Priority Questions

Motor Insurance Regulation

Michael McGrath

Question:

1. Deputy Michael McGrath asked the Minister for Finance if he will reconstitute the Motor Insurance Advisory Board, which was previously successful in reducing motor insurance premiums, particularly to examine the profitability of the industry, the settlement of claims and the impact of false and exaggerated claims on premiums; and if he will make a statement on the matter. [1516/16]

I thank the Ceann Comhairle. On a personal note, I wish the Minister, Deputy Noonan, all the best. It is good to see him in good form and working away following his health difficulties before Christmas. I wish him the very best.

The issue I raise in this question is the need to re-establish the Motor Insurance Advisory Board to examine the rapid escalation in motor insurance premiums. There has been much focus on insurance companies as a result of the flooding issue, which we will discuss later. This is a very important consumer issue and I hope the Minister will agree to the re-establishment of the board.

I thank Deputy McGrath for his personal good wishes and for raising this very important issue this morning. As Minister for Finance, I am concerned that there should be a stable insurance sector and that risks to policy holders and to the wider financial system are limited.  I am aware of reports of the increasing cost of motor insurance.  However, the ability of the Government to influence insurance pricing is limited, as insurance companies are required under European law to price in accordance with risk, and neither I, as Minister for Finance, nor the Central Bank of Ireland have the power to direct insurance companies on the pricing of insurance products. 

The Central Bank advises me that competitive conditions within the insurance market intensified in recent years and that many firms focused on maintaining market share, which provided an impetus towards lower premiums.  Competition on premiums was subsidised by investment income and other measures.  Recent reversals in investment markets have generated investment losses that are a drag on profitability.  In the view of the Central Bank, the recent premium increases are aimed at restoring core underwriting profitability and securing the financial position of the firms concerned for the long term.

While the provision and pricing of insurance policies is a commercial matter for insurance companies, this does not preclude the Government from introducing measures that may, in the long term, lead to a better claims environment that could facilitate a reduction in claims costs.

The question of the cost of insurance is a complex one involving a number of Government Departments, State bodies and private sector organisations.  Whilst I do not intend to reconstitute the Motor Insurance Advisory Board at this time, I have asked my officials to examine the factors which contribute to increasing costs of insurance.  This work is part of an overall review of the insurance sector which my Department will undertake in consultation with the Central Bank and other Departments and agencies.  This work will continue over the coming months and will involve engagement with a number of parties both public and private.

I thank the Minister for his reply. These are more than reports of increases in motor insurance premiums - over the last 12 months or so, motor insurance premiums have increased by up to 30%. The industry predicts that over the course of 2016, increases will be of the order of 25%. Somebody who paid a premium of €400 in 2014 will probably pay €650 to €700 after this year.

That is simply not sustainable and the evidence suggests that younger drivers and people driving older vehicles, in particular, are being hit with the highest increases. We have been here before. The Motor Insurance Advisory Board, which was established in 1998 and first reported in 2002, made a series of recommendations which, when implemented, made a discernible difference to the cost of motor insurance premiums. There is no transparency in the sector. Seven out of every ten claims are settled out of court by insurance companies, with no register or evidence as to consistency with regard to the settlement of those claims. I welcome the fact that departmental officials will examine the sector but I ask the Minister to go further and to formally re-establish the aforementioned board.

As I said, the Department is conducting a review at present and will consult with various interest groups, both public and private. Certainly there are issues that need to be addressed but under European law insurance companies must cover risk and must price in accordance with risk. If the risk is high, obviously premiums go up. Neither the Central Bank nor the Department of Finance can intervene to direct or influence the pricing policy of insurance companies.

I am informed by both the insurance industry and the Central Bank that the frequency of claims has increased over the past year. This is associated with improving economic conditions. They also state that the number of large claims has increased. The Central Bank further states that a number of changes taking place within the claims environment in Ireland are making that environment volatile. This in turn increases the claims costs for insurance. The changes mentioned include the changes in the courts' jurisdiction since February 2014 which has led to concerns in the sector that this will lead to increased legal costs. Furthermore, claimants are now more likely to engage a solicitor to handle claims and insurers report that this has led to cases taking longer to settle and has increased the cost per claim. There are also proposals to introduce periodic payment orders. There are changes happening in the sector so it is timely that we would conduct a review, led by the Department of Finance. While I am not re-instating the Motor Insurance Advisory Board, we will see what recommendations come from the departmental review which should be concluded in a matter of months.

