the Revenue computer system. However, any PAYE taxpayer with non-PAYE income greater than €3,174 is required to complete an income tax return form 11. This return is the source of the figure provided in this reply in respect of individuals.

Reduction of tax reliefs for pensions over €65,000 – 28th November 2012,

To ask the Minister for Finance his views on withdrawing or reducing tax relief for pension contributions when the pension pot reaches a certain level, say €65,000 per annum.

Reply

The Minister for Finance ( Michael Noonan):

The scale of pension saving reliefs available to higher earners, in particular, has been significantly restricted over recent years. The maximum allowable pension fund for tax purposes at retirement (the Standard Fund Threshold) was reduced from over €5.4 million to €2.3m in Budget and Finance Act 2011 while the annual earnings cap which operates in conjunction with age-related percentage limits to determine the annual amount of tax-relievable pension contributions has also been reduced over a period from its peak of over €275,000 in 2008 to its current level of €115,000 per annum.

The incentive regime for pension saving will be considered, in common with other tax relief and incentive arrangements, in the context of my preparations for the forthcoming Budget.

Incentivised investment of Irish pension funds – 28th November 2012,

To ask the Minister for Finance if he has considered ways of incentivising Irish based pension funds to invest in the economy here in a sustained way.

Reply

The Minister for Finance (Michael Noonan): I understand the Deputy is referring to tax incentives. I should explain in the first instance that pension funds approved by the Revenue Commissioners are exempt from tax on any income or gains derived from their investment activities.

Officials of my Department and of the Department of Public Expenditure and Reform continue to engage with third-party investors on how investment deals could be structured to facilitate the provision of funding for new infrastructure projects.

With regard to tax-based incentives for investment in the economy, pension fund investments should be executed at a level of return comparable to that earned by other investors accepting the same level of investment risk. I am conscious that there are aspects of such investments, such as maturity, liquidity and risk appetite, that may be of particular concern to pension funds and engagement is continuing with the sector on these issues.

NAMA’s 80:20 payment scheme  – 27th November 2012,

To ask the Minister for Finance the number of people that have taken up National Assets Management Agency’s 80:20 deferred payment initiative scheme.

Reply

The Minister for Finance ( Michael Noonan):

NAMA advises that to date the sale of 81 houses with a combined value of over €15 million have been sold under the 80:20 Deferred Payment Initiative, which was launched on a pilot basis on 8th May in respect to 115 houses and extended on 15th October to an additional 180 houses.

Number of investigations underway in NAMA – 27th November 2012

To ask the Minister for Finance the number of investigations currently underway in National Assets Management Agency, the number of people being investigated, the reason for these investigations and the person conducting them.

Reply

The Minister for Finance ( Michael Noonan):

This is an operational matter for NAMA but I am advised by NAMA that no investigations are currently underway.

Investment schemes for small businesses – 20th November 2012,

To ask the Minister for Finance further to Parliamentary Question No. 129 of 8 November 2012, if he will consider an investment scheme that applied to all businesses below a certain size, so that this would not skew the market towards one area, and would not risk starving larger companies of capital in view of the fact that the amounts being considered would be relatively low say something similar to the film section scheme for example but not confining the relief to one’s own tax band.

Reply

The Minister for Finance (Michael Noonan) :

I assume the Deputy is referring to the provision of a tax incentive to micro businesses that would be more attractive than that which is available under the Employment and Investment Incentive.

As indicated in my previous response to the Deputy on this topic, EII is already available to the majority of SMEs including micro businesses. My concern in relation to providing a more attractive tax incentive for micro businesses is that it would draw investments away from other small businesses that do not meet the definition of a micro business which includes having less than 10 employees.

It is likely that any incentive scheme that is more attractive than another, in terms of tax relief or reduced risk, would draw investors in the first instance to it. Only where such investors had access to greater amounts of capital to invest than allowed under the terms of the more attractive scheme, would they consider making other investments. In this regard, it is worth pointing out that the high earners’ restriction imposes a limit on the amount of specified tax reliefs that can be claimed in a single tax year of €80,000 or 20% of adjusted income, whichever is higher.

Bankruptcy declarations – 15th November 2012,

To ask the Minister for Finance the number of persons that Allied Irish Bank, Bank of Ireland and the Irish Bank Resolution Corporation respectively have sought to have declared bankrupt in court over the past two years.

Reply

The Minister for Finance (Michael Noonan):

I have been advised by the Banks that unfortunately it has been impossible to collate this information within this short timeframe. I will forward this information to the Deputy as soon as it is made available to me.

Enterprise investment scheme – 8th November 2012,

To ask the Minister for Finance if he has considered an enterprise investment scheme as is operated in the UK whereby an investor in an early-stage enterprise can claim back up to 50% of their investment through tax reliefs.

Reply

The Minister for Finance (Michael Noonan):

I assume the Deputy is referring to the Seed Enterprise Investment Scheme(SEIS), which the UK introduced to supplement its Enterprise Investment Scheme (EIS). The SEIS provides a higher rate of relief for qualifying investments in early stage enterprises, than is available under EIS and was introduced with effect from the 6th of April this year.

We have a similar incentive to the EIS called the Employment and Investment Incentive (EII), which commenced on 25 November 2011, following the receipt of State Aid approval from the European Commission. The EII provides tax relief of 30% on investments made in small and certain medium-sized enterprises, including early stage enterprises, with the possibility of a further 11% in tax relief at the end of a three year holding period. The incentive was previously known as the Business Expansion Scheme and was significantly amended to target limited Exchequer resources towards job creation. As part of these changes, access to the incentive was made available to the majority of small and medium-sized companies (SMEs).

Figures from the Revenue Commissioners show that the level of funding raised by SMEs under the Business Expansion Scheme has been declining since 2008. This could be related to the economic downturn or to a lower appetite for risk among investors. It is too early to say whether the changes brought about by the introduction of EII will have the desired affect and halt such decline. However, the peak period for raising investments under EII is November/December and a better picture of the impact of the changes should be available next year.

The introduction of any scheme that would provide higher tax relief for investments in certain companies could have the capacity to skew investments towards such companies. This could work to the detriment of other equally deserving companies that need to raise risk capital investments. Ultimately, the priority of the Government is to incentivise investments where they are most likely to create jobs. Therefore, I am inclined to be cautious as regards implementing further changes to the tax incentives available for such investments at the current time.

 

Investment Schemes involving tax relief – 7th November 2012,

To ask the Minister for Finance if he will provide details of all investment schemes currently operated by the State which involve some form of tax relief or similar, whereby persons investing money in small and medium sized enterprises may receive a portion of that investment back through the tax system; the maximum amount under each scheme which can be invested and the maximum rate of relief.

Reply
The Minister for Finance (Michael Noonan)

The schemes providing for tax relief for investment in small and medium-sized enterprises are as follows:

The Employment and Investment Incentive (EII)
EII is a tax incentive that provides tax relief for investors who purchase new ordinary shares in small and certain medium-sized companies carrying on a trade, and who hold those shares for a minimum of three years. The incentive is designed to help companies to raise new risk capital to expand their activities. An individual investor can obtain income tax relief on investments up to a maximum of €150,000 per annum, subject to the high income individuals’ restriction, in each tax year up to 2013. The maximum amount that may be raised by a company in any 12 month period is €2.5 million, subject to a lifetime limit of  €10 million.

The maximum rate of tax relief available to an individual who subscribes for new ordinary shares is 30% of the amount invested. However, a further 11% tax relief may be available at the end of the holding period, provided the company concerned has either increased its number of employees or spent at least 30% of the investment raised on research and development.

Seed Capital Scheme (SCS)

The SCS is designed for individuals who are or were in employment, which was subject to PAYE. In general, it operates by providing that an eligible individual, who makes an investment in new ordinary shares in a qualifying company, may set off the amount of that investment against his or her taxable income in any of the previous 6 years, which will result in an overpayment of tax. The individual may then claim a refund of the tax overpaid. For example, an individual, who makes an investment of €10,000 in new ordinary shares and who sets off the amount of that investment against his or her taxable income for a year of assessment in which his or her marginal rate of tax was 41%, will be entitled to claim a tax refund of €4,100.

The maximum investment that can be set against taxable income in any single year of assessment is €100,000. This means that the maximum total investment that can be made under the Seed Capital Scheme is €600,000, as the individual may set up to €100,000 against the taxable income of each of the previous 6 years.

An eligible individual is an individual who takes up full-time employment with the company and holds at least 15% of the issued ordinary share capital for the required period, normally 3 years.

A qualifying company is a new company that carries on a trade except where the activities of that trade consist of-:

(a) activities which were previously carried on by another person and to which the company has succeeded,

or(b) activities which were previously carried on as part of another person’s trade or profession.

Film Relief (Section 481)
The film relief scheme was introduced to promote the Irish film industry, by encouraging investment in Irish made films. Tax relief on the full amount of the investment is available to individual investors at their marginal rate of tax (41% for top rate taxpayers). Individual investors can invest up to €50,000 under the scheme in any year of assessment. The maximum amount which can be raised by a film production company, under the scheme is 80% of the total cost per production, subject to a maximum of €50,000,000.

If Financial Institutions such as AIB are subject to public procurement rules, 26th September 2012,

To ask the Minister for Finance if the financial institutions Allied Irish Bank, Permanent TSB and Irish Life are subject to public procurement rules.

Reply

The Minister for Finance (Michael Noonan):

While the State holds a majority shareholding in both AIB and Permanent TSB and recently acquired full ownership of Irish Life, the institutions are not covered by formal public procurement rules as their commercial remit makes them subject to market forces.

The Relationship Frameworks for Allied Irish Banks and Irish Life and Permanent (now Permanent TSB) were published on the Department of Finance website on 30 March 2012, the relevant links are published below for your convenience:

http://banking.finance.gov.ie/wp-content/uploads/Allied-Irish-Banks1.pdf
http://banking.finance.gov.ie/wp-content/uploads/Irish-Life-and-Permanent1.pdf

Under the Relationship Frameworks the Boards of these institutions are responsible for the day to day operations including the awarding of contracts. Therefore they are not required to seek formal approval before awarding contracts of any nature, though certain other transactions do require Ministerial approval.

Is an extension of VAT reduction scheme possible-18th September 2012,

To ask the Minister for Finance if he is considering an extension of the VAT reduction scheme introduced last year and any widening of the scheme to include additional areas or industries.

Reply

The Minister for Finance (Michael Noonan):

The Finance (No. 2) Act 2011 provided for a second reduced VAT rate, of 9%, on a temporary basis in respect of certain tourism-related services and goods for the period 1 July 2011 to 31 December 2013.  I have no plans to extend the 9% rate to include additional areas or industries.

Should the VAT rate for gyms and pools be lower –18th September 2012,

To ask the Minister for Finance in recognition of the fact that an active lifestyle is important for both physical and mental health, if he will consider lowering the VAT rate on membership fees for gyms and public pools; and if he will make a statement on the matter.

Reply

The Minister for Finance (Michael Noonan):

I would point out that a low reduced VAT rate already applies to membership fees for gyms and swimming pools.  While 75% of the goods and services liable to VAT in Ireland are subject to either the standard VAT rate of 23% or the 13.5% reduced rate, the VAT rate that applies to the supply of facilities for taking part in sporting activities is 9%. I have no plans to reduce further the VAT rate on gym and swimming pool membership fees.

The management of assets when there is no next of kin – 18th September 2012,

To ask the Minister for Finance his role in the management of a deceased person’s assets and finances when the deceased has not left a will and there are no living dependants.

To ask the Minister for Finance the estimated value of assets formerly belonging to person’s who are now deceased and who did not leave any indication of any beneficiary nor any living relative.

Reply

The Minister for Finance (Michael Noonan):

I propose to take these questions together.

Section 73 of the Succession Act 1965 provides that where a person dies intestate and without known next-of-kin the estate of that person shall be taken by the State as ultimate intestate successor.

Where an estate falls to the State under Section 73, it is administered by the Chief State Solicitor under the direction of the Attorney General. Depending on the extent and nature of the estate this process may involve the extraction of letters of administration from the High Court and advertising for next-of-kin. When it is established that there are no known next-of-kin, the proceeds of the estate are paid into the Intestate Estates Fund Deposit Account.

Under Section 73 of the Succession Act, 1965, the Minister for Finance has power to waive the State’s interest in escheated estates. Every application for waiver is referred to the Office of the Chief State Solicitor for consideration. The CSSO, in consultation with the Attorney General’s Office, as appropriate, deals with the legal issues involved. The Minister for Finance makes his decision on an application for waiver following consideration of the advice of the Attorney General.

Under Section 36 of the State Property Act, 1954, as amended by Section 28 of the Dormant Accounts Act, 2001, the Minister for Finance may transfer monies from the Intestate Estates Fund Deposit Account into the Dormant Accounts Fund which proceeds are used for charitable purposes.  A sum of €4.4m was transferred from the Intestate Estates Fund Deposit Account to the Dormant Accounts Fund in 2007. The balance currently in the Intestate Estates Fund Deposit Account is €2.16m.

Money on deposit with no owner – 18th of September 2012,

To ask the Minister for Finance the estimated amount of money currently on deposit in financial institutions in the State formerly belonging to persons who are now deceased and who did not leave any indication of any beneficiary nor any living relatives known to the authorities.

