Alan Farrell
Question:68. Deputy Alan Farrell asked the Minister for Finance what consideration his Department is giving to further anti-inflationary measures; and if he will make a statement on the matter. [3135/23]
Ceisteanna Eile - Other Questions
Inflation Rate
Jennifer Murnane O'Connor
Question:110. Deputy Jennifer Murnane O'Connor asked the Minister for Finance if he anticipates further measures being taken in relation to cost-of-living pressures; and if he will make a statement on the matter. [2980/23]
Peter Fitzpatrick
Question:157. Deputy Peter Fitzpatrick asked the Minister for Finance if he plans to extend the cost-of-living measures introduced in budget 2023; and if he will make a statement on the matter. [2932/23]
Fergus O'Dowd
Question:237. Deputy Fergus O'Dowd asked the Minister for Finance what further measures his Department is considering in dealing with rising inflation in the year 2023; and if he will make a statement on the matter. [56473/22]
I congratulate the Minister and the Minister of State on their moves and in particular the Minister of State, Deputy Carroll MacNeill, on her promotion. I look forward to working with both of them and I pay them every good wish.
My question relates to the plethora of measures the Government has introduced but looking to the future and to the fact that this inflationary cycle does not seem to be moving particularly fast. Is the Government considering further anti-inflationary measures?
I propose to take Questions Nos. 68, 110, 157 and 237 together.
I thank the Deputy for his good wishes, and I look forward to working with him. It is important to note that from the outset the Government has acted forcefully and decisively to help ease the burden of inflation on households and businesses across the country. Budget 2023 was a cost-of-living budget, incorporating a total package of €11 billion with the focus on protecting the most vulnerable from rising costs. This built on some €3 billion in measures introduced by the Government over the past year. It would be premature to take a decision on further policy measures before a full evaluation can be made of the performance of the measures currently in place, the outlook for inflation this year and, indeed, the prospects for the public finances.
I would caution that excessive or poorly designed fiscal policies could backfire. In this regard, it is crucial that budgetary policy itself does not become part of the problem by contributing to an inflationary spiral that would have severe consequences. I also emphasise that the majority of the cost-of-living measures introduced as part of the budget will continue to support households and firms over the coming months. For example, the two remaining electricity credits, which are worth €200 per household and which amount to €800 million in spending, will continue to be issued in the coming period, assisting households with their energy bills.
The temporary business energy support scheme, TBESS, which provides relief to businesses struggling with rising energy costs, will remain open for claims until the middle of this year. The €1.1 billion package of reductions in personal tax as well as increases in social welfare payments provided for in the budget took effect earlier this month and are permanent. In our response to the cost-of-living challenge, the Government has struck the right balance between providing necessary support without adding to inflationary pressures. Moreover, there is compelling evidence to suggest that inflation has peaked, while it is notable that energy prices, at the wholesale level at least, have fallen significantly from their highs last autumn. Hopefully, we will see those being transmitted to the end consumers. Any policy decisions must take into account these developments.
I understand the matter of the measurement of the response. Measurement of the success of some of the measures that have been introduced will of course take time. The TBESS, for instance, is only in its infancy and it will take time. The energy credit has had obvious beneficial effects on households up and down the country but as we move towards the latter end of the year, we will be at the end of autumn and into winter. We may then be in the same scenario we find ourselves in now. While I fully appreciate that the Minister is not going to announce Government policy or budgetary policy for 2024 on the floor of the House in January, the understanding that there is an acceptance that further measures may have to be taken will probably be sufficient for the public and that there are certain financial constraints that we as a Government will have to adhere to. However, that flexibility is built into the budget and that is one of the points I would like to get across.
While I welcome the significant increased supports in the budget, including the reduction in taxation, the increase in social welfare payments and expanding the fuel allowance and making it easier for people to access, there is a significant problem for what we call the “working poor”, such as people who are on tracker mortgages. I have a constituent whose mortgage has gone up by €60 per week, which he cannot pay. Even though he is a single earner, he has three young children. He is benefiting in many ways from the budget and I fully respect and support that. We need to do more to help the working poor, as well as people whose mortgages have been moved to Pepper Mortgages. They are being crucified with interest rates they cannot pay. They envisage the likes of the vulture funds taking possession of their homes in the future. I fully support all the Minister is doing. I welcome all the changes, but he needs to do more to help the working poor particularly those who have difficulties with their tracker mortgages and Pepper Mortgages.