I thank the Minister for his reply. The reasons behind the hikes in insurance premiums are many and varied. They include an increase in the cost of settling claims, an increase in the incidence of fraud, a lack of consistency in court awards and a lack of transparency around out-of-court settlements involving insurance companies and claimants. These issues require examination and must be dealt with. In that context, I welcome the fact that the Minister has asked his officials to lead a review. I ask him to clarify that the review is specifically focused on the motor insurance sector and will result in recommendations which will be on the desk of the Minister's successor - whether that be the Minister, Deputy Noonan, himself or another Minister for Finance - in the coming months. Hopefully, the outcome of the review will be similar to what was achieved in the past when the Motor Insurance Advisory Board made its recommendations, one of which was the establishment of the Personal Injuries Assessment Board. While that body has proved to be very successful, it also requires a review, given the passage of time and the fact that it has been overtaken by developments.

The scope of the review is to examine the insurance industry with particular emphasis on why premiums are rising, particularly in recent months, in what many people consider to be an unjustified manner. Premiums are certainly rising very rapidly. There will be a particular focus on motor insurance. Insurance in Ireland has been fraught for some time. The Central Bank has explained that for some time investment income was used by insurance companies to keep premiums lower and to bolster their positions. However, investment income has gone down now so the companies are raising their premiums. We will have the full review and the Deputy is very welcome to make a submission to the Department of Finance to raise any particular issues along the lines of those he has raised today and I will ensure they are examined fully.

Universal Social Charge Abolition

Peadar Tóibín

Question:

2. Deputy Peadar Tóibín asked the Minister for Finance in absolute terms, and as a percentage of the predicted available fiscal space, the cost of abolishing the universal social charge within the next five years; the gain for a person earning €185,000 of such an abolition; and if he will make a statement on the matter. [1515/16]

Guím gach rath ar an Aire tar éis a chóir leighis. Is maith an rud é go bhfuil cuma breá folláin air arís.

There is great pressure on the infrastructure of this State and on our public services. There is also great pressure on low and middle income earners. However, there is a dangerous habit in this State of governments shifting the tax base from stable personal taxation to more volatile tax bases. What would be the cost to the people of Ireland of the tax break proposed by Fine Gael which will mostly benefit the wealthy in the future?

Gabhaim buíochas leis an Teachta as an dea-ghuí maidir le mo shláinte.

This is a very interesting question because, one way or another, all parties are either maintaining the status quo in respect of USC or advocating change. In that context, it is important to put the debate on a firm statistical footing at least, whatever the opinions might be subsequently. In reply to Deputy Tóibín's specific question, the indicative gross fiscal space over the 2017 to 2021 period is some €10.9 billion in cumulative terms, as outlined in budget table A.9. A decision not to index the tax system would add a further €2 billion to the level of space available over the period, of which some €500 million relates to the USC, bringing the total potential fiscal space to €12.9 billion. It should be noted that the indicative fiscal space highlighted in these budgetary annexes requires a number of assumptions, including in relation to reference rates for potential growth, deflators and certain other variables used in the calculation. These inputs are based on current projections and are likely to change over time.

In 2016, the universal social charge is projected to raise approximately €4 billion in Exchequer receipt terms, with this level expected to increase as employment and wage growth continue in the years thereafter. Were the USC abolished, the full year impact, incorporating recent changes to the USC, would cost approximately €3.7 billion. It should be noted these USC projections assumed some indexation of the USC, which increases the cost of abolition. In terms of broad order of magnitude, were the USC abolished over the medium term, this would absorb one third of the currently available gross fiscal space.

Since coming into Government, I have already made several significant changes to the USC to increase its fairness. As a result of a review of USC by my Department, the Government decided in budget 2012 to increase the entry point to the USC from €4,004 to €10,036 per annum. This removed an estimated 330,000 individuals from the charge in that year. Further increases in budgets 2015 and 2016 brought the exemption threshold to €13,000, resulting in a situation in which an estimated 29% of income earners will be outside the scope of USC in 2016. Furthermore, I also reduced the three lower rates at which USC is charged and increased the thresholds for these rates. These measures, together with the introduction of a new 8% rate on income over €70,044, further enhanced the existing progressive nature of the USC. I have committed, if given the opportunity, to continue to progressively abolish the USC as part of a wider reform of the income tax system to reward work and reduce the marginal rate to no more than 50% for all workers to make Ireland more attractive for mobile foreign investment and skills, including for our returning emigrants.