Reply

The Minister for Finance (Michael Noonan):

I am advised by the National Treasury Management Agency – which is the manager of the Dormant Accounts Fund – that the balance of the Fund as at 31 August 2012 was €169,305,657.

The Fund does not refer only to deposits of persons who are deceased. An account will be considered to be dormant if it has been 15 years since the last customer-initiated transaction. Under the Unclaimed Life Assurance Policies Act 2003, the net encashment value of certain life assurance policies are also transferred to the Fund where the holders of the policies in question cannot be traced.

The NTMA is not in a position to determine how much of the balance in the Fund came from individuals who died intestate, or from accounts which have not been used for 15 years or more.

When does the State get involved when money on deposit has no claimant – 18th September 2012

To ask the Minister for Finance the typical length of time that unclaimed money, owing to the death of a person who has no will and no known next of kin, may remain in an account before the State becomes involved and the longest period for which such an account has remained open following the death of the account holder.

Reply

The Minister for Finance (Michael Noonan):

Section 73 of the Succession Act 1965 provides that where a person dies intestate and without known next-of-kin the estate of that person shall be taken by the State as ultimate intestate successor.

Where an estate falls to the State under Section 73 it is administered by the Chief State Solicitor under the direction of the Attorney General. Depending on the extent and nature of the estate this process may involve the extraction of letters of administration from the High Court and advertising for next-of-kin. When it is established that there are no known next-of-kin the proceeds of the estate are paid into the Intestate Estates Fund Deposit Account.

The length of time between the death of a person who has no known next-of-kin and who has not left a will comes to the attention of the State depends on the circumstances of the case, including whether or not any other person has knowledge of the existence of a bank account and of the death of the account holder. In any event an account will be considered to be dormant if it has been 15 years since the last customer-initiated transaction and the proceeds of the account would fall to be paid into the Dormant Accounts Fund.

Tax breakdown for a worker earning €42K –10th July 2012,

To ask the Minister for Finance if he will provide the following information, estimated, for a single person with no dependents, no credits, breaks or reliefs, earning €42,000 in income, with no other assumed additional sources of income: the amount of income tax and other taxes on incomes expected to be paid by this person in 2012; a percentage breakdown of the areas of Government spending on which the taxes paid by the person are to be spent by each Department and in each area in line with the budget for 2012; if he will provide a detailed description of the way the taxes paid by the person are to be spent in simple monetary terms euros and cents in line with this breakdown; if he will provide a figure detailing the person’s annual contribution to national debt repayments; a figure detailing the person’s share of the national debt, a figure detailing the person’s share of the national deficit; and if he will provide the same information as projected for 2013.

Reply

The Minister for Finance (Michael Noonan):

It is assumed for the purposes of answering this question that the single person is a PAYE worker in the private sector who would receive the basic tax credits and standard bands of tax, appropriate for an employee earning €42,000 per annum in 2012. The amount of PAYE income tax, Universal Social Charge (USC), and employee PRSI that person would pay is €10,707. The calculation is outlined in the table below.

Single Individual (Employee) Earning €42,000 (Class A Full PRSI)

Gross Income:                                   €42,000

Deductions

Universal Social Charge (USC)           €2,259

PAYE Income Tax:                                €7,032

Employee PRSI:                                     €1,416

Total Deductions:                                  €10,707

Net Income:                                             €31,293

Tax revenues are not generally assigned to particular areas of expenditure. Rather they are available, along with non-tax revenues, capital receipts as well as moneys sourced from borrowing to fund overall expenditure.

The Department of Public Expenditure and Reform published the Revised Book of Estimates (REV) for 2012 in February. The REV sets out the voted expenditure allocations for every Government Department and Office, including for areas such as Social Protection, Health, Education, Justice and Agriculture. The REV therefore sets out the areas of voted expenditure that the tax revenues, non-tax revenues and capital receipts collected by the State as well as borrowing undertaken by the State are used to fund.

National debt servicing in 2012 was estimated at €6,965 million by the National Treasury Management Agency (NTMA) at the time of the Stability Programme Update (SPU) publication in late April. Last year’s Census estimated the Irish population at just under 4.6 million. On this basis, an individual’s share of total National debt servicing in 2012 is just under €1,520.

As per the website of the NTMA, at end-June 2012 the State’s National debt stood at €131.9 billion. Given an estimated population of just under 4.6 million, an individual’s share of National debt outstanding at end-June 2012 is just under €28,750.

This year’s Exchequer deficit was estimated at €18,655 million in the SPU. Given an estimated population of just under 4.6 million, an individual’s share of this year’s Exchequer deficit is approximately €4,065. Note that this deficit estimate included, as part of non-voted capital expenditure, €3,060 million in respect of the IBRC Promissory Note although settlement of this payment was with a Government bond.

As regards 2013 it is not yet possible to provide the Deputy with the detailed information as voted expenditure allocations for 2013 have not yet been decided.

The number of staff in the department’s redeployment pool – 26th June 2012,

To ask the Minister for Finance the number of persons in his Department’s redeployment pool, including agencies responsible to it, that is, those persons who are to be redeployed as their current role is no longer necessary, but have not been.

Reply

The Minister for Finance (Michael Noonan):

My Department does not have a redeployment pool.

Breakdown of a PAYE payment –12th June 2012,

To ask the Minister for Finance if he will provide further information on the following case in relation to the breakdown of a PAYE payment (details supplied).

Reply

The Minister for Finance (Michael Noonan):

Section 188 of the Taxes Consolidation Act 1997 provides for an exemption from income tax for a couple who are jointly assessed to tax and either of them is 65 years of age or over during the tax year where their combined incomes do not exceed €36,000.

However, where their combined incomes exceed €36,000, a measure of relief from full taxation (called ‘marginal relief’) is still available.  Under marginal relief the couple’s income tax liability is computed on the basis of the lesser of –
– 40% of the difference between €36,000 and the couple’s combined income, and
– the couple’s tax liability using normal tax computation rules.
The following is an example extrapolated from the limited details provided by the Deputy:
Normal tax computation rules:
Employment pension €18,721
DSP pension €22,700 (including increase for qualified adult over 66)
Combined incomes €41,421
Tax @ 20% €8,283
Less
Personal Tax Credit (€3,300)
PAYE Tax credit (€1,650) (employment pension paid under PAYE)
Age credit (€490)
Tax liability €2,843
Marginal relief method:
40% of (€41,421 – €36,000) = €2,168
Income tax due €2,168

Income is also subject to the Universal Social Charge (USC).  USC is not payable where an individual’s income does not exceed €10,036 (€4,004 for 2011) for a tax year.  However, where this amount is exceeded, USC is payable on the full amount.  The first €10,036 of income is charged at 2%, the next €5,980 at 4% and the remainder at 7%.

These standard rates are modified in certain circumstances.  Thus, where an individual holds a full medical card or is aged over 70 years at any stage in a tax year the rate of USC is capped at 4%.  In addition, social welfare payments, including social welfare pensions, are exempt from USC.

In the case of married couples or civil partners, the USC thresholds apply to each spouse or civil partner individually and cannot be combined where one spouse or civil partner is below the threshold and the other above.

Taking the example given earlier, the employment pension of €18,721 is liable to USC.

Assuming the person in receipt of that pension is over seventy years of age or holds a medical card, the USC liability arising on it is €548 (€10,036 @ 2% and €8,685 @ 4%).

Combining the income tax liability (€2,168) and the USC liability (€548) gives a total tax and USC liability of €2,716.

I am informed by the Revenue Commissioners that in the absence of complete details of the nature of the income of the couple and their entitlement to various tax reliefs (e.g. medical expenses) it is not possible to fully reconcile their tax and USC liability with the details supplied.  However, it would seem, taking into account entitlement to marginal relief and their USC liability as demonstrated in the example above, that the couple’s tax and USC liability as set out in the question would appear to be broadly correct.  If the individuals concerned contact their Revenue office with all relevant details their liability to income tax and USC can be examined and explained to them in detail.

The effect of increasing/decreasing corporation tax –12th June 2012,

To ask the Minister for Finance the effect on Revenue respectively of a 0.5% increase and a 0.5% decrease in corporation tax; the way either scenario might affect foreign direct investment; and the way either change would place us in comparison with our EU partners.

Reply

The Minister for Finance (Michael Noonan):

I am informed by the Revenue Commissioners that the full year yield to the Exchequer, estimated in terms of 2012 profits, of increasing the standard rate of corporation tax from 12.5% to 13% is tentatively estimated on a straight line arithmetic basis to be about €135 million. A corresponding reduction in the rate would result in a cost to the Exchequer of a similar amount.

This estimate does not take into account any possible behavioural change on the part of taxpayers as a consequence of the proposed changes. In terms of an increase in the 12.5% rate, estimating the size of the behavioral effects is difficult but they are likely to be relatively significant. An OECD multi-country study found that a 1% increase in the corporate tax rate reduces inward investment by 3.7% on average. While a reduction in the rate might be expected to have a positive impact on inward investment, it would be difficult to justify such a move in the context of Ireland’s consistently strong view that it will not change its corporation tax strategy. Even a marginal change would undermine both our long held stance on this issue and the certainty of business, domestic and international, in our resolve to maintain that position.

Number of people on NAMA advisory group – 6th June 2012,

To ask the Minister for Finance the number of persons appointed to the Advisory Group for the National Assets Management Agency; the terms of their appointment; when each person was appointed; the number of times they met as a group since their appointment; when they are due to report to him, what they report on, the form that this report will take, and if this report will be made public.

Reply

The Minister for Finance (Michael Noonan):

The advisory group currently consists of three members; Mr. Michael Geoghegan; Mr. Denis Rooney and Mr. Frank Daly, the chairman of NAMA. Mr. Geoghegan acts as chair of the group and all members of the Group were appointed on 7 March 2012. Each of the individuals has agreed to work on a pro-bono basis.

This group was set up to advise me on specific issues related to NAMA. The group operates on an informal basis and reports directly to me. As such there is no formal report to be published. It is important to say that this group is not a shadow Board nor is it intended to provide a route for me as Minister to get involved in the day to day running of the Agency.
The group’s advice to me primarily relates to the strategy of NAMA as proposed by the board of NAMA; the appointment of directors to NAMA; the remuneration of the senior executives of NAMA and any further advice that I may seek on any matter relating to NAMA.

I have agreed that the group will meet and report to me at least four times a year. I have met with the group on one occasion since it was established. It is also open to the Chair to contact me as issues arise. I expect the advisory group to play a valuable role and I can confirm that I am satisfied with the operation and progress of the group to date.

The Minister’s views on the cash accounting scheme – 6th June 2012,

To ask the Minister for Finance his views on whether the cash accounting scheme as it exists in Ireland, with a condition that businesses have an annual turnover of no more than €1 million to qualify, is too restrictive and if he will consider the extension of the scheme to businesses with a turnover of less than €2.5 million, as recommended by the Dublin Chamber of Commerce.

Reply

The Minister for Finance (Michael Noonan):

I would point out that VAT is normally accounted for on the basis of invoices issued i.e. VAT is payable on the total sales invoiced in the relevant period, regardless of whether or not the trader has been paid for the supply in that period. However, the cash basis of accounting provides traders with the option to account for VAT on a cash receipts basis.

This means that the trader is not required to pay VAT until payment for the supply is actually received.  Availing of this option assists firms in the critical area of cash flow.

In order to avail of the cash receipts basis of accounting for VAT, a business must either a) be supplying goods or services, where 90% of the supplies are to persons who aren’t registered for VAT, or b) have an annul turnover which is less than €1 million.  The annual turnover threshold for eligibility for the cash basis of accounting is €1 million and has been effective since 1 March 2007.  Although it is possible under EU VAT law to increase the threshold, the cash basis can only be used for “certain transactions or certain categories of taxable persons”.

It cannot be used to replace the normal VAT arrangements across the board.  In addition, increasing the cash basis threshold from €1 million to €2.5 million would be very costly to the Exchequer, costing in excess of €150 million in the year of introduction.

Tax reliefs for retired sportspersons – 22nd May 2012,

To ask the Minister for Finance if tax reliefs are available for sportspersons upon retirement; the way in which these tax reliefs work; the sporting professions that are benefitting the most from these reliefs; and the total cost of these reliefs to the Exchequer.

Reply

The Minister for Finance (Michael Noonan):

Section 480A of the Taxes Consolidation Act 1997 provides for relief from income tax on retirement for certain income of certain sportspersons.  The sportspersons who qualify are: athletes, badminton players, boxers, cricketers, cyclists, footballers, golfers, jockeys, motor racing drivers, rugby players, squash players, swimmers and tennis players.

The earnings to which the relief applies are earnings from participation in the relevant sport such as prize money, performance fees etc., but not other earnings such as sponsorship fees, advertisement income or income from endorsements.  The relief takes the form of a deduction from the sportsperson’s participation earnings of an amount equal to 40 per cent of those earnings for any 10 tax years for which the sportsperson was resident in the State, starting with the tax year 1990/91.

The relief is given by way of repayment of tax and is to be claimed within four years from the end of the tax year in which the sportsperson ceases permanently to be engaged in that sport provided he or she is resident in the State in that year.

The relief is withdrawn if the person subsequently recommences in that sport, though this does not prevent a further claim for the relief if and when the sportsperson finally retires at a later time.

