Written Answers Nos. 78-86
78. Deputy Michael McGrath asked the Minister for Finance if he will provide in tabular form the number of revenue audits carried out each year from 2008 to 2013; the revenue raised from such audits; and if he will make a statement on the matter. [41643/13]
Amharc ar fhreagraI am advised by the Revenue Commissioners that their overall approach to tackling compliance is to make the appropriate intervention following careful appraisal of the risk factors in each case. Not all interventions conducted are in the form of an audit. The appropriate compliance intervention is the one considered to be the most effective in targeting the specific risk or risks identified, and to influence the compliance behaviour of the taxpayer. By carefully selecting cases for intervention, and choosing the type of intervention, Revenue maximises the use of resources, and minimises the compliance burden on compliant taxpayers. Accordingly, the focus may vary from a comprehensive examination of all the taxes and duties for which a taxpayer may be liable, to a detailed check of a single tax-head, or a concentration on a single issue of concern.
This targeted approach is greatly supported and enhanced with appropriate technology, including the Risk Evaluation Analysis and Profiling system – REAP, integrating information obtained from multiple sources, and Integrated Case Management systems that facilitate case selection, provide invaluable information for evaluating Revenue’s programmes, track the progress of cases and record the risks identified and examined. REAP, developed by Revenue, categorises taxpayers in accordance with defined risk criteria and includes details of the compliance behaviour of the taxpayer in relation to filing and paying.
I am advised that these systems have enabled the Commissioners to gradually evolve and refine the recording and classification of compliance interventions and the approach currently in use is shown in Table 2 below in respect of 2012. As a result, the data is not directly comparable over time and the Commissioners note that the previous approach may have resulted in some interventions being labelled as audits which today could be differently classified. With this caveat, the Commissioners have set out in Table 1 details of audits and other compliance interventions carried out by them from 2008 - August 2013 inclusive.
I am satisfied that notwithstanding the pressure on resources and skills due to the loss of some experienced staff Revenue continues to carry out a substantial compliance programme involving audits and other compliance interventions.
Table 1: Audit & Compliance Interventions 2008 – 2013 (End August 2013)
|
Year |
Number of Compliance Interventions |
Compliance Yield |
|
2008 |
360,859 (Audits 13,414) |
€632.3m (€569.2m) |
|
2009 |
373,899 (Audits 12,419) |
€668.0m (€602.m) |
|
2010 |
465,804 (Audits 11,088) |
€492.7m (€434.7m) |
|
2011 |
557,568 (Audits 11,066) |
€521.8m (€440.5m) |
|
2012 |
537,821 (Audits 9,066) |
€492.4m (€359.1m) |
|
2013 (to end August) |
431,650 (Audits 5,434) |
€394.8m (€242.3m) |
Table 2: Extract from Revenue’s 2012 Annual Report which sets out the classification of compliance interventions currently in use in Revenue.
|
Type of Intervention |
Completed 2012* |
Yield €m |
Completed 2011* |
Yield €m |
|
Comprehensive (All taxheads) Audits |
4,687 |
182 |
4,717 |
183.6 |
|
Multi Tax/Duty Audits |
985 |
34 |
1,236 |
61.6 |
|
Single Tax/Duty Audits |
2,624 |
100 |
3,345 |
126.9 |
|
Single Issue/Transaction Audits |
770 |
43 |
1,768 |
68.4 |
|
Total Audit Intervention |
9.066 |
359 |
11,066 |
440.5 |
|
Risk Management Interventions |
125,073 |
88 |
- |
- |
|
Assurance Checks |
373,803 |
22 |
546,502 |
81 |
|
PAYE Compliance Checks |
29,879 |
23 |
- |
- |
|
Total Interventions |
537,821 |
492 |
557,568 |
521.5 |
79. Deputy Michael McGrath asked the Minister for Finance the yield that would be generated from standard rating the tax relief for expenses allowable to employees under Schedule E; and if he will make a statement on the matter. [41644/13]
Amharc ar fhreagraI am advised by the Revenue Commissioners that the full year yield to the Exchequer from confining relief for expenses allowable to employees to the standard rate of income tax for the year 2010, the most recent year for which the necessary estimates are available, would be of the order of €23 million. However, such a measure could not be considered without the application of similar tax treatment to the expenses allowable to self-assessed taxpayers.