I thank both Deputies for raising these issues and I want to take the opportunity to thank all our public servants who were involved in administering the exceptional payments issued between budget day and early December. Payments of the order of €1 billion outside of normal payments were made through our social protection system, including some universal payments such as child benefit and so on. I know from talking to people on the ground of the benefit that was derived from those particular payments. It was welcome and badly needed at that time. It is worth reiterating that many of the budget measures have only just kicked in in respect of permanent changes to income tax and social welfare, widening eligibility to the fuel allowance, significant reductions in childcare costs, which I know have been so warmly welcomed by many families, and we are continuing to administer the system of electricity credits as well.
That said, I acknowledge that inflation hurts people. Inflation affects people’s living standards and it makes the cost of doing business much higher. While we believe inflation has peaked in Ireland and it is coming back, it is still at in excess of 8%, which is a level the like of which we have not seen for approximately 40 years. Therefore, we will have to keep all of this under review. Saying that the rate of inflation is falling is not the same as saying that prices are falling.
At the end of the day, what matters to people is how much they are paying at the forecourt for their fuel, how much they are paying at the supermarket till for their groceries and how much they are paying for other essential day-to-day expenses. The Government understands that. Most people acknowledge that we have done a lot of work to help and address the challenges they are facing. I am not committing to any new specific measures here tonight except to say that we will be keeping it under active review, in particular, monitoring inflation and the real-world costs that people are facing in their day-to-day lives.
Questions No. 69 taken with Written Answers.
Tax Rebates
Aindrias Moynihan
Question:70. Deputy Aindrias Moynihan asked the Minister for Finance the amount his Department received in overpaid PAYE taxes in 2021 and 2022; the measures that are in place to make individuals aware of any overpayments; and if he will make a statement on the matter. [3140/23]
For various reasons, a large number of PAYE workers end up with overpayments of tax, whether this is because they change jobs, credits that they may not have claimed, emergency tax or a range of different reasons. This year more than ever, people are under phenomenal pressure to pay bills. Various supports are in place, but there is still huge pressure on people in paying for food, energy and so on. What measures are being taken to ensure that their earned money is in their pockets and not with Revenue?
I am advised by Revenue that, to date, it has refunded €554 million to PAYE taxpayers in respect of 2021 and €193 million in respect of 2022. In 2022, Revenue wrote to over 400,000 individuals who, based on the information available to Revenue, may have overpaid or underpaid tax in some or all of the years 2019 to 2021, inclusive. These letters provide a preliminary tax position, advising the recipients to submit a tax return to claim any additional tax credits or reliefs that they may be due and-or to declare any additional income they may have received.
As of 23 January this year, more than 1.1 million PAYE employees have submitted tax returns in respect of 2021 and more than 370,000 PAYE employees have submitted their returns in respect of 2022. Any overpayments due to PAYE taxpayers can only be quantified when they submit their tax returns at the end of the year and claim any additional credits or reliefs that may be due and declare any additional income received.
At the end of every year, Revenue makes a preliminary end-of-year statement available to all employees. The statement sets out a provisional tax position, based on information available on Revenue records. It will show whether an employee has paid the correct income tax and universal social charge for the year. If a taxpayer wishes to claim additional credits, reliefs, or expenses, such as health expenses, or declare other incomes, they must complete an income tax return for the year. Revenue will then generate a statement of liability confirming their final tax position.
Revenue encourages taxpayers to submit their returns to ensure that they are paying the correct tax and to receive any refunds that they may be due.
For the remaining PAYE taxpayer units, where jointly assessed spouses or civil partners are counted as one unit, with a preliminary end-of-year statement for 2022 and who are yet to file an income tax return the following is the case: about 1.4 million, or 62%, are potentially balanced; about 563,300, or 25%, have potentially overpaid tax of up to €400 million; and 287,000, or 13%, have potentially underpaid tax of up to €118 million.
The moral of the story is that everyone should make a return. Many people are entitled to refunds but they will have to go online and engage with the system, where the refunds are issued quickly, in my experience.
I thank the Minister. Those figures are quite helpful. Phenomenal sums are available for many people. I understand that in previous years, several hundred thousand people have got back anywhere up to €1,000 each. Will the Minister indicate how many people the figures apply to for the two years in question? He gave the euro value, which is helpful, but he might also indicate how many people it applies to.
People are under severe pressure to pay ordinary, everyday bills and having that money back in their pocket would be invaluable to them. Are efforts being made to make people aware of these refunds? In fairness, people generally expect that their payslip should be correct and that Revenue will not take anything more than it should. They expect not to find themselves having overpaid tax. Are efforts being made to make people aware of this issue and to promote the claiming back of funds?