The Deputy requested that I provide details of the gain which would accrue on the abolition of the USC to an individual earning €185,000 per annum. An employee with that income level has an annual USC liability of approximately €12,342 but I do not propose to provide a benefit of this scale to such a high earner. As in the previous two budgets in which the benefits of USC and income tax cuts have been capped at €70,000 in earnings it is my intention, should I be given the opportunity, to present further budgets to claw back some of the benefits of USC abolition for the highest earners. I will be setting out the details of my party's position on this issue in due course.

The Minister said there was a fiscal space of roughly €12 billion. Is that over five years?

Okay. That is obviously a higher estimate than would have been in discourse previously, which was €8 billion over the next five years. However, the key issue is the effect that cutting USC will have. There is no doubt that workers need a break. They have suffered massively over the last number of years and we need to ensure that they have money restored to their pockets. The problem I have with the debate on the USC and its abolition is that without the detail of any clawback sought on upper earners, the Taoiseach would for example have a tax cut of €12,340 on his wage. Someone on €100,000 would have a tax cut of €5,500 on their wage.

A question, please.

Someone on the median wage - and we must remember that half the population earn €28,000 or less - would receive €860 back. Given those major disparities in the amounts that would be returned, is it not the case that the abolition of the USC is an unfair way to redistribute some of the benefits in the State?

Yes, but the Deputy's arguments are based on the assumption that it is the Government's intention, if re-elected, to abolish USC completely for all levels of income. That is not the position. As I have done previously, and particularly in the last two budgets, we capped the benefits at €70,000. We will have a clawback so that these very high benefits will not accrue to high earners. I am not introducing a budget this morning. I am simply signalling that there will be a significant clawback, so the figures the Deputy has quoted are effectively redundant and will not apply. The details of the clawback will be provided in the course of the early days of, or before, the election campaign. Effectively, we are talking about an election commitment with regard to how, if we are re-elected, we will handle the USC over the next five years.

The Deputy questioned the period involved. Last October we put the 2016 budget in place, and that is fully funded. Therefore, what we are looking at for the future concerns 2017, 2018, 2019, 2020 and, indeed, 2021. In the same way as the 2016 budget was introduced in October 2015, there is an opportunity for the incoming government to introduce the 2021 budget in the autumn of 2020 if they go the full term. There is therefore a five-budget spread right out to 2021.

I sense that there may be a row-back in terms of Government policy, because the Taoiseach was advocating a €4 billion USC return to the State over the next five years. Whether it is 50% of the fiscal space returned in USC or one third, as the Minister says today, that has to be contrasted with the level of investment in the State. In the spring statement, the Minister said that Government investment would decrease from 1.8%, which is the figure today, to 1.5% in 2020. That would mean that Irish Government investment was the lowest in the European Union. In real terms, that means that projects such as flood defences will not get the necessary investment to which they are entitled.

A question, please, Deputy.

It also means that other issues, such as the creaking M50 that becomes chock-a-block after one accident, will not be resolved. It means that infrastructural projects like the Navan to Dublin rail line will not be built. How is it that we will try to achieve European levels of investment in public services and infrastructure on what is an American tax base?

First of all, there is no row-back. What I have said this morning in reply to the Deputy's question is absolutely consistent with what I have done in the past in terms of USC - capping it at €70,000 and ensuring that high earners do not have extravagant benefits. They are proportionate benefits to people with an income of €70,000, and something similar will be proposed when we abolish USC completely. It will be replaced by some form of clawback for high earners.

Second, the Deputy switched to the issue of investment. A lot of what was in the spring statement has changed because circumstances have improved. Even though it is not 12 months ago, the fundamental statistics are now much better than they were at the time of the spring statement. Looking forward, it now looks as though we are going to balance the budget in 2017. That, in effect, means that we will not be assigning funds to reduce a deficit because we will not have a deficit.

So investment will increase for the time being.