I am informed by the Revenue Commissioners that the estimated cost to the Exchequer of the tax relief on retirement for qualifying sportspersons is set out in the following table for the tax years 2005 to 2009 inclusive.  2009 is the latest year for which the necessary detailed data is available.

Retirement relief for Qualifying Sportspersons
Year Estimated cost to the Exchequer €m
2005 0.3
2006 0.2
2007 0.2
2008 0.2
2009 0.2

The information is not captured in such a way as to provide a basis for compiling a breakdown of the estimated cost of the relief by reference to sports code.  Even if such a breakdown were available the obligation of the Revenue Commissioners to observe confidentiality in relation to the tax affairs of individual taxpayers or small groups of taxpayers would preclude them from providing it.

In circumstances where a sportsperson has been an employee then he or she will be entitled to avail of the same reliefs as are available to all other employees on retirement in addition to the section 480A relief described above.

A flat tax on income – 15th May 2012,

To ask the Minister for Finance what rate would a flat tax on income have to be if all existing tax credits, allowances and reliefs were abolished, with the first €15,000 of earnings exempt of tax for every income earner, to achieve a target yield equal to the amount currently raised from income tax, the USC and employee’s PRSI..

Reply

The Minister for Finance (Michael Noonan):

The flat rate figure is an estimate from the Revenue tax-forecasting model using actual data for the year 2009 adjusted as necessary for income and employment trends for the year 2012.  It is, therefore, provisional and likely to be revised.

I am advised by the Revenue Commissioners that if the combined Budget estimate of €16.84 billion expected in 2012 from income tax, USC and employee’s PRSI was to be raised by applying a single flat rate of tax on the basis outlined by the Deputy, the rate of tax required, based on projected 2012 incomes, would be 27%.

This tentative estimate is based on the assumption that a full flat tax system is introduced and that the existing income tax, USC and employee PRSI structures would be replaced in their entirety by the system outlined by the Deputy.  In such an event, the personal tax credits and allowances and tax reliefs in general would no longer apply.  This is normally a feature of flat tax systems.  For example, contributions to approved superannuation schemes would no longer attract tax relief and mortgage interest relief and medical insurance relief which are provided at source would cease to apply.

Other schemes and reliefs which it is assumed would be abolished for the purpose of this costing include capital allowances, property reliefs generally, the various savings related tax reliefs, tax relief on redundancy payments, the business expansion scheme and film relief.   To the extent that any of these reliefs were continued, the costs would be higher

A list of all entities holding authorisations and all credit institutions – 15th May 2012,

To ask the Minister for Finance further to Parliamentary Question No. 225 of 24 April 2012, if he will provide a list of all entities holding authorisations and all credit institutions.

Reply

The Minister for Finance (Michael Noonan):

I would like to inform the deputy that the information he is seeking is available on the Central Bank of Ireland website in the form of a publicly-available register. The relevant links are attached below for your convenience.http://registers.financialregulator.ie/FirmSearchPage.aspx
http://registers.financialregulator.ie/DownloadsPage.aspx

The number of people with a distressed mortgage – 15th May 2012,

To ask the Minister for Finance the number of persons who currently have a distressed mortgage, the level of distress and the way this is determined.

Reply

The Minister for Finance (Michael Noonan):

The Central Bank publishes statistics on principal private residential mortgage arrears, restructures and repossessions.  The latest available data is for the period ended December 2011 and it indicates that 70,911 mortgage accounts are in arrears of over 90 days.  This amounts to 9.2% of total residential mortgage accounts extended by regulated mortgage lenders.

The data also indicated that 74,379 accounts were restructured at the end of December 2011. Of this total, 36,797 are not in arrears and are performing as per the restructured arrangement. The balance of restructured accounts (37,582) has arrears of varying categories (arrears of both less than and greater than 90 days).  Overall, therefore, 107,708 residential accounts are either in arrears of over 90 days or have been restructured and are performing as at the end of December 2011.

The amount of money currently on deposit – 15th May 2012,

To ask the Minister for Finance the amount of money currently on deposit in Irish banks household deposits and others, excluding foreign owned deposits.

Reply

The Minister for Finance (Michael Noonan):

The Central Bank of Ireland (CBI) publish a comprehsensive data set on a monthly basis in relation to deposits at Irish banks, both Covered and non Covered institutions. These data from part of the bank’s Monthly Banking Statistics which are unconsolidated and reflect data on the assets and liabilities of within-the-State offices of credit institutions. There are three tiers of balance sheet published by the CBI each month. They are a) Credit institutions – Aggregate balance sheet (which is labled table A4); b) Credit institutions – Domestic Group (table A4.1) and c) Credit institutions – Covered Group (table A4.2).

Table A4 has the widest coverage of institutions and is effectively the banking “system” in Ireland.  The other two are sub-sets of table A4, with the Domestic Group representing those banks and credit unions which have significant business with Irish resident households and non-financial corporations in terms of credit and deposits. The Covered Group (table A4.2) which has the narrowest scope, represents only AIB, Bank of Ireland, EBS, IBRC (formerly Anglo Irish and Irish Nationwide) and permanent tsb. At each balance sheet tier, there are three different measures of deposits that can be tracked or quoted and this can sometimes cause confusion. The “Private Sector Deposits” category is the narrowest measure and the one that tends to get the most focus however. To this one can add General Government deposits and deposits from Monetary Financial Institutions (MFI’s) to get “Deposits from Irish Residents” and when non resident deposits are added one reaches a figure that is best described as “Total Deposits”.

Private sector deposits across the entire Irish banking system amounted to €163.1bn at the end of March 2012. The CBI provides a further breakdown of these deposits into various catergories. Within this figure, Household deposits amounted to €92.1bn, deposits held by Non Financial Corporations (NFC’s) amounted to €29.7bn, Other Financial Intermediaries were €30.1bn and finally Insurance Corporations/Pension Funds accounted for a further €11.1bn. Unsurprisingly the Irish Covered Banks account for a large share of these Private Sector Deposits – around 64% or €103.9bn.

To aid analysis and interpretation of deposit trends at the Irish Covered Banks, the Department of Finance recently began publishing a consolidated dataset on deposits. This dataset is sourced from the Central Bank of Ireland but unlike the data referred to above, it excludes intra-company exposures and also includes deposits held in foreign subsidiaries. The most recent data set for end March 2012 showed that deposits at the Covered Banks on this basis were circa. €149bn. This figure has increased from around €147bn at year end and has been on a slow rising trend since the Autumn of last year. Further details on this dataset or indeed on the CBI statitics can be found at http://banking.finance.gov.ie/wp-content/uploads/Deposit_Note_Mardataset.pdf and  www.centralbank.ie

Flood insurance – 15th May 2012,

To ask the Minister for Finance the position regarding flood insurance.(details supplied)

Reply

The Minister for Finance (Michael Noonan):

I am advised by the Irish Insurance Federation that flood insurance cover is currently available to approximately 98% of householders in Ireland.  Neither the Central Bank nor I, as Minister for Finance, can compel insurance companies to quote for business. The decision to provide any specific form of insurance cover, and the price at which it is offered, is a commercial matter based on the assessment of the risks involved. There are no provisions in the Central Bank’s Consumer Protection Code to compel an insurance company to accept a particular insurance risk.

However, I wish to inform you that the Minister of State with responsibility for the Office of Public Works (OPW) and his officials are engaged in discussions with the Irish Insurance Federation (IIF) in relation to the difficulties experienced by certain householders in obtaining insurance cover for flood risk.

These discussions have allowed a sharing of information and understanding about the scope and scale of the work undertaken by the OPW on flood risk management and, in particular, on the mapping of areas subject to flood risk nationally which will emerge from the OPW’s Catchment Flood Risk Assessment and Management programme (CFRAM).   This programme is a national initiative to systematically identify, assess, document and report on the most significant flood risks throughout the country.  This work is being undertaken on OPW’s behalf by specialist consultants and is organised into six separate regional or catchment areas.  These comprehensive studies will recommend an integrated management plan and prioritised measures to address flood problems in areas where there is significant risk in each major catchment in the country.

The discussions between the OPW and the IIF have also focused on how the insurance industry can best address the issue of the provision of flood insurance where incidences of difficulties in obtaining flood insurance are being raised.  The insurance industry considers that this incidence is marginal and has indicated that where it arises the causes are complex with each case being assessed in light of the particular circumstances applying.  The OPW and the IIF are keen to establish a sustainable means of sharing information on areas vulnerable to flooding and on identifying flood defence works carried out or funded by the OPW and the impact of those works in reducing the risk of flooding in areas where flooding previously occurred. A number of issues are being clarified with a view to agreement being reached on a viable basis on which information can be provided.

In tandem with these developments, the Irish National Flood Forum, which is a voluntary body representing communities affected by flooding, plans to undertake a survey to gather as much information as possible from their member organizations.  Details of what will be involved should be available shortly on the Forum’s website www.irishnationalfloodforum.com. The information gathered by the Forum will be a useful input into the deliberative process on this subject.

Remuneration policy in the Irish Bank Resolution Corporation – 1st May 2012,

To ask the Minister for Finance if any consideration has been given to altering the remuneration policy in the Irish Bank Resolution Corporation in order that it is in line with the public sector in view of the fact that the bank is fully nationalised.

Reply

The Minister for Finance (Michael Noonan):

I have asked the Board of the bank to consider the remuneration packages at the bank.  The Board has considered reductions in pay levels for individual staff in IBRC but has however, recommended to me its view that pay cuts should not be implemented at this time. The decision not to pursue pay cuts is on the basis that staff retention is a critical issue for IBRC. There has been considerable reduction in staff numbers and current staff are being regularly headhunted by Banks and other organisations. It is the Board’s view that further pay cuts would create a risk for the bank in relation to the retention of staff and would impact negatively on the bank’s ability to deliver its mandate. The Board has indicated its view that the skills of staff  within IBRC are integral to the successful delivery of the bank’s asset recovery programme on behalf of the State and, by extension, the taxpayer.

In this context, IBRC have also pointed out to me that a 20% reduction was applied to the salaries of senior management in the former Anglo Irish Bank immediately post nationalisation. These adjusted lower salaries have remained in place in the organisation for subsequent replacements to those roles.  . It should also be noted that IBRC does not operate a performance based incentive plan.

The bank had further indicated that total remuneration paid to the top 50 individuals in the organisation in 2009 has reduced by 15% as at March 2012. In addition, total staff costs in the organisation have reduced by 48% from end 2008 to end 2011 and this includes 6 months of additional cost resulting from the merger with INBS in 2011.

Since nationalisation there has been a 60% reduction in total headcount in the combined Anglo Irish Bank and INBS organisations from close to 2,250 in January 2009 to 919 today. IBRC also employs 184 front line staff in its NAMA servicing unit. As part of this reduction, there has been an extensive re-structuring and streamlining of the management structures in IBRC. Of the 50 most senior people employed pre-nationalisation, 34 (or 68%) have since left the Bank.

I have accepted the Board’s position at this time. However, I have  asked that the situation in relation to remuneration  be kept under review. I have also conveyed my view that downward pressure is to be exerted in relation to the remuneration packages of any new staff recruited to the bank.

Credit card charges levied by Irish banks – 24th April 2012,

To ask the Minister for Finance if his attention has been drawn to the fact that credit card charges levied by Irish banks are higher than other banks in the EU.

Reply

The Minister for Finance (Michael Noonan):

I have been informed by the Central Bank there are three types of charges associated with credit cards:

The ‘acquiring bank’ (on behalf of the credit card company e.g. Visa and Mastercard) charges the retailer a fee – these fees are subject to the provisions of section 149 of the Consumer Credit 1995, if the acquiring bank is a financial institution,

The ‘issuing bank’ (the issuer of the credit card on behalf of the credit card company) charges the cardholder fees, e.g. foreign exchange fees/late payment/ interest fees. These fees are covered under section 149 of the Consumer Credit Act 1995 as the bank is an financial institution.

Sometimes, a retailer passes fees onto the cardholder for using a credit card e.g. Ryanair/Irish Rail. These fees are not covered under section 149 of the Consumer Credit Act 1995.

I have also being informed by the Central Bank that, while they have not carried out research into such charges, it would appears that credit card charges in Ireland are higher than those charged by  banks in other EU states.

Section 149 of the Credit Consumer Act 1995 requires financial institutions, money transmitters and bureaux de change to notify certain charges to the Central Bank for assessment in accordance with criteria laid down in the legislation as follows:

the promotion of fair competition between holders of authorisations and credit institutions,
the commercial justification submitted in respect of the proposal,

the effect new charges or increases in existing charges will have on customers, and
passing on costs to customers.

Having assessed the proposed charges submitted, the Central Bank will either reject the proposal, approve at a lower level or approve in full.

Examination of different tax bands – 18th April 2012,

To ask the Minister for Finance if he will provide estimates of the expected decrease in direct revenue to the State from a 1% reduction in the lower and higher rates of income taxation respectively; and if he will provide same for a 10% increase in the respective tax bands.

Reply

The Minister for Finance (Michael Noonan):

I am informed by the Revenue Commissioners that the full year costs to the Exchequer, estimated by reference to 2012 incomes, of reducing the standard and higher rates of income tax by 1 percentage point would be approximately €470 million and €205 million respectively.

The estimated cost of increasing the standard rate tax bands by 10% would be approximately €540 million in a full year.