The figures are significant and it is important we all take every opportunity to highlight this and to remind people of their rights. As I outlined, for the remaining PAYE taxpayer units with a preliminary end-of-year statement for 2022 who are yet to file an income tax return, some 25%, or 563,300 people, have potentially overpaid tax of up to €400 million, although there are others who have underpaid tax, to an overall value of about €118 million. If we look back at the equivalent figures for 2021, for which we would expect most people at this stage to have claimed additional reliefs or submitted health expenses and so on, the estimate is that about 325,100 people, or about 20% of the remaining taxpayer cases, have potentially overpaid tax of up to €182 million. In total, therefore, between 2021 and 2022, Revenue believes taxpayers have overpaid more than €580 million, although, again, there are underpaid sums for the two years, at significantly less, totalling about €230 million.
The message to people is to check how they are fixed. It is simple to go online and make a claim.
I thank the Minister for the details. Clearly, the message has to be put out loud and clear that it is quite possible to have overpaid and that people should check to see whether they can claim back on their funds. That is needed now more than ever, even if just to pay ordinary household bills. It is very possible to be eligible to claim back anywhere between €500 to €1,000, and maybe more, for many people.
I understand that tax can be claimed back for up to four years after it has been paid when returns are being made. What happens after those four years? Revenue sets aside funds each year for people to claim back and it knows those funds are their money. At the end of the four years, what becomes of the funds? Everybody knows they are not Revenue's funds or anybody else's other than the individual taxpayer's. Are they held in some kind of dormant account whereby people can at some point claim back their own funds or what has become of them? It should be accessible to people.
On the question of awareness, we are all familiar with websites that are available and we will have seen advertisements of bodies that provide services in this regard. In addition, the Revenue Commissioners make a lot of information available regarding how people can make such claims. We have a role in this House and the Government certainly has a role to make people aware where they may well be in a position to claim back tax they have overpaid. That is an important point to make.
As for what happens after the four years, the Deputy is correct regarding the current legal position. For the four previous tax years, overpaid tax can be claimed back, but beyond that period the legal right is lost and those sums become part of the Central Fund. The legal right to claim lapses at the end of the four-year period.
Small and Medium Enterprises
Alan Dillon
Question:71. Deputy Alan Dillon asked the Minister for Finance the measures being considered to support small and medium enterprises; and if he will make a statement on the matter. [3058/23]
I wish the Minister the very best in the finance Ministry and congratulate my party colleague, the Minister of State, Deputy Carroll MacNeill. I look forward to working with them both.
Over the weekend, the Minister stated that the economy would experience a "short and shallow downturn" in the coming months that will, inevitably, impact on small and medium enterprises. What considerations is the Government making to support our SME sector in response to the choppy waters ahead?
I thank the Deputy for his good wishes. SMEs are the foundation of the economy, accounting for 99.8% of all enterprises and the majority of employment in the State. Their importance to our economy is reflected in our programme for Government commitments. The Minister for Enterprise, Trade and Employment and I, as Minister for Finance, jointly chair the SME State bodies group, bringing together SME representative bodies and other stakeholders including State agencies to identify and understand current challenges businesses face. My Department also conducts the SME credit demand survey to gain insight into the experience of SMEs in the economy accessing credit.
While the responsibility for enterprise policy rests with the Minister for Enterprise, Trade and Employment, one of my responsibilities as Minister for Finance is to ensure viable businesses that wish to access credit from bank and non-bank sources can do so. The credit review office and the Strategic Banking Corporation of Ireland, SBCI, were established as bodies under the aegis of my Department for this purpose. The credit review office assists SMEs and farm borrowers that have had credit applications of up to €3 million refused or, indeed, an existing credit facility withdrawn or amended by the participating bank.
The SBCI provides and promotes the provision of credit to SMEs and increases the availability of appropriately priced, flexible funding to viable SMEs. It has supported lending of €3.2 billion to more than 50,000 SMEs since 2015, from all sectors of the economy and across a wide geographical spread, using a mix of low-cost liquidity and guarantees. The SBCI has a number of schemes launched and in development to support SMEs to access credit. These include the growth and sustainability loan scheme, the energy efficiency loan scheme and the Ukraine credit guarantee scheme.
In addition to the schemes launched and in development by the SBCI, a range of direct and indirect measures were introduced to support SMEs in response to the challenges posed by Covid-19 and the invasion of Ukraine, including the tax debt warehousing scheme and the temporary business energy support scheme, the latter of which is supporting a broad range of businesses that have experienced a significant increase in natural gas and electricity prices.