80. Deputy Eamonn Maloney asked the Minister for Finance the total outstanding amount of arrears owed to the Revenue Commissioners up to and including 30 June 2013, with a breakdown of the amount owed by self employed, national companies and multinational companies; the number of Revenue staff engaged in recouping the arrears for the year 2011, 2012, and 30 June 2013. [41701/13]
Amharc ar fhreagraFirstly, the Deputy will be aware that debt collection continues to be very challenging for both business and Revenue given the ongoing difficult financial environment. I am assured that Revenue continues to be very conscious of the challenges that exist for some businesses in meeting their tax obligations in a timely manner and its debt collection caseworkers will always seek to work proactively with taxpayers and viable businesses that engage positively to agree mutually satisfactory arrangements to overcome temporary cashflow difficulties in preference to deploying enforcement options.
I am informed that the total outstanding tax debt at 31 March 2013, the latest date for which debt data is available, amounted to €2,006m. However the ‘debt available for collection’ portion of the total debt, which excludes both debt under appeal to the Appeal Commissioners and insolvent debt was €1,180m at that date. This figure, which is a more accurate reflection of the debt available to Revenue to manage through its debt management programmes was €137m or 10% less than the same period in 2012. Of the €1,180m ‘debt available for collection’ figure at 31 March 2013, €476m was under active enforcement and a further €124m was the subject of phased payment arrangements.
In regard to the Deputy’s request for a breakdown of the arrears, I am informed that the data is not maintained in the format requested. However the data is available at taxhead level and is attached in the table.
In regard to the Deputy’s question on the number of Revenue staff engaged in arrears collection, primary responsibility for debt management rests with the Collector-General’s Division. The purpose of the Collector-General’s debt management function is to ensure the timely collection of the business and personal taxes for which Revenue has responsibility and, where timely compliance is not achieved, to undertake robust debt collection activity to recoup arrears. The numbers of Collector-General staff involved in debt collection activity during the years 2011, 2012 and 2013 are as follows:
|
Year |
Number of Staff |
|
2011 |
450 |
|
2012 |
441 |
|
2013 |
460 |
Finally, I am assured by Revenue that, notwithstanding the continuing very difficult environment, achieving further reductions in collectible debt is a key strategic objective. I am satisfied that the continuing trend in decreasing levels of ‘debt available for collection’ over the last couple of years is encouraging and clearly demonstrates the success of Revenue’s current approach to debt management.
Analysis of Taxes Outstanding Debt at 31 March 2013
|
Tax Head |
2013 €m |
|
VAT |
434 |
|
PAYE |
166 |
|
PRSI |
159 |
|
Income Tax (excl PAYE) |
647 |
|
Corporation Tax |
241 |
|
Capital Gains Tax |
260 |
|
Capital Acquisitions Tax |
30 |
|
Relevant Contracts Tax |
27 |
|
Environmental Levy |
41 |
|
Air Travel Tax |
1 |
|
Total |
2,006 |
81. Deputy Michael McGrath asked the Minister for Finance the current average interest rate earned by the National Treasury Management Agency on its cash balance; the actual average interest earned by the NTMA on its cash balance in 2012; the current average interest rate on the general Government debt; the current average interest rate on the State's Exchequer debt; and if he will make a statement on the matter. [41723/13]
Amharc ar fhreagraExchequer cash balances are held in the Exchequer account at the Central Bank of Ireland and earn interest at the Euro Overnight Index Average (EONIA) rate. These balances are available immediately to the State. At end-September 2013 there were Exchequer cash balances of €12.5 billion. At end-September 2013 there was also €13.1 billion on hand in short-term investments, including bank deposits. The rate of return on NTMA investments is commercially-sensitive information. These investments are available to the State at short notice. In 2012, the accounts of the NTMA show that there was €129 million of interest received on deposits, including balances at the Central Bank of Ireland, and other investments.
The average interest rate on General Government debt in 2013 was estimated at 4.3% in the April 2013 Stability Programme Update (SPU). This estimate is calculated by dividing the estimated General Government interest expenditure for 2013 by the stock of General Government Debt outstanding at the end of the previous year. Using a similar methodology for Exchequer (or National) Debt and taking account of the replacement of the IBRC Promissory Notes, which were not part of the National Debt, by a portfolio of floating rate Government bonds which are, a similar interest rate was estimated for 2013 at the time of the April SPU.