The figures are estimates from the Revenue tax-forecasting model using actual data for the year 2009 adjusted as necessary for income and employment trends for the year 2012. They are, therefore, provisional and likely to be revised.

Any prospective changes to tax rates on income earned – 18th April 2012,

To ask the Minister for Finance if he is considering in the context for Budget 2013, any changes to the tax bands or tax rates on income earned.

Reply

The Minister for Finance (Michael Noonan):

As the Deputy is aware, the Programme for Government states that as part of the Government’s fiscal strategy we will maintain the current rates of income tax together with bands and credits. This commitment was delivered in Budget 2012.

As I have stated many times before in the House, the Programme for Government sets out our strategy in this matter and, subject to agreement with the Troika, we intend to continue to deliver on these commitments.

Taxes and rates – 18th April 2012,

To ask the Minister for Finance the number of persons paying tax ateach of the tax rates.

To ask the Minister for Finance the number of persons earning income but not paying income tax.

Reply

The Minister for Finance (Michael Noonan):

I propose to take questions numbers  242 and 246 together .

I am advised by the Revenue Commissioners that the information requested by the Deputy is as follows, in respect of the income tax year 2012.

Projected Distribution of Income Earners for 2012
Tax year Exempt
(Standard rate liability fully covered by credits or age exemption limits) Standard rate (including those whose liability at the higher rate is fully offset by credits) Higher rate (liability not fully off set by credits) All cases
Number % Number % Number %
Post-Budget 2012 817,100 37.7 946,200 43.7 401,800 18.6 2,165,100
· Numbers are rounded to nearest hundred.

The figures are estimates from the Revenue tax-forecasting model using actual data for the year 2009 adjusted as necessary for income and employment trends for the year 2012.
They are therefore provisional and likely to be revised.

It should be noted that a married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit.

Revenue from different tax rates – 18th April 2012,

To ask the Minister for Finance the amount of revenue collected from those paying tax at the lower rate and those paying tax at the higher rate.

Reply

I am informed by the Revenue Commissioners that on the basis of income tax returns for the income tax year 2009, the latest year for which the necessary detailed historical information is available, the breakdown of the total income tax liability between taxpayers at the lower and higher rates of tax for that year is 29% and 71% respectively.

Further details are provided in Table IDS 17 of the Income Distribution chapter of the Revenue Statistical Report for 2010, which is available on the Revenue website.

Revenue from income tax – 18th April 2012,

To ask the Minister for Finance the total amount of revenue raised from income tax on those earning €100,000 or greater; what this is as a percentage of the total tax take for the State; and if he will provide same from those earning €80,000 and €60,000 respectively.

To ask the Minister for Finance the total amount of revenue raised from income tax on those earning _40,000 or less in income tax and what this is as a percentage of the total tax take for the State.

Reply

The Minister for Finance (Michael Noonan):

I propose to take questions numbers 244 and 245 together.

I am advised by the Revenue Commissioners that the information requested, estimated by reference to the income tax year 2012, is set out in the following table.

Income Tax Post-Budget 2012 (Base year 2009)
Range of Gross Income Income Tax  % of Total Income Tax Yield
€40,000 or less €1,207,918,600 10%
€60,000 or greater  €8,716,082,300 72%
€80,000 or greater  €6,777,535,500 56%
€100,000 or greater €5,328,329,800 44%

Tax figures are rounded to the nearest hundred and percentages are rounded to the nearest whole number.

It should be noted that the income ranges shown in the above table relate to Gross Income as defined in Revenue Statistical Report 2010.

The figures are estimates from the Revenue tax-forecasting model using actual data for the year 2009 adjusted as necessary for income and employment trends for the year 2012. They are therefore provisional and likely to be revised.

It should be noted that a married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit.

Tax breaks, exemptions and losses to the exchequer – 18th April 2012,

To ask the Minister for Finance if he will provide a breakdown of all tax breaks provided by the Government, by area, value and what these tax breaks are estimated to be worth to the Exchequer in terms of revenue forgone.

To ask the Minister for Finance if he will provide a breakdown of all tax exemptions provided by the Government, by area, value and what these tax exemptions are estimated to be worth to the Exchequer in terms of revenue foregone.

To ask the Minister for Finance if he will provide a breakdown of all tax allowance provided by the Government, by area, value and what these tax allowance are estimated to be worth to the Exchequer in terms of revenue foregone.

Reply

The Minister for Finance (Michael Noonan):

I propose to take questions numbers 247, 248 and 249 together.

I am advised by the Revenue Commissioners that the total identifiable costs to the Exchequer which are currently available relate to income tax and corporation tax allowances, reliefs, exemptions and tax credits available as set out in the following tables for 2008 and 2009, the most recent year for which the necessary detailed historical information is available. It shoild be noted that there have been changes since this period, i.e. some schemes have been abolished or modified and others have been introduced. Relevant notes relating to items in the tables are also included.

Index of Tables and Notes
a) Note on the Cost of Tax Credits, Allowances and Reliefs 2008 and 2009
b) Table IT 6 showing Cost of Tax Credits, Allowances and Reliefs 2008 and 2009
c) Notes on Table IT 6
d) Note on Green Paper on Pensions
e) Estimate of cost of certain property-based tax incentives and incomes exempt from tax for 2008 and 2009
f) Note on reliefs in respect of which costs are not currently quantifiable or are negligible or are not identifiable within total aggregates.

These estimates of cost are not compiled by reference to areas.

a) Cost of Tax Credits, Allowances and Reliefs 2008 and 2009
The following table IT 6 shows the estimated cost in terms of revenue forgone of the personal tax credits and the main reliefs and deductions allowable under the income tax system.  A number of reliefs which apply both to individuals and companies is also included and the cost shown in relation to these reliefs covers income tax and corporation tax.

An adjustment is included in the cost figures applying to income tax to compensate for incomplete numbers of tax returns on record at the time of compiling the estimates.

The tax credits and reliefs listed in the table serve varying  purposes. Many are essentially structural reliefs through which individual tax liabilities are adjusted to reflect relative taxable capacity.  The main  personal tax credits are a good example of this since they may be regarded as part of the progressive income tax structure representing a band of income chargeable at a zero rate. Others, such as relief for interest paid in full or investment in corporate trades, are tax-based incentives in favour of specific  groups or activities which are designed to promote certain aspects of public policy.

In computing taxable profits, account needs to be taken in some way of the depreciation of capital assets incurred in earning those profits. To this extent, the figures in the table of the “costs” of capital allowances should not be regarded as measuring a “loss of tax revenue” on profits. To compute such “loss”, regard would have to be had to the excess of the amount of the capital allowances at current rates over the amount of the normal allowances.

The figures shown for the basic personal tax credits (married, single and widowed) are the costs of these tax credits as if all other tax credits and the exemption limits did not apply. They do not include individuals who are not on Revenue records because their incomes are below the income tax thresholds. The cost figures for the exemption limits are based on the excess of the exemption limits over the basic personal tax credits.

The figures of cost are for 2008 and 2009 and all figures are based on tax due in respect of assessments for each year and not on tax receipts within that year.

The figure against each credit or allowance represents the additional tax which would become payable if the tax credit or allowance were withdrawn assuming no consequent change in the behaviour of taxpayers (for example, in relation to the reliefs for savings), or the amounts of payments (for example, interest payable on certain savings schemes might need adjustment to take account of the new tax liability).

The numbers of claimants of each credit or relief are shown for both years to the extent that they are available. The numbers included are the taxpayers who would be adversely affected by the withdrawal of the respective credit or relief.

In the calculations, each tax credit or allowance has been dealt with separately and on the assumption that the rest of the tax system remained unchanged.  It would be therefore inaccurate to calculate the effect of withdrawing all the credits, reliefs and allowances by simply totaling the figures. For example, the costs shown for capital allowances and stock relief are also calculated on the basis of separate withdrawal of these reliefs. Their combined cost would be greater than the sum of the separate costs because allowances are not always fully set off against available profits. For instance, a person with €1,000 gross trading profits, €1,000 capital allowances and €1,000 stock relief would pay no tax if either of the reliefs were withdrawn but would pay tax on €1,000 profits if both reliefs were withdrawn. In this case, the cost of each relief separately is nil but the combined cost is tax on €1,000. Basic data is not available to enable an estimate of the combined cost of these reliefs to be made.

The figures for estimates based on tax returns have been grossed up to an overall expected level to adjust for incompleteness in the numbers of returns on record at the time the data was extracted for analytical purposes.

Apart from the artists exemption, these figures do not take account of the application of the restriction of reliefs originally provided for in section 17 of Finance Act 2006, which took effect from 1 January 2007.The restriction was extended by Section 23 Finance Act 2010.

Finally, the estimates shown in many cases are tentative and are subject to revision in the light of later information.
b) Table IT 6 showing Cost of Tax Credits, Allowances and Reliefs 2008 and 2009
(Table to be inserted here)

c) Notes on Table IT 6
(1) Figures accompanied by an asterisk * are particularly tentative and subject to a considerable margin of error.
(2) The cost figures for the exemption limits are based on the excess of the exemption limits over the basic personal tax credits. They include the cost of marginal relief for taxpayers whose incomes are not greatly in excess of the exemption limits.
(3) The figures shown for the basic personal tax credits (married, single and widowed) are the costs of these tax credits as if all other tax credits and the exemption limits did not apply. They do not include individuals who are not on Revenue records because their incomes are below the income tax thresholds.
(4) Arising from the change over to Tax Relief at Source the figures relate to the number of policies issued. These include policies where subscriptions were paid by businesses on behalf of their employees.
(5) Part of the cost of contributions to Permanent Health Benefit Schemes is not identifiable as a result of the move to a “net pay” basis for contributions by PAYE taxpayers from 6 April 2001.
(6) See the following  note on  “Green Paper on Pensions” for background commentary on the basis of the cost figures  .
(7) “Other” relates to borrowings for purposes such as acquiring an interest in a company or partnership  .
(8) The income on which the cost of  exemption from income tax for   charities, colleges, hospitals, schools, friendly societies, etc. is based includes dividend income on which income tax deducted at source has been repaid,  other investment income, payments received under covenant, donations by the PAYE sector to approved bodies together with the associated tax relief and donations by the self-employed and corporate sectors to approved bodies and approved sports bodies. Information is not available about other income received gross.
(9) The cost figures for relief for certain Sports Persons are based on income tax self assessment returns and for donations to Approved Sports Bodies are based on ncome tax and corporation tax self assessment returns .
(10) In the absence of other information, tax has been assumed at the standard rate of income tax even though a different rate might be more appropriate.
(11) The costs and numbers for the Exemption of Statutory Redundancy Payments are based on external data. From 2009 the “numbers” indicate the numbers of claims received in the year and not the numbers of claims approved.
(12) The costs included for corporation tax are by reference to accounting periods which ended in the years 2008 and 2009.
(13) The cost shown for capital allowances does not include any cost associated with “unused capital allowances”, that is, capital allowances which are not absorbed by a company in the accounting period in which they arise because they exceed the amount of the company’s profits of that accounting period which are available for offset. Unused capital allowances can be offset as losses against taxable profits arising in the previous accounting period and against certain profits arising in future accounting periods and can be offset against the profits of another company in the same group of companies. It is estimated that €3587 million and €5373 million of unused capital allowances were claimed in respect of 2008 and 2009 accounting periods respectively but as the proportion of this item which is included in previous years losses and in group relief is not separately identifiable a reliable estimate of the cost of the capital allowance element cannot be provided.
(14) The tax cost shown for section 23 type relief is the estimated ultimate tax cost relating to the total allowable expenditure in respect of  claims  made in 2008 and 2009 tax returns for the first time. The cost shown is for income tax cases only.
(15)  the cost shown for manufacturing relief for 2008 is compiled using the basic data available but for  technical reasons associated with a system  redesign  it is understood to be  understated by at least €100m.
(16) The costs shown for R&D is for claims for R&D on corporation tax returns for accounting periods ending in 2008 and 2009. However, the cost  for 2009 includes the amount of credit allowed against 2009 tax together with the amount offset against tax of previous accounting periods and as payable credits.

d) Note on Green Paper on Pensions – Review of estimates of cost
As part of the work on the Green Paper on Pensions, a review was carried out of the current regime of incentives for supplementary pension provision with a view to developing more comprehensive and reliable estimates of the cost of reliefs in this area. The review examined, among other things, the current reliefs and incentives for investment in supplementary pensions and the data available on which to base reliable estimates of the costs in revenue foregone to the Exchequer.

The review drew on newly available 2006 aggregate data on contributions to pension schemes by employers and employees arising from a P35 initiative introduced on foot of provisions that were included in Finance Act 2004 with a view to improving data quality. Estimates of the cost of tax for private pension provision updated for 2008 and 2009 are included in  table  IT6.

The breakdown and make-up of these estimated costs of reliefs differ from presentations of costs in this area for years PRIOR TO 2005 in a number of respects and are not directly comparable. further details on the cost of tax and other reliefs and the changes in the methodology are contained in pages 106 and 107 of the Green Paper on Pensions which is available at www.pensionsgreenpaper.ie.

e) Estimate of cost of certain property-based tax incentives and incomes exempt from tax for 2008 and 2009
Certain property-based tax incentives and incomes exempt from tax  – uptake and estimated potential cost to the Exchequer in terms of income tax and corporation tax forgone based on 2008 and 2009 tax returns
Provisions were included in the Finance Acts of 2003 and 2004 to enable new statistical data on the uptake of tax relief for certain property-based tax incentives and incomes exempt from tax to be obtained from tax returns. This information, derived from changes introduced by the Revenue Commissioners to income tax returns and corporation tax returns for 2008 and 2009, is set out in the following tables.