I thank the Minister. I think we are all in agreement that the supportive measures and schemes that were introduced earlier during the pandemic and within budget 2023 were a massive lifeline of vital importance to the survival of many SMEs. Nevertheless, businesses are still struggling to cope with the soaring energy costs, the rising interest rates and the broader inflationary pressures across our economy. The mood among some companies that operate in the domestic economy is not great. Revenue sheriffs will soon begin seeking up to €500 million in quarter 1 of this year and that will compound the problems of some SMEs that are struggling to cope with high fuel costs and the cost-of-living crisis. The number of insolvencies in the hospitality sector almost doubled in 2022 compared with previous years.
We face a perfect storm in the months ahead. Careful consideration must be given to prevent companies from collapsing, which would have a negative impact on our employment rate.
I ask that the Department consider these matters.
I thank Deputy Dillon and assure him that we will take on board the points he made and ensure that we carefully consider the current business environment when we examine all of these issues. I acknowledge the cost of doing business has increased because of the nature and level of inflation currently being experienced. Our response in the budget in part was the introduction of the temporary business energy support scheme, TBESS. I encourage businesses that have yet to register and submit a claim to now examine their eligibility to do so because, at the end of this month, people who have not applied will lose the benefit for September, as one can go back to the beginning of September until the end of January. It is important that there is an awareness of that issue and that the claims are made. As the Deputy knows, the Revenue Commissioners publish a data bank every week with the latest information on that issue. I wish to make that call here this evening as well.
I wish both of the Deputies well in the future and congratulate them on their new roles. I wish to bring to the Minister's attention, under the section of small businesses, that agriculture and farming probably make up most of the small businesses in rural Ireland. I wish to bring to the Minister's attention the transfer of bank accounts from Ulster Bank and from banks that are closing, to Permanent TSB and other banks where overdraft facilities are not being acknowledged. Farmers are running into real difficulties with banks that do not understand the nature of farming and in terms of payments that come in at certain times of the year. Farmers are now finding they are completely without overdraft facilities. When the Minister speaks about credit and credit flows being available to small businesses, absolutely and certainly, that is needed to sustain those businesses.
Are we still on Question No. 71?
Yes. Will the Minister intervene with the banks and make them aware that they were supposed to do everything possible to make that transition as smooth as possible, but farmers are now finding that they do not have the overdraft facilities they had before. They are in real difficultly around that issue.
I thank the Minister for his response and for raising the TBESS scheme. From listening to some constituents regarding its expansion, there are many sectors which have been excluded from it, one being those which do not use a main gas supply and use imported liquefied petroleum gas, LPG. They can measure their consumption and the cost. There is a certain cohort which has been excluded which should be included. Many rural pubs which use kerosene and LPG to run their businesses have also been excluded. There are, I think, over 1,500 rural pubs which were excluded from the TBESS. I ask that the Minister look at this again in the round.
I wish also to raise the issue around the 9% VAT rate. It is of vital importance for counties such as my own, County Mayo, which heavily rely on the tourism and hospitality sector, taking into account the escalating business costs and ongoing energy crisis. I ask that we be pro-active with support measures to avoid potential insolvencies going forward.
I thank An Cathaoirleach Gníomhach and Deputy Conway-Walsh for her good wishes and for raising this specific issue, which I will follow up on. The most important thing is that the departure of Ulster Bank and KBC is done in an orderly manner and the interests of their customers are protected. The fact that these two banks are leaving the Irish retail market is deeply regrettable and will have implications in terms of competition and consumer choice. That said, it is beyond our control. They have made their commercial decision to leave the Irish market and we now have to make sure it is done in a way that minimises disruption and the fallout the Deputy highlighted for individual customers, including farmers. It is the subject of close scrutiny by the regulator. The Central Bank and its team are on an ongoing basis reminding both Ulster Bank and KBC of their obligations. The Deputy raised the specific issue regarding overdraft availability. I will ask that that be looked at.
Regarding Deputy Dillon's points, I am of course aware of the exclusion of certain sources of energy from the TBESS. My understanding is that it is because of concerns raised by the Revenue Commissioners at the time regarding oil, LPG and kerosene. As things stand, the scheme is due to end at the end of February. In the course of my examination of all of the issues due to arise before the end of next month, I will be looking at the operation of the TBESS scheme. Earlier this evening there was an exchange across the House on the 9% VAT rate. I was asked to put on record the costings of extending it. Extending it to the end of this year would cost €427 million.
Banking Sector
Rose Conway-Walsh
Question:72. Deputy Rose Conway-Walsh asked the Minister for Finance the assessments that have and will be undertaken with regards to the Code of Conduct on Mortgage Arrears, CCMA, including the suite of alternative repayment arrangements; his plans to give the code full legal effect; and if he will make a statement on the matter. [3100/23]
Will the Minister outline the assessments that have and will be undertaken with regard to the code of conduct on mortgage arrears, including the suite of alternative repayment arrangements? What are the Minister's plans to give the code full legal effect?