I am satisfied that the NTMA manages the cash balances in a prudent manner consistent with minimising risk and always having sufficient cash on hand to cover any volatility which might arise. Finally, I would add that in view of its relatively strong funding position, the NTMA announced on Tuesday, 1 October, that it has decided to suspend its monthly Treasury Bill auctions for the final quarter of 2013. The NTMA has also decided to defer consideration of any further medium or long-term bond issuance until early 2014.
82. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the economic fundamentals now prevailing are in accord with the requirements for economic recovery while keeping pace with bailout requirements; and if he will make a statement on the matter. [41761/13]
Amharc ar fhreagra88. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which it may be possible in the coming year to expect economic growth which might offset excessive budgetary cuts while at the same time maintaining targets agreed with the troika; and if he will make a statement on the matter. [41767/13]
Amharc ar fhreagra92. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the domestic economy can be encouraged to grow without affecting the future stability of the national economy; and if he will make a statement on the matter. [41771/13]
Amharc ar fhreagra94. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which this country’s economic recovery remains on target and in line with expectation for exit from the bailout programme; and if he will make a statement on the matter. [41774/13]
Amharc ar fhreagraI propose to take Questions Nos. 82, 88, 92 and 94 together.
The latest data from the Quarterly National Accounts show that real GDP increased by 0.4 per cent in the second quarter of this year. More high frequency data have also been encouraging and suggest a continuation of the positive momentum into the third quarter. In particular, I would point to signs of a modest recovery in domestic demand. Personal consumption increased by 0.7 per cent in the second quarter and strong retail sales in recent months are indicative of further growth in the third quarter. We have also seen a return to growth in ‘core’ (excluding planes) investment, with both construction and machinery and equipment now growing.
There has also been a marked improvement in labour market conditions over the last year, with employment having increased in each of the last four quarters. Employment was up by 1.8 per cent in annual terms in the second quarter, representing an additional 33,800 jobs over the year. The improvement in labour market conditions has also been reflected in the unemployment rate, with a standardised unemployment rate falling to 13.3 per cent in September, having peaked at 15.1 per cent early last year.
These indicators point to a modest recovery in the Irish economy. My Department will be publishing updated forecasts for 2013 and 2014 along with the Budget on 15 October which will take account of developments in the interim and which must be independently endorsed by the Irish Fiscal Advisory Council, in line with the European regulation on common provisions for monitoring and assessing draft budgetary plans. The forecasts produced by the Central Bank yesterday suggest moderate growth this year as weaker export growth drags on the headline figure, with the rate of expansion set to pick up in 2014.
On the fiscal side, we continue to meet and exceed our budget deficit targets. It should however be noted that part of our current deficit is structural; in other words, economic recovery alone will not be sufficient to correct the deficit. However, we have made significant progress in reducing the structural deficit in recent years and most of this correction has already been done. Ireland’s considerable efforts in restoring our public finances to a sound footing has not only been reflected in the deficit figures but has also had significant confidence effects. Ireland’s 10 year bond yield has fallen by over 10 percentage points since peaking in July 2011, facilitating Ireland’s return to the market for long-term financing earlier this year.
As Ireland’s EU-IMF Programme of Financial Support comes to an end this year the Government’s focus is now firmly fixed on achieving a successful and durable exit from our programme, and a full and sustainable return to the financial markets, and we are doing all we can to this end. Macroeconomic developments thus far are supportive of the projected reduction in debt and deficit in the post-programme environment.
83. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which his Department continues to monitor the progress of lending institutions in their efforts to meet the requirements of borrowers, with particular reference to the need to protect the family home; and if he will make a statement on the matter. [41762/13]
Amharc ar fhreagra89. Deputy Bernard J. Durkan asked the Minister for Finance if he is satisfied that all lending institutions are entering into meaningful discussions with borrowers with a view to ensuring that such borrowers remain in their family home while making reasonable arrangements to meet their commitments in the circumstances with particular reference to their current income as opposed to their income when undertaking their borrowings; and if he will make a statement on the matter. [41768/13]
Amharc ar fhreagra93. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which his Department has monitored the total number of family home repossessions in each of the past three years to date; and if he will make a statement on the matter. [41772/13]
Amharc ar fhreagraI propose to take Questions Nos. 83, 89 and 93 together.
The Government’s strategy to assist those in mortgage difficulty is built around measures in four distinct areas – Personal Insolvency, a Mortgage Advisory Service, the Mortgage to Rent Scheme, and Engagement with the Banks, and considerable progress has now been achieved across this agenda.