The figures shown include the amounts claimed in the year but exclude amounts carried forward into the year either as losses or capital allowances, and include any amounts of unused losses and/or capital allowances which will be carried forward to subsequent years.
Tax Incentive/Income Exemption 2008   Amount Claimed Assumed maximum tax cost €m Number of claimants
€m €m
Urban renewal   230.8 87.0 3,367
Town Renewal   61.6 24.2 998
Seaside Resorts   16.1 6.4 1,091
Rural Renewal   88.4 35.7 2,803
Multi-storey car parks 16.8 6.6 134
Living Over the shop     6.4 2.6 81
Enterprise Areas 6.3 2.5 138
Park and Ride 1.8 0.7 21
Holiday Cottages 36.9 14.8 844
Hotels 305.5 116.4 1,996
Nursing Homes 48.4 19.8 734
Housing for the Elderly/infirm     7.4 3.0 179
Hostels    1.68 0.69 22
Guest Houses     0.29 0.12 10
Convalescent Homes    1.4 0.5 32
Qualifying Private Hospitals 30.2 12.3 342
Qualifying sports injury clinics   4.1 1.7 60
Buildings Used for certain childcare purposes   30.3 12.2 519
Qualifying Mental Health Centres 0.1 0.0 3
Student Accommodation 60.0 23.5 814
Caravan Camps                                                                     1.5 0.6 10
Mid-Shannon Corridor Tourism Infrastructure         1.8 0.7 12
Exemption of profits or gains from Greyhounds 0.0 0.0 10
Exemption of profits or gains from Stallions  92.3 15.1 192
Exemption of profits or gains from Woodlands 51.0 13.6 2,492
Exempt Patents (Section 234, TCA 1997) 198.3 51.7 1,209
Totals   1,299.2 452.6 18,111
Tax Incentive/Income Exemption 2009   Amount Claimed Assumed maximum tax cost €m Number of claimants
€m €m
Urban renewal   233.8 93.1 3410
Town Renewal   45.4 18.3 1,001
Seaside Resorts   13.3 5.3 875
Rural Renewal   70.0 28.0 2,653
Multi-storey car parks 13.2 5.2 130
Living Over the shop     4.1 1.7 66
Enterprise Areas 5.4 2.1 118
Park and Ride 2.0 0.8 20
Holiday Cottages 34.7 13.9 786
Hotels 263.2 102.1 1,906
Nursing Homes 54.4 21.6 750
Housing for the Elderly/infirm     6.8 2.8 145
Hostels    0.73 0.3 14
Guest Houses     0.24 0.1 8
Convalescent Homes    1.3 0.5 28
Qualifying Private Hospitals 30.5 12.5 346
Qualifying sports injury clinics   3.6 1.5 67
Buildings Used for certain childcare purposes   30.8 12.5 527
Qualifying Mental Health Centres 0.1 0.0 1
Student Accommodation 48.3 19.1 751
Caravan Camps 0.6 0.2 2
Mid Shannon Corridor Tourism Infrastructure  0.6 0.2 2
Exemption of profits or gains from Greyhounds 0.0 0.0 5
Exemption of profits or gains from Stallions 2.0 0.4 32
Exemption of profits or gains from Woodlands 48.2 14.4 3,570
Exempt Patents (section 234, TCA 1997) 260.7 71.7 1,268
Other
Totals   52.6
1,226.6 19.5
447.8 635
19,116

These figures do not take account of the application of the restriction of reliefs originally provided for in section 17 of Finance Act 2006 and which took effect from 1 January 2007.The restriction was extended by Section 23 Finance Act 2010.

Notes:
The figures shown  relate to the various reliefs/incentives and exemptions as specified in the 2008 and 2009 form 11 and CT1.
There were concerns that in some instances the new, separately categorised data on property incentives may not have been correctly entered on the Tax returns. Revenue drew the attention of the relevant tax practitioner bodies to these deficiencies  to rectify them in future returns and also increased awareness among its own staff involved in processing tax  returns of the need to ensure, through closer examination of the returns, that they are correctly completed.
The estimated costs have assumed tax foregone at the 41% rate in the case of income tax and 12.5% in the case of corporation tax. This means the figures shown correspond to the maximum Exchequer cost in terms of income tax and corporation tax. However, the actual Exchequer cost could be lower, particularly in relation to the exempt income items, as the income could be subject to deductions for allowable expenses and other costs thereby reducing the level of income that would be actually  subject to tax.
Some of the costs shown above are included in the costs shown for capital allowances and section 23 relief in Table IT6However, exempt income included above is not part of capital allowances.

f) Note on reliefs in respect of which costs are not currently quantifiable or are negligible or are not identifiable within total aggregates.

Examples of this type of relief would include:

Relief from averaging of farm profits;
Exemption for income arising from payments in respect of personal injuries;
Exemption of certain payments made by Hemophilia HIV Trust;
Exemption of lump sum retirement payments;
Relief for allowable motor expenses;
Tapering relief allowable for taxation of car benefits in kind;
Reduced tax rate   for authorised unit trust schemes;
Reduced tax rate   for special  investment schemes;
Exemption of certain grants made by Údarás na Gaeltachta;
Relief for investment income reserved for policy holders in life assurance companies;
Relief for various business related expenses such as staff recruitment, rent, legal fees, and other general expenses;
Exemption in certain circumstances on the interest on quoted bearer Eurobonds;
Exemption of payments made as compensation for loss of office;
Exemption of scholarship income
Exemption for income received under Sceim na bhFoghlaimeoiri Gaeilge.

Haulage – 18th April 2012,

To ask the Minister for Finance if he will provide a response to the following haulage issue (details supplied).

Reply

The Minister for Finance (Michael Noonan):

The Deputy may be aware that a working group was set up between officials of my Department, the IRHA and some members of the Oireachtas.  This working group is discussing a number of issues of concern to the haulage industry.  I am sure the Deputy will understand that I cannot pre-empt the outcome of those discussions which are ongoing.

I should point out that a fuel rebate system, as sought by the IRHA, could not under EU law be restricted to Irish licenced hauliers but would have to be extended to all vehicles intended exclusively for the carriage of goods by road with a maximum permissible gross laden weight of not less than 7.5 tonnes. In addition, the rebate would have to include the carriage of passengers by a motor vehicle of category M2 or category M3 as defined in Council Directive 70/156/EEC.

BOI customers can’t make international payments in Yuan – 29th March 2012,

To ask the Minister for Finance if his attention has been drawn to the fact that Bank of Ireland do not allow customers to make international payments in Chinese Yuan; and if he believes this to be a hindrance to competition.

Reply

The Minister for Finance (Michael Noonan):

Notwithstanding the State’s shareholding in the bank, Bank of Ireland operates in an arm’s length capacity from the State in relation to commercial issues.  It is a matter for the board and management to determine and implement operational policy in their organisation. Therefore, commercial decisions in relation to Bank of Ireland are solely a decision for the bank.

The scrappage scheme – 28th March 2012,

To ask the Minister for Finance his plans to re-introduce a scrappage scheme for the auto industry.

Reply

The Minister for Finance (Michael Noonan):

I have no plans to re-introduce a scrappage scheme for the auto industry.

A tax free weekend for personal computers – 22nd February 2012,

To ask the Minister for Finance further to Parliamentary Question No. 47 of 9 February 2012, if he will consider the possibility of introducing a tax free weekend in either August or September of each year to be applied solely to personal computers and related products and to do so by way of reducing VAT to 1% on such products in order to assist those students in purchasing the necessary equipment for the coming academic year.

Reply

The Minister for Finance (Michael Noonan):

As outlined in my previous response to the Deputy, VAT is governed by the EU VAT Directive, with which Irish VAT law must comply.  The VAT Directive provides that the supply of goods and services by taxable persons is subject to VAT, unless specifically exempted under its terms.

The terms of the Directive do not provide for variations in VAT treatment for specific periods and as such it is not possible to provide for a scheme of the kind proposed.

Furthermore, it is not possible to apply a VAT rate of 1% to any good or service as the VAT Directive provides that a minimum reduced rate of 5% apply and only in relation to set goods and services listed in Annex III of the Directive. Personal computers and related products are not listed in Annex III and as such the standard VAT rate of 23% must apply to them.

A tax free weekend to assist students – 9th February 2012,

To ask the Minister for Finance if he will consider the possibility of introducing a tax free weekend in either August or September of each year to be applied solely to personal computers and related products, in order to assist those students in purchasing the necessary equipment for the coming academic year..

Reply

Minister for Finance (Michael Noonan):

VAT is governed by the EU VAT Directive, with which Irish VAT law must comply.  The VAT Directive provides that the supply of goods and services by taxable persons is subject to VAT, unless specifically exempted under its terms.  The terms of the Directive do not provide for the non-application of VAT to supplies for specific periods and as such it is not possible to provide for a scheme of the kind proposed.

VHI healthcare plans and the paymaster general – 7th February 2011,

To ask the Minister for Finance if his attention has been drawn to the fact that when Fingal County Council transferred responsibility for pension payment to retired vocational education committee employees to the Paymaster General, that the Paymaster General changed the renewal period for those with VHI healthcare plans, meaning that there was a period when those in receipt of pension payments were not covered under their VHI plans..

Reply

Minister for Finance (Michael Noonan):

There is a long standing agreement with all of the health insurance companies, including the VHI, where an individual’s health cover remains in place even in circumstances where, through no fault of his/her own, a premium is not paid. As part of the move to the greater use of shared services in the public sector in order to drive efficiencies, the Paymaster General’s Office, which is part of my Department, took over the payment, on an agency basis, of pensions of the retired staff of the Vocational Education Committees. Payment of these pensions was previously made through the local authorities. When  those in receipt of pension paid via Fingal County Council moved to the payroll of the Paymaster General’s Office in November 2011, there was no period during the transfer when they were not covered under their VHI plans.

NAMAs strategy for unoccupied homes – 7th February 2012,

To ask the Minister for Finance if he is satisfied with the National Assets Management Agency’s strategy in relation to residential homes, some of which are protected structures or in areas of architectural conservation, that are unoccupied and in need of repair, or have been vacated while renovation works remain to be completed, and are now falling into disrepair.

Reply

NAMA informs me that property assets securing NAMA loans are under the control of debtors or of receivers appointed by the Agency. As such, it is debtors and receivers who are responsible for the preservation and maintenance of such property, including protected structures and residences which are of architectural significance.

In cases where NAMA becomes aware that debtors are neglecting their duties in this regard, the Agency advises me that it demands of them that they take appropriate remedial action. Should the debtor fail to take the appropriate action, NAMA can appoint a receiver to take control of the property concerned or under the provisions of section 141 of the NAMA Act, it can apply to the District Court for an entry and maintenance order, for which the overall costs can be charged back to the debtor.

NAMA informs me that it has not been necessary to move beyond the first option in the very few cases relating to period buildings and protected structures that have arisen to date.

Fuel smuggling – 31st January 2012,

To ask the Minister for Finance if there is an operation in place to test trucks crossing the border from Northern Ireland to ensure the fuel isn’t going to underground filling stations in the Republic.

Reply

The Minister for Finance (Michael Noonan):

All consignments of mineral oil from Northern Ireland are subject to requirements of EU law for the Intra-EU movement of excisable products. These requirements include the paying or securing of the excise duty due in the State, and that the consignment is at all times under cover of the appropriate documentation.

In keeping, however, with the principle of free movement of goods in the EU, there can be no systematic or random checking of these consignments at the border, and a consignment may only be stopped and checked where there are reasonable grounds to suspect that there has been a breach of requirements. The consignment may then be stopped by Revenue officers, and documents may be examined and the mineral oil sampled and tested.

Revenue employs a broad range of compliance and enforcement strategies to detect illicit practices involving mineral oil fraud, including optimum deployment of resources to intercept illicit product, and sampling and testing of mineral oil, both in the course of consignment and at retail outlets.

Investment plans for the National Pensions Reserve Fund –18th January 2012,

To ask the Minister for Finance the current standing of the National Pensions Reserve Fund; if he will provide a breakdown of investments including the discretionary portfolio, as well as money committed and information on the future investment plans of the fund.

Reply

The Minister for Finance (Michael Noonan):

I am informed by the National Treasury Management Agency, as the Manager of the National Pensions Reserve Fund, that, on 31 December 2011, the total value of the National Pensions Reserve Fund was €14.5 billion, comprising the Discretionary Portfolio of €5.4 billion and the Directed Portfolio currently held at €9.1 billion pending completion of an independent valuation review of the Fund’s investments in Allied Irish Banks.