The Central Bank code of conduct on mortgage arrears, CCMA, is the key consumer protection measure for borrowers experiencing difficulty with a mortgage secured on a primary residence. This statutory-based code, which is issued by the Central Bank under section 117 of the Central Bank Act 1989, sets out how regulated mortgage creditors must treat borrowers in or facing mortgage arrears. Regulated entities are required to comply with all aspects of the CCMA as a matter of law and as such it has full legal effect.
The objective of the CCMA is to ensure that regulated entities have fair and transparent processes in place to deal with their borrowers who are facing mortgage arrears. Due regard must be given to the fact that each mortgage case is unique and needs to be considered on its own merits. All cases must be handled sympathetically and positively by the regulated entity, with the objective at all times of assisting the borrower to meet his or her mortgage obligations.
In particular, the CCMA provides that, in order to determine which options for alternative repayment arrangements are viable for each particular case, the regulated mortgage creditor must explore all options for alternative repayment arrangements offered by that creditor. Furthermore, if a borrower is not satisfied with the decision of the regulated entity regarding this matter, such as if he or she is not happy with the particular alternative repayment arrangement offered by the mortgage creditor to address the particular mortgage repayment difficulty or if the mortgage creditor declines to offer an alternative repayment arrangement, the CCMA provides that an appeals process must be in place to allow for the matter to be reconsidered. That appeals procedure must also inform the borrower of his or her right to refer the matter to the Financial Services and Pensions Ombudsman.
The Central Bank carried out a review of the CCMA in 2018 to ensure it remains as effective as possible. The review found at that time that, for borrowers who engage with the process, it was working effectively and as intended. The Central Bank keeps its consumer protection framework under review and, as the Deputy will be aware, the Central Bank is currently reviewing its consumer protection code and a discussion paper on this is now open for public consultation.
I thank the Minister. There are serious problems in how what the Minister's spoke about is being adhered to and how it is being enforced. The issues are well-documented in the Free Legal Advice Centres, FLAC, From Pillar to Post series published in the last number of years. As the Minister said, it is crucial to ensure that the CCMA is fit for purpose, especially in the context of the rising interest rates, which we are seeing more of today. For those who are having repayment difficulties, this is becoming more and more prevalent. There is limited data on the type of restructures that take place between the lender and borrower. The data shows that the longer a mortgage is in arrears, the more difficult it is to get a restructure, with the minority of mortgages in arrears having received a restructure.
There is also concern regarding the premature classification of borrowers as non-co-operating which immediately removes the borrower from the protection of a mortgage arrears resolution process. We have to ask if there is a need for greater supervision by the Central Bank of lenders prematurely classifying borrowers as non-co-operating, given its stark and immediate consequences for them.
I thank the Deputy, who has raised very important issues. I know that the Central Bank takes them very seriously. The review of the consumer protection code is a very important body of work which is currently under way. I encourage all Members of the House to engage in the process and to share the real-life experience of constituents, which has been conveyed to us, so that the Central Bank is fully aware of what is happening on the ground and in reality.
It is worth putting on the record that the level of mortgage arrears in Ireland has fallen very significantly. For the quarter ending September 2022, slightly over 45,700 primary dwelling mortgages were in arrears and, when those mortgages which were in very short-term arrears were excluded, some 30,800 were in arrears of more than 90 days. That is approximately 4.3% of principal dwelling house mortgages. Back in 2013, that was almost 13%. That said, there is no room for complacency. We know that interest rates have risen and are likely to rise further and that, of course, has an impact on the affordability of mortgage repayments for customers. We do not want to see the progress that has been made in respect of mortgage arrears going into reverse. The types of issues that the Deputy has raised are very important. I know that they will be considered very carefully by the Central Bank in respect of its regulatory function.
We need this to work for homeowners. There is clear evidence, as the Central Bank has warned on many occasions, that the waterfall of alternative repayment arrangements has not been sufficiently worked through by lenders. The easy reflex option of sale to third parties and vulture funds has been used, rather than finding sustainable solutions for borrowers. There is a cohort of borrowers whose loans were sold and are now owned by the vulture funds, with interest rates suddenly rising sharply. They are refusing to engage with the borrowers, offer fixed rates or consider sustainable solutions. There is a real problem here for those who are caught in the trap of mortgage arrears.