The implementation of sustainable mortgage arrears strategies and solutions by individual banks for their distressed customers, with Central Bank oversight, is a key element of the overall framework to address the mortgage arrears problem. The Deputy will be aware of the Central Bank’s initiative announced last March, which set time bound and measurable targets for the main banks, requiring them to systematically address their arrears book. This is a very important step to resolve the impasse on arrears. The Central Bank initially required the main mortgage lenders to propose sustainable solutions to 20% of mortgages that are in arrears (of over 90 days) by end June. The target rises to 30% by the end of September, to 50% by the end of December 2013 and 70% by end of March 2014. The Central Bank is now also requiring banks to agree sustainable solutions with 15% of their customers by the end of this year and 25% of their customers by the end of March next year. The Central Bank has informed me that it will monitor and audit the performance of banks in relation to the targets and, crucially, will also assess whether the modifications provided are in fact sustainable solutions.
The Central Bank’s Code of Conduct on Mortgage Arrears (CCMA) also provides a strong protection framework for borrowers who engage with their lenders. Under the CCMA lenders are required to proactively engage with their co-operating customers in order to help them address the situation - they must carry out a full assessment of the borrower’s situation based on the Standard Financial Statement and each case must be examined on its individual merits and when a lender makes a sustainable forbearance offer to a borrower, the affordability assessment of the borrower needs to be based on both their current and prospective future servicing capacity for all borrowings Lenders are required to explore all their options and where they do not offer an alternative repayment arrangement they must inform the borrower of the reasons for this and what alternatives are available.
The ‘Keane Report’ indicated that, given the recourse nature of mortgages, personal insolvency reform and in particular the introduction of new more accessible insolvency resolution frameworks, were essential for the resolution of the mortgage arrears problem. The Personal Insolvency Act is now law and the introduction of this Act should be a catalyst to incentivise banks to reach an agreed solution with individual borrowers in resolving mortgage arrears cases. The Insolvency Service of Ireland is already dealing with the first cases that have been submitted.
The Mortgage Advisory Service, which is an extensive independent mortgage advice framework has been put in place by the Minister for Social Protection and comprises of an enhanced website, a Mortgage Arrears information helpline, and the provision of free independent ‘one-to-one’ professional advice to borrowers when considering a long-term forbearance or resolution offer from their lender.
In addition, the Minister for Housing and Planning has put the ‘mortgage-to-rent’ scheme on a nationwide basis. Protecting the home of the most distressed mortgage holders through a ‘mortgage-to-rent’ scheme where the ownership of the house passes to an Approved Housing Body is a key housing support for those with distressed mortgages. The existing owner then becomes a social housing tenant. This option is now available in appropriate cases and will be of benefit to low income families whose mortgage situation is unsustainable to allow the family to remain in their home.
The Deputy will be aware that the Central Bank compiles and publishes quarterly mortgage arrears, restructures and repossession statistics for both primary domestic homes (PDH) and buy-to-let (BTL) mortgages and my Department closely monitors these statistics closely. According to these Central Bank statistics, from Q3 2009, over 2,000 PDH properties have been taken into possession by the regulated lenders to Q2 2013 inclusive. Full details are available on the Central Bank’s website at www.centralbank.ie.
The mortgage arrears problem is a major problem that needs to be resolved for the long term economic and social health of the country and the Government has now put in place a comprehensive strategy to tackle the problem.
84. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which small and medium sized enterprises seeking credit from their respective lending institutions have been accommodated by their banks in each of the past three years to date; the extent to which unsuccessful applications have succeeded on appeal; if in the case of refusal any assessment has been done of the main reasons for refusal such as poor credit rating which can be attributed to other factors; and if he will make a statement on the matter. [41763/13]
Amharc ar fhreagraI assume the Deputy is referring to the extent to which SMEs seeking credit have been accommodated by their banks. As the Deputy is aware, the Government recognises that SMEs are the lifeblood of the economy and will play a vital role in the recovery of employment growth in our country. One of the key priorities of the Programme for Government is to ensure that an adequate pool of credit is available to fund SMEs in the real economy during the restructuring and downsizing programme.
The Government has imposed SME lending targets on AIB and Bank of Ireland for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion in 2012 and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks have reported that they achieved their 2011 and 2012 targets and the recent Credit Review Office quarterly report commented “both banks are on track to achieve their €4bn loan sanction targets, assuming the pattern of previous years of a strong Q4 performance is repeated.”