The breakdown of the Discretionary Portfolio as at 31 December 2011 is as follows:  Asset Class €m % of
Discretionary
Portfolio
Large Cap Equity 1,346 25.1%
Small Cap Equity 141 2.6%
Emerging Markets Equity  375 7.0%
Quoted Equity 1,862 34.7%

Value of equity put options 264 4.9%

Eurozone Inflation Linked Bonds 78 1.5%
Eurozone Corporate Bonds 271 5.0%
Cash 856   15.9%
Financial Assets 1,205 22.4%

Private Equity 791 14.7%
Property 501 9.3%
Commodities 271 5.0%
Infrastructure 308 5.7%
Absolute Return Funds 170 3.2%
Alternative Assets 2,041 38.0%

Total Discretionary Portfolio
5,3721
100%

1 Information in respect of the Discretionary Portfolio is, in the case of direct quoted investments, based on valuation as of close of business on 31 December 2011 and, in the case of indirect investment vehicles, based on the most recently available valuations.

It should be noted that the NPRF has a number of capital commitments as set out in the following table:

Capital committed at 31 December 2011  €m
Private Equity Undrawn commitments 431
– to Irish funds €123m
– to international funds
€308m
Property Undrawn commitments 84
Infrastructure Irish Infrastructure Fund 250
Water metering Subject to certain conditions 450
Total  1,215

In September 2011 the Government announced the establishment of a Strategic Investment Fund which will take the form of a portfolio of funds investing in areas of importance to the Irish economy including infrastructure, financing for SMEs and venture capital. The NPRF will be a cornerstone commercial investor in these funds with the expectation of increasing total fund size by attracting other commercial co-investors. In November the NPRF announced a commitment of €250 million to a new Irish infrastructure investment fund which is seeking up to €1 billion from institutional investors in Ireland and overseas and which will invest in infrastructure assets in Ireland, including assets designated for disposal by the Government and commercial State enterprises and also new infrastructure projects.

The Section 23 consultation process – 25th October 2011,

To ask the Minister for Finance when he is due to report on the Section 23 consultation process.

Reply

The Minister for Finance (Michael Noonan):

The public consultation on Section 23-type reliefs and other “legacy” property-based tax reliefs, undertaken by my Department concluded at the end of July.  Over 700 submissions were made during the consultation, which forms part of an impact assessment process to assess the potential effects of amending, curtailing and/or abolishing such reliefs, in keeping with the commitment in the Programme for Government to curtail tax shelters which benefit very high income earners.

Submissions were received from a wide range of organisations and from individuals, and varied in length and scope.  These submissions are currently being examined and are adding to our understanding of the dynamic of these reliefs and providing a valuable source of information on the possible impacts on the State and investor groups of potential changes to the treatment of property-based legacy reliefs.

It is anticipated that the analysis of the submissions along with the results of the impact assessment process will be available for consideration in the context of the forthcoming budget.

As the Deputy is aware it is not customary to comment in advance of the Budget on any matters that might be the subject of Budget decisions.

Legal costs incurred by NAMA – 25th October 2011,

To ask the Minister for Finance if he will confirm the cost to the State for the legal costs incurred by the National Asset Management Agency in 2010 and to date 2011.

Reply

The Minister for Finance (Michael Noonan):

Fees and expenses incurred by NAMA are recovered through the operating activities of the agency.  They are published in the quarterly reports of NAMA, which are laid before the Houses of the Oireachtas and published on the NAMA website.

The second quarterly report for the period ending 30 June 2011, accompanied by financial statements for the second quarter, was submitted to me as required by the end of September 2011 and I will lay the report before each House of the Oireachtas shortly.

The aggregate legal costs for the year 2010 and the first quarter of 2011 are as follows:

2010€m Q1 2011€m
Legal   Fees 3.31 0.88

The figures in the table above do not include legal fees incurred by NAMA as part of the loan due diligence process, which are recovered from the five participating institutions through a reduction in the consideration paid for acquired loans.

The amount spent by the Department on consultancy fees – 6th October 2011,

To ask the Minister for Finance the amount he intends to spend on consultancy fees in 2011, in particular those contracted to identify value for money in his Department.

Reply

The Minister for Finance (Michael Noonan):

The 2011 Estimate for my Vote includes the following provision for consultancy expenditure:

Administrative Budget:                                                                                                    €0.028m

Consultancy costs associated with the stabilisation of the Banking Sector:         €3.515m

At this point I do not envisage that the full allocation will be required but, due to the uncertain nature of the work, the final requirement cannot be predicted with reasonable certainty.

I do not envisage that any of this provision will be attributed to contract work related to value for money.

The following table contains the relevant information in relation to the bodies under the aegis of my Department.

Agency, Body, Office Detail
National Treasury Management Agency The projected costs of legal and consultancy fees for the NTMA for 2011 are €8 million. This amount includes fees in relation to banking system functions and takes account of fees incurred by the Department of Finance post the transfer of banking functions to the Department (5 August 2011). It excludes banking consultancy fees recoverable from the financial institutions. Under the Memorandum of Understanding agreed with the Department of Finance, the NTMA continue to pay the third-party consultancy fees of the Banking Unit until 31 December 2011.The above projected costs do not include consultancy fees incurred by NAMA which are paid out of NAMA’s operating income. In 2011, legal and consultancy fees for NAMA are expected to be €29.9m.
Office of the Revenue Commissioners The amount provided for in 2011 in the Revenue Commissioners Revised Estimates Volume under Consultancy Services and Value for Money and Policy Reviews is €108,000. The amount spent to date in 2011 is €31,365 (including €2,405 to those contracted to identify value for money). The projected total expenditure to the end of the year is c€45,000.
Office of the Appeals Commissioners Nil expenditure on Consultancy in 2011
Office of the Comptroller and Auditor General The Office of the Comptroller and Auditor General has an Estimate of €700,000 for 2011 in subhead A.7 Consultancy. Of this amount €500,000 is to provide specialist expertise in conducting the audit of the National Asset Management Agency and €200,000 is provided more generally for specialist expertise in connection with the reporting work carried out by the Office. The consultancy expenditure on NAMA related work is considered a cost of audit and is recouped from NAMA through Appropriations in Aid.To the end of September the Office has spent about €86,000, most of which is recoupable from the NAMA audit. To the end of the year it is expected that the Office will not spend more than about €100,000.

Legislation governing book makers opening hours – 14th September 2011

To ask the Minister for Finance his plans to review the current legislation governing the opening hours of bookmakers.

Reply

The Minister for Finance (Michael Noonan):

The proposed Betting (Amendment) Bill, which is being drafted at present, will amend the 1931 Betting Act to inter alia establish the regulatory framework for the licensing of remote bookmakers and betting exchanges, including measures to enforce the regulatory framework. The extension of the opening hours of retail betting shops over the winter period is being considered in that context.

The drafting of the Bill, which is fairly complex, is well advanced. The Bill is likely to be published in the autumn.

The State review of senior management in financial institutions – 14th September 2011,

To ask the Minister for Finance further to Parliamentary Questions Nos 89 and 93 of 10 May 2011 regarding employment contracts of all the senior management in financial institutions covered by the State guarantee, the stage the review is at; when it will be completed; and if he will give details of any preliminary details.

Reply

The Minister for Finance (Michael Noonan):

As the Deputy is aware, in April of this year, the NTMA requested a review of remuneration policies and practices by each of the covered institutions.  In that regard, the institutions were asked to consider measures that could be taken to realign staff expectations with regard to remuneration and benefits in the current economic environment and financial circumstances of the banks.

The review exercise is ongoing.  I fully recognise that there is a real public interest in the levels of remuneration at the covered institutions and I will endeavour to have this completed in the shortest timeframe possible with a view to putting the information into the public domain.

Alternatives to the moratorium on the enforcement of repossessions –14th September 2011,

To ask the Minister for Finance if he is considering alternative courses of action for lenders other than the current moratorium on the enforcement of repossessions.

Reply

The Minister for Finance (Michael Noonan):

The Deputy may wish to note that a Working Group has been established under the Economic Management Council to consider the state of implementation of the main recommendations of the Mortgage Arrears and Personal Debt Group which published its final report in November 2010.

Adjustment for those who paid pension levy out of personal pension – 14th September 2011

To ask the Minister for Finance if any adjustment will be made in the future to take into account those who paid their pension levy out of their personal pension.

Reply

The Minister for Finance (Michael Noonan):

I assume the Deputy is proposing that the amount of the pension levy passed on to individuals over the period of the levy should be available to them as a credit against their future tax liabilities.

The moneys raised from the pension fund levy will be used to pay for the reductions in VAT, PRSI and the air travel tax as well as for the additional expenditure measures announced in the Jobs Initiative in May last. These and the other various measures in the Initiative represent the first steps by this Government towards improving the competitiveness of important sectors of the economy and facilitating the return to work of people currently unemployed.

Moratorium on the enforcement of repossessions – 14th September 2011

To ask the Minister for Finance if he is considering alternative courses of action for lenders other than the current moratorium on the enforcement of repossessions.

Reply

The Minister for Finance (Michael Noonan):

The Deputy may wish to note that a Working Group has been established under the Economic Management Council to consider the state of implementation of the main recommendations of the Mortgage Arrears and Personal Debt Group which published its final report in November 2010.

This Group has also been asked to consider and develop further necessary actions to alleviate the increasing mortgage over-indebtedness problem. I expect that the Group will have its work completed shortly.

Pension levy – 14th September 2011,

To ask the Minister for Finance if any adjustment will be made in the future to take into account those who paid their pension levy out of their personal pension.

Reply

Minister for Finance (Michael Noonan):

I assume the Deputy is proposing that the amount of the pension levy passed on to individuals over the period of the levy should be available to them as a credit against their future tax liabilities.

The moneys raised from the pension fund levy will be used to pay for the reductions in VAT, PRSI and the air travel tax as well as for the additional expenditure measures announced in the Jobs Initiative in May last. These and the other various measures in the Initiative represent the first steps by this Government towards improving the competitiveness of important sectors of the economy and facilitating the return to work of people currently unemployed.

Given our commitments under the Joint EU/IMF Programme of Financial Support and the current difficulties in the public finances, the Jobs Initiative must be funded on a cost neutral basis. Since the proceeds of the levy are already committed in the manner I’ve described, a commitment to allow the levy to also be used as a tax credit against future tax liabilities would mean that the Jobs Initiative would not be cost neutral. I cannot therefore agree to the proposal.

Protection of consumers – 14th September 2011,

To ask the Minister for Finance his plans to protect those who had their finances managed by a company (details supplied).

Reply

Minister for Finance (Michael Noonan):

Following the collapse of Home Payments Ltd (HPL) last month, the Central Bank commenced an investigation into the matter. This investigation is on-going and I await the final report from the Bank. However, I can confirm that the Central Bank has informed me that, as HPL was not authorised or licensed by the Bank, clients are not eligible for a compensation scheme/deposit protection scheme and, in addition, clients of HPL do not have recourse to the Financial Services Ombudsman. Since the collapse, the Central Bank has worked with the National Consumer Agency and with  regulatory and industry bodies to provide assistance to customers of HPL who are at a financial loss.

The Bank has also informed me that it is undertaking a review of all firms in the State which appear to offer customers debt advice and/or debt management type services.

The Government is committed to having in place an effective regulatory/supervisory system for those firms providing a household budgeting and bill payment service, a debt management service and/or a debt advice service. The findings of the investigations by the Central Bank into HPL and into the other firms will inform what regulatory/supervisory system  should be put in place for firms providing these services – whether provided separately or bundled together – or, alternatively, what amendments to the current regulatory/supervisory framework may be required.

The regulation of debt-mangement companies – 14th September 2011,

To ask the Minister for Finance if existing legislation allows for regulation of debt-management and debt-advice services companies.

To ask the Minister for Finance his plans to regulate debt-management and debt-advice services companies.

Reply

Minister for Finance (Michael Noonan):

I intend to answer Question Numbers 115 and 116 together.

The Government is committed to having in place an effective regulatory system for debt-management and debt-advice companies.

To that end, my officials are in consultation with the Central Bank in examining what legislative proposals would be appropriate in this area.

Plans to reduce the VAT on NCT – 14th September 2011,

To ask the Minister for Finance his plans to reduce National Car Test VAT rate to 13% to bring it in line with the VAT rate for other services.

Reply

Minister for Finance (Michael Noonan):

I am advised by the Revenue Commissioners that the repairing or maintaining of movable goods, including motor vehicles, is liable to VAT at the reduced rate of 13.5% in accordance with paragraph 20(1), Schedule 3 of the Value-Added Tax Consolidation Act 2010.  The service of vehicle testing, that entails an inspection of a vehicle rather than its repair or maintenance, is liable to VAT at the standard rate of 21% in accordance with section 46(1)(a) of the VAT Consolidation Act.

There is no provision under the EU VAT Directive that would allow for a reduced VAT rate to apply to testing services.

1% rate of stamp duty on commercial properties in London – 21st July 2011

To ask the Minister for Finance if a reduction in stamp duty on commercial properties has been considered to bring Irish rates in line with the 1% rate charged in London.

Reply

Minister for Finance (Michael Noonan):

The top rate of non-residential Stamp Duty was reduced from 9% to 6% in 2008.   (The Deputy may be aware that residential Stamp Duty rates were reduced in December 2010 to 1% on consideration up to €1 million and 2% on the balance over 1 million.)

The Stamp Duty Land Tax rate in the UK is not a straightforward 1% across the board.  The charge can be up to 4% and the rate charged depends on a number of factors, including whether a property is freehold or leasehold, and whether the property is residential, non-residential or mixed-use.  Also, the purchase of a new lease with a substantial annual rent may attract an additional Stamp Duty Land Tax charge.  It is, therefore, a more complex tax than our Stamp Duty on transfers of non-residential property, where the primary factor that determines the rate is the consideration for the property.