Can I clarify something with the Minister? The programme for Government committed to assess the CCMA, including the available suite of alternative repayment arrangements, and to ensure it has full legal effect. Is the Government going to do that or is it just saying that the Central Bank is carrying out a piece of work that will take us up to 2025? This is a far wider consumer protection piece of work and is very important. Is the Government going to fulfil its commitment under the programme for Government? There is an issue in respect of the alternative repayment arrangements and the suite which is available. As I said earlier when we were talking about mortgage interest relief, tracker mortgage customers who were paying 3.5% in June are now being forced to pay a 7% interest rate. There is no option for them to fix. The Minister says that the CCMA has full legal effect but when a vulture fund only offers a customer to pay his or her interest or mortgage, where does a borrower go in those circumstances?
I am aware that not all loan owners - non-bank lenders, in particular - offer a fixed rate option, which can be a very attractive one for many borrowers. We have seen the run rate recently. Approximately 92% to 93% of new mortgages being issued in Ireland are fixed-rate in nature because it gives certainty to the borrower about the nature and the level of their repayment for a period of time. It is the case under the CCMA that the mortgage creditor has to explore all of the options for an alternative repayment arrangement offered by that lender, that the Central Bank has to ensure that such an assessment has been properly done, that every possible repayment arrangement is being explored and that the most appropriate one is being offered to a borrower in these circumstances. There is an appeals process in place also to address that issue.
Question No. 73 taken with Written Answers.
Tax Code
Pearse Doherty
Question:74. Deputy Pearse Doherty asked the Minister for Finance his views on introducing additional tax measures for developers and investors in the residential property market; if he agrees with a previously commissioned report (details supplied) that such incentives would represent a clear waste of scarce public resources and would lead to an increase in site and property prices; and if he will make a statement on the matter. [3149/23]
Darren O'Rourke
Question:78. Deputy Darren O'Rourke asked the Minister for Finance his position on introducing additional tax measures for developers and investors in the residential property market; and if he will make a statement on the matter. [3098/23]
Martin Kenny
Question:247. Deputy Martin Kenny asked the Minister for Finance his position on introducing additional tax measures for developers and investors in the residential property market; and if he will make a statement on the matter. [3182/23]
In November of last year, the Taoiseach made plain his desire to introduce tax breaks for private developers. That sums up the approach of the Government in housing policy and the cul-de-sac which the Taoiseach's thinking has entered. Unfortunately, he is taking struggling renters and prospective owners down that cul-de-sac with him and stunting their life plans and hopes for the future. Is the Minister for Finance considering the introduction of tax breaks for developers, as the Taoiseach has suggested? What is his view on the fact that the Taoiseach wants him to do this?
I propose to take Questions Nos. 74, 78 and 247 together.
The Government is acutely aware of the difficulties in the housing market. As I have said on many occasions, the key problem is a lack of supply. This is why the Government is committed to increasing the supply of all types of homes: social, affordable, rental and owner-occupier. Under Housing for All, the Government has provided over €4 billion this year to accelerate the delivery of new homes. The Government has also intervened in other areas, including legislating for a residential zoned land tax and a vacant homes tax. These measures are working and in the past year around 28,000 houses were built, the highest number since 2008. However, over the past year we have experienced very high levels of inflation. Data released by the Central Statistics Office, CSO, show that annual inflation in the wholesale price of construction materials was over 16% in November 2022. The increase in costs is adversely impacting the viability of housing projects, which may make it difficult to meet our housing targets this year and beyond. To combat this, all options will be considered to boost the supply of housing.
On tax measures, our recent history suggests that an extremely cautious approach is necessary. In the past such measures were too broadly based and inefficient. They created distortions in the construction sector and proved very difficult to end. For these reasons and more, public expenditure measures continue to be the preferred method of State support. We must also recognise that money alone cannot solve the housing shortage. The viability challenge must be met using all the various tools available to the Government, including regulatory and legal means. In this respect, I welcome recent initiatives by the Department of Housing, Local Government and Heritage on planning reform and the forthcoming report on lowering the cost of construction. I will continue to work with my Cabinet colleagues to ensure that any further interventions in the housing market are appropriately calibrated, represent the best use of scarce public resources and boost the supply of housing in both the public and private sectors.