AIB and Bank of Ireland are expected to lend to viable businesses both for investment and working capital purposes. The Credit Review Office is available to assist businesses which have been refused credit. The recent CRO report shows that the Credit Review Office upheld the credit appeal in 150 cases or 55% of cases decided. The upheld appeals have resulted in €18.5m credit being made available to SMEs and farms, protecting 1,521 jobs. This shows that there is a strong prospect of success for SMEs going to the Credit Review Office and I would strongly encourage SMEs refused credit to seek a review by the Office.
Taking the data in the recent demand surveys undertaken on behalf of my Department, covering the period April 2011 to March 2013, the average success rate of SMEs in having credit applications approved or partially approved is approximately 74%. It should be noted that there has been an increase in the number of applications fully approved in successive iterations of the demand survey to date. As regards the success or otherwise of SME appeals on bank lending decisions, the twelfth CRO quarterly report, published on 26 September, contains the following information pertaining to Allied Irish Banks and Bank of Ireland:
Banks’ Internal Appeals
|
2010-2013 |
Cases Reviewed |
Bank Decision Upheld |
Bank Decision Overturned |
% Overturned |
|
AIB Bank |
686 |
445 |
241 |
35% |
|
BOI |
388 |
345 |
43 |
11% |
|
Total |
1074 |
790 |
284 |
26% |
In relation to bank refusals of credit applications, information contained in the most recent credit demand survey, covering the period October 2012 to March 2013, indicate that the main reasons for refusal include:
- Change in bank lending policy
- Inadequate payment capacity
- Account performance/history
- Inadequate security
- Deterioration in business financial performance
If the Deputy is seeking further details in this area, the report is available on my Department’s website at http://www.finance.gov.ie/documents/publications/reports/2013/SMEdemandREDCjun.pdf.
85. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which Government policy towards assisting small and medium sized enterprises by way of enhanced lending for working capital or other purposes has been successful to date; and if he will make a statement on the matter. [41764/13]
Amharc ar fhreagra86. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the lack of the availability of adequate working capital to the manufacturing and services sectors has inhibited employment expansion and-or economic growth as a result; and if he will make a statement on the matter. [41765/13]
Amharc ar fhreagra91. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which adequate working capital remains available to the hotel and catering sectors; and if he will make a statement on the matter. [41770/13]
Amharc ar fhreagraI propose to take Questions Nos. 85, 86 and 91 together.
Access to finance for SMEs is a key aspect of the Action Plan for Jobs 2013. It is the Government’s vision that all viable businesses operating in Ireland should have the opportunity to access sufficient finance to meet their enterprise needs in a manner that supports growth and employment in the economy. The working capital requirements of many SMEs, including those in the sectors referenced by the Deputy, are often fulfilled by short term credit in the form of overdrafts or short term loans.
The Government has imposed SME lending targets on AIB and Bank of Ireland for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion in 2012 and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks have reported that they achieved their 2011 and 2012 targets and the recent Credit Review Office quarterly report commented “both banks are on track to achieve their €4bn loan sanction targets, assuming the pattern of previous years of a strong Q4 performance is repeated.”
AIB and Bank of Ireland are expected to lend to viable businesses both for investment and working capital purposes. The Credit Review Office is available to assist businesses which have been refused credit. The recent CRO report shows that the Credit Review Office upheld the credit appeal in 150 cases or 55% of cases decided. The upheld appeals have resulted in €18.5M credit being made available to SMEs and farms, protecting 1,521 jobs. This shows that there is a strong prospect of success for SMEs going to the Credit Review Office and I would strongly encourage SMEs refused credit to seek a review by the Office.
The Government has taken a number of actions to improve the situation in relation to credit availability to SMEs. The credit stream available to SMEs now includes the Microenterprise Loan scheme which can facilitate up to €40million in additional lending to microenterprises over the next five years. In addition, the Credit Guarantee Scheme is designed for SMEs who, because of lack of collateral or because of the specialised sector they operate in, face difficulties in accessing bank credit.
It is vital that the banks continue to make credit available to support economic recovery. However, it is not in the interest of the banks, businesses or the economy for finance to be provided unless the business is viable and has the capacity to meet the interest payments and repay the sum borrowed.