Any potential taxation changes will be determined in the context of the Budget and Finance Bill and following the comprehensive spending review.

The possibility of a zero rate of DIRT for one year – 21st July 2011,

To ask the Minister for Finance the strategies he has in place for increasing and maintaining deposits in Irish Banks; and his views on a zero rate of DIRT for one year as a possible option.

Reply

Minister for Finance (Michael Noonan):

As the Deputy will be aware, deposits in Irish banks were on a downward trajectory during 2009 and 2010 as fears grew about the health of their balance sheets and rating agencies downgraded their recommendations. The government’s first priority was therefore to ensure that they were adequately capitalised to not only restore depositor and investor confidence, but to ensure they were in a position to support the economy going forward in terms of new lending.

The Central Bank completed an in depth analysis of the banks’ balance sheets in Q1 of this year using external consultants and the €24 billion capital need identified as a result of this exercise is currently being provided for. The exercise has generally been judged a success by the market a result which was highlighted again last week when the EBA stress tests results were released.

As I understand it, the result of this further recapitalisation of the banks is that if depositors on the ground now have any concerns it tends to resolve around uncertainties at a European level rather than the health of the Irish banking system.

Of course recapitalisation of our banks takes place against a general restructuring effort which will shrink not only the number of players in the market but the size and shape of these institutions and this will also bear fruit in terms of providing a road map to stability.

At a broader level the government remains focused on stabilising and growing the domestic economy such that rising incomes will be reflected in increased deposits in the Irish banking system.

As regards the suggestion of a zero rate of DIRT for one year, if this proposal was introduced that yield would be lost to the Exchequer and the money would have to be found elsewhere, whether through increased taxation from other sources or reduced expenditure.  To indicate the amount that may be involved, the 2010 yield from DIRT was €445 million.  I do not feel charging DIRT on deposit interest is a significant deterrent to saving, especially since DIRT is a final liability tax (that is, no further income tax is due on interest subject to DIRT) and income subject to DIRT is not liable to the Universal Social Charge.  Even if reducing the DIRT rate encouraged savings in Irish Banks, making the reduction for one year would not encourage the maintenance of deposits there.  Also, under European law we would be required to charge the same rate of tax on deposit interest in banks throughout the EU.

I have no plans at this time to make the suggested change.  However, any taxation changes will be determined in the context of the Budget and Finance Bill.

Credit for small and medium enterprises – 21st July 2011,

To ask the Minister for Finance his plans to encourage banks to provide timely credit for small and medium enterprises.

Reply

Minister for Finance (Michael Noonan):

I propose to answer questions and together.

The Deputies will be aware that the banking system restructuring plan creates capacity for the two Pillar Banks, Bank of Ireland and AIB, to provide lending in excess of €30 billion in the next three years.  SME and new mortgage lending for these banks is expected to be in the range of €16-20bn over this period. In each bank, a team of senior managers will be dedicated to the task of ensuring lending continues to grow to support economic growth. This lending capacity is incorporated into the banks’ deleveraging plans which allow for repayment of Central Bank funding through asset run-off and disposals over the period to 2013.

Both pillar banks provide my Department with monthly figures on balance sheet volumes, sanctioned facilities and geographic and industrial breakdowns of their SME lending. The Deputies may also be aware that under the terms of the government recapitalisation, both banks also produce a quarterly report which incorporates figures for sanctions and drawdowns by SMEs. The data contained in these reports will continue to be reviewed and analysed by my Department and the Credit Review Office to ensure that the banks are compliant with the terms of the Government recapitalisation as it relates to the provision of credit for SMEs.

I expect the pillar banks which have received considerable Government support to develop and offer a range of products to support SMEs and to ensure that lending targets are met.

When will the national budget be balanced – 21st July 2011,

To ask the Minister for Finance if it is his intention to balance the national budget; and the year he estimates that this will happen.

Reply

Minister for Finance (Michael Noonan):

The Government is committed to restoring order to the public finances and as an intermediate step, reducing the General Government deficit to less than 3% of GDP by 2015. The Programme for Government states that further reductions in the deficit will be required thereafter. However, the current budgetary projections contained in the Stability Programme Update, published in April, are only available out to 2015. Based on these projections, the Budget will not be in balance by 2015 but importantly will no longer be in excessive deficit. It is also important to note that a primary surplus – that is an excess of revenues over expenditure excluding debt interest – of 1.7% of GDP is forecast to emerge in 2014.

A new Irish bank – 21st July 2011,

To ask the Minister for Finance if his attention has been drawn to any proposals to create a new Irish Bank in order to increase competition within the banking sector.

To ask the Minister for Finance if any strategies are in places to encourage foreign banks to open here.

Reply

Minister for Finance (Michael Noonan);

I propose to take questions 86 and 90 together.

The Deputy will be aware of my Statement on Banking of 31 March 2011 where I set out Government policy in relation to the matters the Deputy has raised.

A fundamental element of Government Strategy has been to restore a functioning banking system and the Government has made particular commitments to recapitalising the banks and restructuring the banking sector as part of its Programme for Government.   This radical restructuring of the banking system is designed to put our banking system on a firm footing which is essential to Ireland’s economic recovery.

The recent positive review delivered by the Troika as well as the EBA stress test results for the two pillar banks reinforces that decision and puts us on the path to re-start stability and economic growth in core businesses based on a sound and well capitalised banking system with two pillar institutions.

While there are, at present, a number of foreign owned entities that operate within the Irish banking market and I would welcome further interest that foreign entities may have in entering the Irish market.

Tuesday, 19th July 2011 – Minister Michael Noonan

To ask the Minister for Finance further to Parliamentary Question No. 177 of 7 July 2011, if he has communicated these initiatives to other Departments; and if he will keep indicators of their performance in this area.

Reply

Minister for Finance (Michael Noonan):

The Office of Public Works has involvement with energy conservation initiatives in the various buildings in its portfolio. A state-wide energy conservation campaign entitled “Optimising Power @ Work” was launched in January 2008.  The aim of the initiative was to achieve a reduction of 15% in energy consumption in each of approximately 250 large buildings located throughout the country, which are owned/leased by the OPW for use by Government Departments and Agencies. The main focus of the project was the implementation of an intensive staff energy awareness campaign in each building, at the same time ensuring that the buildings were being operated in the most efficient manner possible with respect to all energy consuming processes, while maintaining or improving comfort conditions. The project also included basic energy audits of the buildings.

The initiative delivered average total savings of approximately 12%, €2.6 m annually, taking account of non-participating buildings.

A second phase of the Optimising Power @ Work campaign was launched in late 2010 and the target for this programme is to achieve a 20% energy saving over a 2 year period. In general Phase 2 of the project involves intensively targeting buildings, which under-performed in the first phase. We continue to work with the established energy teams in all the buildings to optimise their energy performance and identify areas where further improvements can be made.

Savings to date of approximately 14% have been achieved. This figure however reflects additional buildings that have only recently joined the project and have not yet shown savings. It is expected that the savings will improve considerably over the coming months as the new energy teams in these buildings become established and proactive.

Data for both electrical and heating fuel consumption is automatically collected from each building in the campaign, using a dedicated monitoring system.  As part of Optimising Power @ Work, using this data, each building is provided with a monthly energy report, which provides information on their current energy performance compared to the target and recommendations on how it can be improved.

ICT systems in the department – 23rd June 2011,

To ask the Minister for Finance his plans to harmonise IT systems across Departments to improve compatibility and improve communication; the platform he has considered; and if migration to a cloud computing solution has been considered.

Reply

Minister for Finance (Michael Noonan):

As with all enterprises, public or private sector, compatibility and communication between disparate systems is generally achieved by the use of recognised industry-standard data formats where available.  All guidance reflects to need for public bodies to comply with international standards and to implement industry standards where international ones do not exist.  The Programme for Government sets out how we plan to rationalise the usage of ICT and encourage greater sharing of ICT infrastructures, services and resources over time, building on some of the initiatives that have already been implemented for the procurement of ICT hardware, networking, telecommunications, and software licensing and support.  Cloud Computing is very much to the fore of our thinking.  In that regard, the Department of Public Expenditure and Reform is engaged in research and conducting trials with a number of major international ICT companies to determine what works best for public bodies, and to develop compelling commercial models for adoption.

A proposal for struggling mortgage holders – 9th July 2011,

To ask the Minister for Finance his views on a proposal (details supplied) to assist those who are struggling to make their monthly mortgage payments.

(Details: For those who genuinely cannot deal with their indebtedness, and who have discarded other assets such as costly cars, second or holiday homes and investments, should lenders not then be prepared to ‘buy’ an interest in the family home, based on its current market value, such that the remaining balance due to the bank can be serviced by the home owner. The homeowner would have the right to buy back the interest at some future date at the higher amount of its then market value and the original amount plus rolled up interest. A scheme built around this concept should provide home security for deserving families who want to honour their mortgage obligations but cannot for the time being.)

Reply

Minister for Finance (Michael Noonan):

I would like to inform the Deputy that there are a number of measures in place to assist mortgage holders who are in genuine difficulties with regard to the payment of their mortgages.

The Deputy will be aware of the work of the Expert Group on Mortgage Arrears and Personal Debt. This Group published its final Report in November 2010.  All of the Expert Group’s recommendations are listed in Chapter 2 of the Report which can be accessed at www.finance.gov.ie .

One of the recommendations of the Group was that lenders should offer a Deferred Interest Scheme (DIS) to borrowers. Under this Scheme, borrowers are allowed, subject to certain criteria being satisfied, to pay at least 66% of their mortgage interest but less than 100%. Payment of the balance may be deferred for up to 5 years. Lenders representing the majority of the market have already indicated their willingness to implement the Group’s proposals for a DIS or a variation of it. I am awaiting information from the Central Bank on the up-to-date position on this and, on receipt, I will communicate the information to the Deputy.  While the scheme is voluntary for all lenders, those who have signed up in support of the scheme will be monitored by the Central Bank to ensure compliance.

Since the publication of the Group’s Report, the Code of Conduct on Mortgage Arrears (CCMA) has been revised by the Central Bank to reflect many of the recommendations, including key recommendations relating to the introduction by all regulated lenders of a standardised Mortgage Arrears Resolution Process (MARP). The most significant changes in the revised CCMA include:

·Lenders are prohibited from moving borrowers in arrears from existing tracker      mortgages,

·Penalty interest charges may not be imposed on borrowers in arrears who co-operate with the MARP,

· Harassment of borrowers through unsolicited communications is outlawed,

·Borrowers in financial difficulties, but not in arrears, are allowed to come under the MARP,

·When a lender is determining the 12 month period the lender must wait before applying to the courts to commence legal action, the lender must exclude any time period during which a borrower is complying with the terms of an alternative repayment arrangement, making an appeal to the internal appeals board or making a complaint to the Financial Services Ombudsman.

The revised CCMA came into effect on 1 January 2011 and can be accessed at www.centralbank.ie. Lenders are required to comply with the CCMA as a matter of law but have been given a period of six months grace ending on 30 June 2011 to put in place the requisite systems and training of staff necessary to support the implementation of the MARP.

The recommendation of the Group to amend the local authority needs assessment process has been implemented by the Department of the Environment, Community and Local Government.  Local authorities have been provided with guidance on the treatment of applicants for social housing support whose mortgages have been deemed unsustainable.  Discussions are on-going between that Department and the Irish Bankers’ Federation to enable borrowers, whose properties are to be repossessed to remain in their homes for a period of time, pending the sourcing of appropriate accommodation by the housing authority.

As regards the recommendations of the Group in relation to the Mortgage Interest Supplement Scheme (MIS), I have been informed by the Department of Social Protection that the implementation of these recommendations will require changes to both primary and secondary legislation. That Department is currently finalising an implementation plan that will set out a framework for the future of the MIS.

People in debt or in danger of getting into debt can avail of the services of the Money Advice and Budgeting Service.  This is a national, free, confidential and independent service.

Share prices in Irish Life and Permenant Group Holdings – 9th June 2011,

To ask the Minister for Finance if the recent recapitalisation of Permanent TSB will affect individuals with shares in Irish Life and Permanent Group Holdings plc; if the recapitalisation of PTSB will result in the transfer of wealth from IL&P shareholders to the Exchequer; and if he will make a statement on the matter.

To ask the Minister for Finance if issues surrounding the Irish Life and Permanent situation as it pertains to shareholders (details supplied) have been brought to his attention and whether the points contained therein have been addressed.

Reply

Minister for Finance (Michael Noonan):

I propose to reply to questions 66 and 67 together.

As the Deputy will appreciate, important aspects of the matters raised in his questions on this issue are commercially sensitive and it would not be appropriate for me to make any further comment beyond what I have stated in my reply to parliamentary question of 25 May 2011 – ref no 13046/11.

Regarding the concerns raised as to how shareholders may be treated in the forthcoming recapitalisation of the institution, I would point out that, as previously announced, ILP must raise its €4bn requirement by end July, subject to appropriate adjustment for expected asset sales.  ILP currently intends to offer its non-banking businesses for sale by end October.