With respect, I have asked the Minister a direct question here. The Taoiseach is upfront about it - he wants tax breaks for developers. That is the cul-de-sac which he wants us to go down, which underlines the abject failure of the housing policy of this Government and indeed the Taoiseach. Can the Minister for Finance tell the House if he is willing to consider tax breaks for developers? The Taoiseach, who is the Minister's boss, wants him to do it. Is he willing to consider that? Does he side with the Economic and Social Research Institute, ESRI, which in 2015 studied the issue of tax breaks to stimulate construction in the housing market and concluded: "Tax breaks will have limited impact on supply if supply has been constrained by [other factors] ... tax breaks in these circumstances can simply lead to a transfer of tax revenue from the state to developers with no effect on supply." Does the Minister support the view of the Commission on Taxation and Welfare? It reached similar conclusions to the effect that such tax breaks "can lead to further price growth in areas where supply is particularly constrained, the beneficiaries of which are the land owners and developers at the expense of forgone revenues".
Does the Minister support the view of his own Department which said in the past year that tax reductions resulting in transfers from the State to developers without any significant effect on supply have a very significant cost to the taxpayer? The ESRI, the Commission on Taxation and Welfare and the Department have all come out against tax breaks for developers - they have said that all such tax breaks will do is benefit developers, and they will have no impact on supply - but the Taoiseach still wants them because his policies are pro-developer and pro-funds. I will put the question plainly. Is the Minister for Finance willing to contemplate tax breaks for developers, as the Taoiseach wants?
I thank the Deputy for his comments. As I said in my initial response, public expenditure measures are the preferred method of State support. The Deputy asked a very direct question, which he put to me here in writing and has repeated verbally, in respect of introducing additional tax measures for developers and investors in the residential property sector.
I have no such plans. We will, as always, keep all taxation matters under review.
When it comes to stimulating supply and the State playing a greater role in that regard, we have the Croí Cónaithe cities initiative and we need to see the full work-through of that in terms of delivery, in particular of high-density development in our cities. We have the Land Development Agency, LDA, with Project Tosaigh. It is engaging with the private sector at this point to see what that can deliver in terms of high-density developments in our city centres, which we will all agree need to be built at the most affordable rates possible.
Will the Minister take the Taoiseach aside and explain to him that his Department, the ESRI and other experts, including the Commission on Taxation and Welfare, whose members were the experts appointed by the Government, are all of the view that taxpayers funding developers will only deepen the pockets of those developers without actually increasing supply? Will the Minister have that conversation with the Taoiseach? He continues to argue for these types of support which are not going to cut it.
The Minister mentioned that money is not the only issue. However, is it not the case that in the ministerial brief prepared for the Minister for Public Expenditure and Reform, the seat occupied by the Minister, Deputy McGrath, until a couple of weeks ago, pointed out that there was a €1 billion underspend under his watch in the Department of Housing, Local Government and Heritage? The fact is that social housing targets were missed last year by a figure of 2,500 homes. Is the Government going to focus on delivering the amount of money that it committed to spend? In a housing crisis, where people are homeless, 4,000 children are in emergency accommodation tonight and many people are locked out of the market, the pitiful amount of money the Government is putting on the table leaves €1 billion unspent. That is unforgivable.
McGrath; Michael
As Minister for Finance, I will of course be part of all of the discussions on what we are doing and what more we need to do in Government to tackle the housing crisis. I am a member of the Cabinet committee on housing and contribute to that on an ongoing basis. I also did so in my previous role. It is true that it is not all about money. The planning reforms the Minister for Housing, Local Government and Heritage, Deputy Darragh O'Brien, is bringing forward are vitally important and I hope the House and relevant Oireachtas committee will co-operate and provide their support and input into them. There are capacity constraints across the industry and also labour shortages across different specialisms that we are well aware of.
The Deputy mentioned tax. We have used tax in a different way, through the residential zoned land tax and the vacant property tax. We are using the taxation system, where we deem it appropriate, to help bring vacant stock back into use or make land available that is intended or earmarked for residential development.
Question No. 75 taken with Written Answers.
Disability Services
Pauline Tully
Question:76. Deputy Pauline Tully asked the Minister for Finance the progress to date on replacing the Disabled Drivers Medical Board of Appeal; and if he will make a statement on the matter. [3023/23]
Michael Moynihan
Question:115. Deputy Michael Moynihan asked the Minister for Finance the number of primary medical certificate appeals currently outstanding; and if he will make a statement on the matter. [2824/23]
David Cullinane
Question:129. Deputy David Cullinane asked the Minister for Finance the current status of the review of the disabled drivers and disabled passengers scheme; when the Disabled Drivers Medical Board of Appeal will be in operation; the number of outstanding appeals before the board; and if he will make a statement on the matter. [3094/23]
Catherine Connolly
Question:150. Deputy Catherine Connolly asked the Minister for Finance further to Parliamentary Question No. 155 of 10 November 2022, the timeline for the publication of the review of the disabled drivers and disabled passengers scheme; and if he will make a statement on the matter. [3092/23]
Catherine Connolly
Question:240. Deputy Catherine Connolly asked the Minister for Finance the status of the Disabled Drivers Medical Board of Appeal; and if he will make a statement on the matter. [3132/23]
I congratulate the Minister and Minister of State on their appointments. I wish them luck in their roles. What progress has been made to date on replacing the Disabled Drivers Medical Board of Appeal, DDMBA?