Yes. As the Deputy will recall, we have built into the capital programme a review after two years. There will be resources if we balance the budget because, rather than a three-way split of tax reductions, expenditure increases and deficit reduction, the latter goes off the table. I will be strongly advocating that at least a large proportion of that money be used for both social and economic infrastructural investment, so there is space there. If one looks at the spring statement, however, things change rapidly and it is hard to give a precise figure. In primary colours, however, I am indicating the direction in which I intend to go.

I do not like to interrupt Members, but I ask you to stick to the time limits. Otherwise, we will not get to the ordinary questions that backbench Deputies are entitled to ask.

Home Repossessions

Seamus Healy

Question:

3. Deputy Seamus Healy asked the Minister for Finance if he will insist that Allied Irish Bank and its subsidiary the Educational Building Society and Permanent TSB, which are in majority State ownership, desist from seeking repossession of family homes through the Courts and withdraw all such existing applications before the Courts; and if he will make a statement on the matter. [1426/16]

Allied Irish Banks, the Educational Building Society and Permanent TSB, PTSB, are in majority State ownership. They are adding to homelessness and the housing crisis by repossessing family homes. I am asking the Minister, as the majority shareholder, to instruct the banks to desist from this practice.

I would like to thank Deputy Healy for raising this question. As he is aware, I have no direct function in the relationship between the customer and PTSB, or AIB and its subsidiary EBS. Notwithstanding the fact that the State is a shareholder in these institutions, I must ensure that these banks are run on a commercial and independent basis to ensure the value of the banks as an asset to the State.

Decisions taken by the banks are a matter for the board and management of the relevant institution. The relationship framework agreements define the arm's-length nature of the relationship between the State and the banks in which the State has an investment. The banks are therefore entitled to pursue all options open to them in order to realise the value of their impaired assets, within the significant constraints imposed by their regulator, the Central Bank and the law as it applies.

The Government has put in place a broad strategy to address the problem of mortgage arrears and family home repossessions. The primary focus of this strategy is to support those home owners in difficulty with their mortgage repayments and, in so far as possible, to avoid repossession of family homes. In recent months, the Government agreed measures to enhance awareness of and access to the insolvency framework. We expanded the mortgage-to-rent scheme, making it more accessible. In addition, my colleague, the Minister for Justice and Equality, Deputy Frances Fitzgerald, introduced the Bankruptcy (Amendment) Bill 2015, which will, among other things, reduce the normal duration of bankruptcy from three years to one year.

The Central Bank of Ireland's code of conduct on mortgage arrears also provides protection as it sets out requirements for lenders dealing with borrowers who are facing, or in, mortgage arrears on their primary residence. It ensures that borrowers struggling to keep up mortgage repayments are treated in a fair and transparent manner by their lenders and that long-term resolution is sought by lenders with each of their borrowers.

The number of mortgages in arrears continues to fall. There are almost 121,000 restructuring arrangements in place and the vast majority of these are working. The figures demonstrate that most families can, working with their financial institutions, find an arrangement to make their mortgage commitments affordable. Active engagement by indebted borrowers with their lenders is key to achieving sustainable resolutions. I would urge borrowers in arrears who have not already done so to take that step by contacting their lender directly, or the Money Advice and Budgeting Service, MABS, for an independent assessment of their situation and advice on available resolution options.

There is a tsunami of homelessness in this country. Last November, the Dublin Homeless Executive provided figures according to which some 1,425 children in 677 families were in emergency accommodation. The Dublin Simon Community said that was unacceptable and shameful. Focus Ireland said that the Government had failed these families. The Master of the High Court, Mr. Edmund Honohan, criticised the banks and accused them of hounding home owners to suicide.

He criticised the fast-tracked repossession regime that the Government has allowed to be introduced in the courts. These banks are majority owned by the State and it is open to the Minister to instruct these banks to desist from repossessing family homes. In Tipperary alone, 100 families are facing repossession. The Minister should insist that this stop.

Deputy Healy raised the very important issue of homelessness and the Minister for the Environment, Community and Local Government, Deputy Alan Kelly, brought forward proposals last year that have blunted the edge of this particular social crisis. Certainly, over the Christmas period there was less sense of a crisis with homelessness than there had been earlier in the year. The measures introduced by the Minister, Deputy Kelly, have been working and, please God, they will continue to work.