Minister for Finance (Mr Noonan), 25 May 2011, Ref No 13046/11:

I have reviewed the issues raised, by the Deputy, on behalf of an employee shareholder of Irish Life and Permanent (ILP) who raised concerns regarding his shareholding consequent on the forthcoming recapitalisation of the institution which has been mandated by the Central Bank of Ireland (CBI).

In relation to the concerns raised about the capital requirement for the institution, I would point out that such requirements for all of the four institutions, announced on 31st March 2011, were determined by the CBI and its advisors having regard to the situation of the institutions concerned. This process took place completely independent from me as Minister and my Department. I would point out that ILP was not treated any differently to any of the other institutions in this process. The outcomes were a function of each bank’s particular circumstances and characteristics, not different targets or processes.  Furthermore, it should be well understood by observers at this stage that given the serious financial circumstances in which the banks and the State now finds themselves, the latest round of stress tests had to be seen by all as extremely credible and robust and I believe the results that were released have been seen and accepted as such by the markets.

Proposes pension levy on pension funds – 2nd June 2011,

To ask the Minister for Finance his views on a proposal (details supplied) along with the proposed pension levy on pension funds.

(Details: If private sector employees are to be taxed, then then this tax should ultimately be used as a tax credit to me when an individual comes to retire – if an individual pays €10,000 in pension taxes over the next 4 years then they could get an additional €10,000 index linked allowance when that individual comes to retire.)

Reply

Minister for Finance (Michael Noonan):

Minister for Finance ( Mr Noonan) : I assume that what is being proposed in the details supplied with the Deputy’s question is that the amount of the pension levy passed on to individuals over the period of the levy should be available to them as a credit against future income tax liabilities.

The moneys to be raised from the pension fund levy will be used to pay for the reductions in VAT, PRSI and the air travel tax as well as for the additional expenditure measures announced in the Jobs Initiative last month. These and the other various measures in the Initiative represent the first steps by this Government towards improving the competitiveness of important sectors of the economy and facilitating the return to work of people currently unemployed.

Given our commitments under the Joint EU/IMF Programme of Financial Support and the current difficulties in the public finances, the Jobs Initiative must be funded on a cost neutral basis. Since the proceeds of the levy are already committed in the manner I’ve described, a commitment to allow the levy to also be used as a tax credit against future tax liabilities would mean that the Jobs Initiative would not be cost neutral. I cannot therefore agree to the proposal.

A proposal for those in negative equity – 25th May 2011,

To ask the Minister for Finance if he has considered the following proposal (details supplied) to assist those in negative equity.

(The following could apply for anyone who bought from 2004 onwards, has moved out of their PPR and who have no other property. Any rent received would be tax free. A clause could be introduced stating that monthly rent could not exceed the monthly repayments on their mortgage. To police the matter, a statement could be sent in by individuals with their Form 12 to the Revenue Commissioners. This matter has arisen as many incorrectly feel that as long as rent does not exceed monthly repayments they are not eligible for income tax. Given that the last Government reduced the interest allowance for tax exemption from 100% to 75%, this break would benefit people at the bottom of the ladder greatly.)

Reply

Minister for Finance (Michael Noonan):

In the Programme for Government we committed to helping homeowners in distress to weather the recession and outlined a number of proposals aimed at protecting homeowners and their families. These proposals and the Deputy’s submission will be examined in tandem with the normal process of reviewing and considering taxation measures and reliefs in the context of ongoing budgetary and economic policy.

Protections for those with prize bonds – 17th May 2011,

To ask the Minister for Finance the protections in place for persons who have invested in prize bonds and the Post Office in the event of our financial situation becoming more precarious.

Reply

The Minister for Finance (Michael Noonan):

All State Savings money is placed directly with the Irish Government, and repayment of all NTMA State Savings money, which includes principal, interest and bonus payments if due (or, in respect of Prize Bonds, cash prizes), is a direct, unconditional obligation of the Government of Ireland.

State Savings is the brand name used by the National Treasury Management Agency (NTMA) to describe the range of savings products offered by the NTMA to personal savers.

The suite of State Savings products includes Savings Certificates, Savings Bonds, Prize Bonds, National Solidarity Bond, Instalment Savings and Deposit Accounts such as the Ordinary Deposit Account and the Deposit Account Plus.

An Post and the Prize Bond Company are agents of the NTMA for the operation of the State Savings schemes. However, neither An Post nor the Prize Bond Company retain or manage any State Savings money. All State Savings money is a part of the national debt which is under the management of the National Treasury Management Agency.

NTMA State Savings products have been an important and dependable component of Government borrowing for many years and make a valuable contribution to the national finances.

Proposal regarding VHI insurance premiums – 17th May 2011,

To ask the Minister for Finance his views on a proposal regarding the VHI health insurance premiums and income tax (details supplied).

(VHI, a state-owned body, has increased it’s premium for over-65’s while reducing cover for these older clients. The proposal is that all healthcare costs and health insurance premiums should be allowed against one’s taxable income for both income tax and the new USC at one’s marginal rate, as used to be the case in respect of income tax.)

Reply

The Minister for Finance (Michael Noonan):

The position is that health expenses relief is granted at the standard rate only, in respect of expenses incurred from 1 January 2009 except for nursing home expenses which continue to be granted at the marginal rate (up to 41%). Further information can be found in leaflet IT6 and Tax Briefing 68 on www.Revenue.ie

It should be noted that the Finance Act 2010 also allows relief at the marginal rate in respect of private contributions made towards the cost of the upkeep of an individual under the Fair Deal Scheme for nursing home care.

Section 470 of the Taxes Consolidation Act 1997 provides for income tax relief in respect of payments made to authorised insurers under relevant contracts in respect of medical insurance and dental insurance. Income tax relief is granted at the standard rate of tax and is generally granted at source under the Tax Relief at Source system (TRS).

In order to provide additional assistance to those aged 60 years or more, additional tax credits are made available under section 470B of the Taxes Consolidation Act 1997 where medical insurance is renewed or entered into. The amount of these additional tax credits was increased by section 9 of the Finance Act 2011 and is now €625 where the individual is aged between 60 and 70 years; €1,275 where the individual is aged between 70 and 80 years; and €1,725 where the individual is aged over 80 years. These additional tax credits are also given under the TRS system.

The universal social charge (USC) was introduced with effect from 1 January 2011. USC applies to gross income without any provision for tax credits or reliefs for expenditures such as pension contributions or medical expenses. There is an exempt annual threshold of €4,004 (€77 per week).

However, where this threshold is exceeded, the entire amount is chargeable. The standard rates of charge are:

  • 2% on the first €10,036,
  • 4% on the next €5,980, and
  • 7% on the balance.

The USC does, however, provide relief for those who are in possession of a full medical card or a Health Amendment Act card or who are aged 70 years or over in that the maximum rate of charge of USC for individuals in receipt of employment or pension income is capped at 4% irrespective of the level of their income. In the case of individuals who are in receipt of income subject to the self-assessment system of taxation, this 4% rate increases to 7% where an individual’s income from self-employment exceeds €100,000.

A comprehensive publication of “Frequently Asked Questions” (FAQs) in relation to the USC has been posted on the Revenue website and is updated at regular intervals. This charge is separate from income tax.

I should point out that there is no proposal in the Programme for Government to allow income tax relief or USC relief at the marginal rate in respect of healthcare costs or health insurance premiums.

However, as a matter of policy, taxation measures are reviewed on a regular basis as part of the annual Budget and Finance Bill process.

Would the Minsiter condiser taxing children’s allowance – 17th May 2011,

To ask the Minister for Finance if he has considered a proposal to tax children’s allowance as an alternative to means testing the children’s allowance; and if he will make a statement on the matter.

Reply

Minister for Finance (Michael Noonan):

The position is that there is no specific proposal in the Programme for Government to means test or tax child benefit payments.

However, as a matter of policy, taxation measures are reviewed on a regular basis as part of the annual Budget and Finance Bill process.

A proposal for Irish bank executives’ compensation – 17th May 2011,

To ask the Minister for Finance if a proposal (details supplied) has been brought to his attention regarding the Irish bank executives’ compensation (details supplied); and if he will make a statement on the matter.

(The banks could simply claim an inability to pay these vast compensation sums due to their massive losses, as such claims by firms were, in the past, accepted by the Labour Courts.)

Reply

The Deputy may wish to note in relation to the matter of remuneration at the covered institutions that the NTMA have recently, on behalf of my Department, requested the CEOs of each of the covered institutions to review remuneration policy and practices in their institutions. In this context the covered institutions have been requested to consult with my Department in advance of giving any additional commitments on redundancy payments. The institutions have also been asked to consider measures that could be undertaken to align staff expectations with regard to benefits/remuneration to the changed economic environment and the financial circumstances of the banks.

Proposal for reduction of VAT for visitors to Irelans – 3rd May 2011,

To ask the Minister for Finance his views regarding the proposal (details supplied) to use changes in the application of VAT on those visiting the country as a short term method of increasing tourism numbers.

Reply

Irish VAT law is governed by the EU VAT Directive.  Articles 146 and 147 of this Directive provide for a scheme whereby persons from outside the EU can claim a refund on VAT charged to them on any goods purchased here that are brought outside the Community. This is known as the retail export scheme.  The scheme specifically applies to goods and not services, and refunds can be obtained only on purchases of goods, such as souvenirs, gifts etc., bought for non-business purposes, which the tourist or traveller brings with them when leaving the EU.  No refund can be obtained for goods that remain in Ireland, or for any services, such as hotel accommodation, car-hire or restaurant meals.  For the refund to apply, the goods must be taken outside of the European Union by the purchaser.  The basic principle is that the goods are treated as exports and are not consumed in the European Union.  In this context, EU VAT law does not allow for a scheme as outlined by the Deputy.

Development of AIB and BOI branch offices – 3rd May 2011,

To ask the Minister for Finance his views on the development or redevelopment of branch offices by Bank of Ireland and AIB; if he will provide detail of such work and money allocated in 2010, 2011 and 2012 and if he intends to put a stop to any such plans in relation to the significant restructuring of the bank which is currently underway.

Reply

Minister for Finance (Michael Noonan):

The Government operates at arms’ length from the banks and does not become involved in these types of operational matters. I do not have any views on the development or redevelopment of branch offices by the banks mentioned and I do not consider it appropriate to get involved in these matters. I might add that I have already received representations in relation to a redevelopment in the Deputy’s constituency and advised the representor accordingly.

The NAMA Act 2009 – 3rd May 2011,

To ask the Minister for Finance further to Parliamentary Question No. 76 of 5 April 2011, if he will provide a summary of those areas or issues he understands the provision in the National Asset Management Agency Act 2009 to contribute to the social and economic development of the State apply to..

Reply

The Minister for Finance (Michael Noonan):

NAMA has a commercial remit and its overriding objective is to generate a return for the taxpayer. However, within the context of its commercial remit and consistent with section 2 of the National Asset Management Agency Act 2009, NAMA is at all times open to considering proposals aimed at contributing to broader social and economic objectives. This includes facilitating public bodies in the creation of vibrant sustainable communities. The NAMA Board has also committed to giving first option to State bodies on the purchase of property which may be suitable for their purposes where these bodies have requirements such as schools, parks, and so on.

NAMA assures me that it will play a key social and economic role by regenerating activity in the property market through its asset sales strategy and through its provision of liquidity to the banks in the form of NAMA securities which can be used as collateral for funding.

Indeed, I understand that both the Minister for Housing and Planning and officials of the Department of Environment, Heritage and Local Government have had discussions with NAMA on the issue of social and affordable housing in order to explore potential solutions which would enable such housing to be provided on a commercial basis.  NAMA has also engaged with the Minister and with the Department on the issue of unfinished housing estates.

The withdrawl of the patent income tax exemption – 14th April 2011,

To ask the Minister for Finance if he will reverse the decision of the last Government to withdraw the patent income tax exemption, an important exemption which underlines Ireland’s commitment to research and development and which, if restored, would also confirm his commitment to putting research and development at the heart of plans or recovery.

Reply

The decision to abolish the relief was taken in the light of a recommendation to this effect by the Commission on Taxation. The Commission’s views on this relief were quite definitive. It found that it had not had the desired impact on innovation and R&D activity and that, despite various refinements to the scheme over the years, the relief was not a particularly well-targeted measure providing good value for money. The Commission also expressed the view that the relief had not resulted to any great extent in companies carrying out R&D activity and that it was being used in some cases by companies “as a tax avoidance device to remunerate employees”.

The Government agrees with the conclusions of the Commission and believes that in the current challenging times scarce resources should be focussed instead on the R&D tax credit scheme. The R&D credit scheme provides a more direct and effective incentive for enterprises to innovate and invest in R&D activities and the scheme has been enhanced considerably in recent years to make it one of the most competitive of its kind anywhere.

Abolition of the patent income exemption will yield €50 million to the Exchequer in a full year.

The Deputy will be aware that the Programme for Government states that this Government “will reduce, cap or abolish … tax shelters which benefit very high income earners. We will also ensure the implementation of a minimum effective tax rate of 30% for very high earners.”

Considering that the patent income exemption had been used as a tax efficient means of rewarding employees and directors, I will not be reversing the decision to abolish the exemption.

This Group has also been asked to consider and develop further necessary actions to alleviate the increasing mortgage over-indebtedness problem. I expect that the Group will have its work completed shortly.