On the wider issue of repossession, which was the topic of the Deputy's notified question, there is some interesting data published by the Central Bank. During the third quarter of 2015, legal proceedings were issued to enforce the debt security on private dwelling house mortgages in 1,687 cases. During quarter three, there were 798 cases where court proceedings concluded but arrears remained outstanding. In 329 cases, the court granted an order for repossession or the sale of the property. A total of 422 properties were taken into possession by lenders in the quarter, of which 207 were repossessed on foot of a court order. The remaining 215 were voluntarily surrendered or abandoned. The idea that tens of thousands of houses are being repossessed is just not correct. A small amount goes through the system. With the changes made by the Minister for Justice and Equality and with MABS assisting directly people before the courts, I hope the number will diminish even further. It is the policy of the Government to put arrangements in place so that people can live in the family home.

The Minister is the majority shareholder in these banks and he has obviously given permission to the banks to repossess family homes. He could equally instruct these banks not to go down this road and repossess family homes. He could call an emergency meeting of these bank boards and instruct them not to repossess family homes. I ask him to do so immediately and if bank directors do not agree, they should be sacked, as the Minister has the power to do so as a majority shareholder. This is urgent and, irrespective of the Minister's comments, thousands of families in the country are facing homelessness because of banks in which the State has a majority shareholding. The Minister could give instructions to stop these repossessions and I ask him to do so immediately.

There is a relationship framework, signed by my predecessors in office, with the banks and the essential component is that the political side will not interfere in commercial decisions. That is for a very good reason as we do not want to politicise the banks. It would be a very sad day for the country if the first port of call for a person seeking a loan had to be the local Deputy rather than a bank manager.

We are not asking anybody to do that at all.

There will be no political interference with the banks. On the question of repossessions, 207 houses were repossessed on foot of a court order, which does not equate to the tens of thousands of houses sometimes mentioned in commentary. There are 121,000 restructured mortgages on private dwellings, with a success rate of 86.6%. That means the arrangements stick in just under 87% of cases. The problem is being solved progressively. I appreciate it is very hard on people and I can appreciate that people who lost their jobs do not have money. I also appreciate the concerns and how upset people are. In a very extreme situation, the issue is being handled reasonably well by the banks.

Mortgage Interest Rates

Michael McGrath

Question:

4. Deputy Michael McGrath asked the Minister for Finance if he is satisfied with competition levels in the Irish mortgage market, particularly the impact on standard variable rates; his views that action is required to ensure equal treatment between existing and new mortgage customers; and if he will make a statement on the matter. [1517/16]

As the Minister knows, I have consistently raised the issue of standard variable interest mortgage rates being charged in this country, particularly the rates being charged on approximately 300,000 existing bank customers on a standard variable rate. There is a marked difference between the rates they are being charged and those being offered by financial institutions to new customers. That is not good enough and the issue still needs to be addressed. Unfortunately, competition does not look set to resolve the matter and the question is what action the Minister is prepared to take.

The Government's position is that competition is the best way to achieve a sustainable long-term solution to the issue of high mortgage repayments. The Government made a commitment in the statement of Government priorities for 2014 to 2016 to applying downward pressure on mortgage rates by increasing and supporting competition in the market and it has undertaken a number of initiatives in this regard. As the Deputy knows, I have specifically taken steps to ensure the banks provide options for mortgage holders to reduce their monthly repayments. Last May, I requested a report from the Central Bank on the topic that was subsequently published. I also met representatives of the six main mortgage lenders in May and outlined my view that the standard variable rate being charged to Irish customers was too high. The banks agreed to review their rates and products and, by the beginning of July, to have simple options to reduce monthly mortgage payments for standard variable rate customers. In September, I concluded a series of follow-up meetings with these banks and the reality is that the majority have put options in place to allow many borrowers reduce their repayments. These options range from lower variable rates to new suites of variable rates based on loan-to-value and reductions in fixed rates.

I, therefore, encourage borrowers to contact their bank to see what is available to them in their circumstances or consider moving to another bank, where possible, if the offer is not satisfactory. In this regard, the Competition and Consumer Protection Commission, CCPC, website, www.consumerhelp.ie, is a valuable source of information on the rates charged by various financial institutions. In addition, the CCPC is currently running a mortgage switching campaign and it has a mortgage switching tool on the website, which should allow borrowers compare rates charged across institutions. Furthermore, I am pleased to note that some lenders offer repayment of legal fees or cash incentives to borrowers switching mortgage provider.

I asked lenders to provide simple options to reduce monthly mortgage payments for standard variable rate customers and the reality is that the majority have put options in place. I am pleased to see that the majority of lenders have offered their new reductions and products to both new and existing customers. I am also pleased to see that the banks continue to introduce new initiatives as the competitive dynamics in the market increase. As recently as last week, one bank introduced a 0.5% reduction on managed variable rates for new or switcher mortgages with a loan to value of 80% or less. Another bank reduced its standard variable rate in December.

There have been new initiatives for new customers but the progress for existing standard variable rate mortgage customers has been extremely limited or non-existent in some cases. We can consider the rates at which banks can currently access funds. In October, Bank of Ireland raised five-year money at just over 0.7% and AIB can raise money at similar rates. The Bank of Ireland standard variable rate is six times the rate at which that bank can raise five-year money on the markets, which is outrageous. It is simply unjustifiable.

I would be the first to acknowledge that banks must make a margin and profit, so I have no difficulty with that. Existing standard variable rate customers are being screwed by the Irish banks and nobody is doing anything about it. That is unacceptable. Many people are not in a position to switch as they are trapped for a variety of reasons relating to their own financial circumstances. It is not good enough. The Minister started the process in May last year but he did not see it through. He made the threat of imposing a levy or legislation but that has not come about.

Competition is working in the market now and it will continue to work as more institutions get involved. The Central Bank's statistical release of 11 December 2015 stated that mortgage interest rates generally declined during the third quarter of 2015. Variable principal dwelling house rates declined by 17 basis points over the second quarter, with corresponding buy-to-let rates falling by 14 basis points.

Aside from new competition in the market, switching represents the best way to foster competition between the lenders currently operating in the market. Central Bank research suggests that 21% of existing private dwelling home, PDH, variable rate mortgage customers could save by switching their provider and I encourage customers to ascertain whether options are available to them to reduce their payments by switching provider or product. I expect that if the financial institutions are convinced there is a threat they will lose existing customers, they will reduce the rates currently charged to customers.

There certainly is a degree of competition for new mortgages and for those who are in a position to switch. I would be the first to advocate to those who have equity in their homes and who are in a position to switch their mortgage from one provider to another to avail of a better interest rate to do so. People of course should shop around and I have asked the Central Bank to consider introducing a code of conduct on mortgage switching. Such a code is in place if one wishes to switch one's current account but no such code is in place if one seeks to switch one's mortgage. Many people are put off by the hassle involved in switching their mortgage-----

A question please. Thank you.

-----but they certainly should do this where they can. However, this does not take away from the fundamental fact that many people do not have this option and are trapped. They are trapped by reason of financial circumstance such as a reduction in their income or they may be in negative equity and other banks are not interested in taking their business.

They are being denied interest rates that could result in a reduction in their monthly repayments in the order of hundreds of euro.

I call the Minister. Thank you.

This is a cohort of people Members really should be trying to help. A fixed rate is not an option for everyone because one loses flexibility if one enters into a fixed rate arrangement.

Yes, but in the majority of cases, those inhibitions do not apply. However, there is a very significant inertia in the desire of people to switch to a different mortgage provider even when they can make significant savings. It is hard to understand this at times and probably is to do with the fact that if people have a mortgage for several years, even if they are to make cash savings, they do not see the purpose of switching. There is an inertia in the system and the various mechanisms have now been put up online to help people who wish to switch to do so.

On the general review of the banks, I met the banks twice. This is an ongoing issue and as I meet the banks in the future, if I am back in office, this will be a high priority on the agenda of any meeting with the banks.

Tax Code

Seamus Healy

Question:

5. Deputy Seamus Healy asked the Minister for Finance if he has read the most recent Credit Suisse global wealth report; if so, his views on the staggering inequalities it suggests in the distribution and concentration of wealth here; if, given this report it is now a matter of urgent priority for the Government to establish a database on wealth distribution and to place a wealth tax on assets of households in excess of €1 million to ensure greater equality in the distribution of wealth; and if he will make a statement on the matter. [1427/16]

This question asks whether, in view of the staggering inequalities in wealth in Ireland, the Minister will establish a database on wealth and whether he will introduce a wealth tax for households with wealth in excess of €1 million.

I thank Deputy Healy for this question. The Credit Suisse Global Wealth Report 2015 provides a range of data in the area of global household wealth, its composition and distribution over the period 2000 to 2015. The report covers all regions and countries and brings together available data from a variety of sources. The authors of the report acknowledge the study of global household wealth is still in an early stage of development and that no country in the world has completely reliable information on personal wealth. This obliged them to assemble and process information from a variety of different sources. The authors state that much work remains to be done to refine estimates of wealth by country and to improve the estimates of wealth distribution within countries.

The most comprehensive source of information on wealth distribution in Ireland is the household finances and consumption survey, HFCS, released by the Central Statistics Office earlier this year. The data relate to 2013 and indicate that wealth inequality in Ireland for that year, as measured by the Gini coefficient, is lower than the euro area average. The results also show that wealth is less concentrated at the top of the distribution here in Ireland than the euro area average.

Ireland already taxes wealth in a variety of ways, such as capital gains tax, CGT, and capital acquisitions tax, CAT, which are levied on an individual or company on the disposal of an asset in the case of CGT or the acquisition of an asset through gift or inheritance in the case of CAT. Deposit interest retention tax, DIRT, is charged at 41%, with limited exemptions, on interest earned on deposit accounts. The local property tax, which was introduced in 2013, is a tax based on the market value of residential properties. The domicile levy introduced in budget 2010 also constitutes a form of wealth tax. It is aimed at high wealth individuals with a substantial connection to Ireland, regardless of whether they are tax resident, to ensure they make a tax contribution to this country in a year of at least €200,000.

The Credit Suisse bank report shows the top 10% own 58.6% of wealth, while the top 5% and top 1% own 46.4% and 27% of the wealth, respectively. This concentration of wealth at the very top is extraordinary on any democratic basis. Moreover, the most affluent 20% in Ireland own 73% of the country's wealth, while the poorest 20% owned just 0.2%. The poorest 10% have negative wealth, while the combined wealth of the top 5% is nearly double that of the entire middle 60%.

A question please. Thank you.

In view of these extraordinary levels of wealth at the very top, I again ask the Minister whether he will impose a wealth tax on households with wealth in excess of €1 million. In addition, will he create a database of wealth?

There are not recent reliable data in Ireland on wealth distribution. It has only been very recently, particularly in the Central Statistics Office, CSO, report published in 2015, that reliable data have been emerging. These data indicate that wealth inequality in Ireland for 2013, that is, the year examined, is lower than the eurozone average as measured by the Gini coefficient. The results also show that wealth is less concentrated at the top of the distribution here in Ireland than the eurozone average. Central Bank analysis of the data also indicates that while wealth inequality has increased since 2011, it is actually lower than was the case in 2006, the earliest period for which data are available.

As part of the research programme agreed between my Department and the Economic and Social Research Institute, ESRI, covering macroeconomic and taxation issues, a research project involving detailed analysis of wealth distribution and taxation has been included. It is intended that this research project, based on the household finance and consumption survey published in 2015 by the CSO will commence shortly. It should be noted that the data gathered by the CSO as part of the HFCS were not collected for the purposes of calculating the potential yield from a wealth tax but to collect general information on the financial situation and behaviour of households. As I have stated on a number of occasions, the Government has no plan to introduce a wealth tax although all taxes and potential taxation options of course are constantly reviewed.

The most recent institutional sector accounts published by the Central Statistics Office show that net financial assets of households are €25 billion above peak boom levels. They have grown massively over the past five years and there is no levy, charge or tax on them. In addition, the Central Bank report for the third quarter of 2015 reported that Irish household net worth was €595.7 billion, which is €13 billion higher than was the case for the previous three months. These figures represent obscene levels of wealth at the very top of society. Is it not possible and right to tax these levels of wealth to ensure public services in the hospitals and educational system? I suggest the Minister does this immediately.

As the economy recovers, obviously the value of assets is increasing. However, there are capital taxes in Ireland which are, in effect, wealth taxes. When assets are transferred on the death of an owner, inheritance tax applies and if assets are transferred prior to someone's death, gift tax then applies. In addition, money on deposit in banks is liable to a DIRT rate of 41%, which also is a form of wealth tax. The residential property tax is a tax on homes, that is, it is a tax on fixed assets and that also is a wealth tax.

There is an inconsistency among the Opposition spokespersons in that they want to abolish the lawful property tax, which, effectively, is a strong tax based on the value of assets, and at the same time are calling for the introduction of a wealth tax. The Deputies cannot have it both ways.