I propose to take Questions Nos. 76, 115, 129, 150 and 240 together.
The disabled drivers and disabled passengers scheme provides relief from vehicle registration tax, VRT, and VAT on an adapted car, as well as an exemption from motor tax and an annual fuel grant. The scheme is open to severely and permanently disabled persons as a driver or passenger and also to certain charitable organisations. In order to qualify for relief, the applicant must hold a primary medical certificate issued by the relevant senior area medical officer, SAMO, or a board medical certificate issued by the Disabled Drivers Medical Board of Appeal. To qualify for a primary medical certificate, an applicant must be permanently and severely disabled and satisfy at least one of six medical criteria.
It is expected that the board of appeal will be established shortly. The background is that following the resignation of all members of the previous board, effective from 30 November 2021, two expression of interest campaigns have been held, seeking suitable candidates for the board. The Department of Health has led on all actions and tasks with respect to the expression of interest campaigns. Officials from my Department have provided support to the Department of Health in this matter.
The first campaign closed on 29 April. As there were insufficient suitable candidates arising from the first campaign, a second round was issued with a closing date of 5 July 2022. From these, three suitable candidates have successfully completed Garda vetting. Five members are legislatively required for a functional board, with a quorum of three needed for any appeal hearing. Two other candidates have recently been deemed suitable and are in the process of being Garda vetted. All five candidates have been nominated by the Minister for Health, pending successful completion of Garda vetting.
I am hopeful that the new board will be up and running in the next few weeks. In my next reply, I will outline the details of the review of the scheme which is under way.
I thank the Minister. We do not have a definite date for the establishment of the medical board of appeal. I asked the Minister's predecessor, the current Minister for Public Expenditure and Reform, Deputy Donohoe, this question a number of times. I have also linked it to the proposed review of the disabled drivers and disabled passengers scheme because the criteria to apply for a primary medical certificate to access the scheme are extremely stringent. That is why the board resigned at the end of November 2021. It was promised a review of the scheme some months prior to that, and when that did not happen the board resigned in total frustration.
Many people who apply for a primary medical certificate do not qualify because the criteria are so stringent. When they are refused the certificate, they appeal the decision. An appeal is only upheld if a person's condition has deteriorated significantly, which is generally as a result of a progressive condition.
Many people apply to the scheme because they do not have any other options open to them. The mobility allowance and the motorised transport grant were suspended in 2013, with a promise that a new scheme would be introduced shortly thereafter. Ten years on, we still do not have a new scheme. The system is inequitable because some people who applied and were approved for the scheme prior to 2013 and are still in receipt of the mobility allowance, while others, who should be able to avail of the scheme, are being denied access to it.
I thank the Deputy. I reassure her that the Minister for Health has made the appointment of the five members of the board of appeal. Garda vetting is being completed and that is why I am hopeful. I understand the board will be up and running in the next few weeks.
Assessments for the primary medical certificate by the HSE are continuing to take place. I acknowledge that there are a lot of appeals awaiting processing. There are currently 759 people awaiting an appeal hearing, with 382 of those dating to 2021. I am anxious that we make progress on this issue. I recognise the value of the scheme and what it means to people.
As the Deputy is aware, my predecessor, the Minister, Deputy Donohoe, committed to a comprehensive review of the scheme under the auspices of a broader review of mobility support. In order to achieve this, the Minister for Children, Equality, Disability, Integration and Youth, Deputy O'Gorman, agreed in September 2021 that the review of the scheme should be incorporated into the work of the national disability inclusion strategy transport working group. The working group, under the chairpersonship of the Minister of State, Deputy Rabbitte, held a number of meetings last year. A draft report was considered at its final meeting on 8 December 2022. It is being finalised and it is expected that it will be published soon. I assure the Deputy that I will give this matter my personal attention to try to move it on.
I thank the Minister. People's rights are being infringed. The State ratified the United Nations Convention on the Rights of Persons with Disabilities, UNCRPD, in 2018 and nearly five years later there is no transport scheme in place for disabled people. The disabled drivers and disabled passengers scheme is extremely limited and only applies to a small number of very disabled people. We need more schemes. I was going to ask the Minister for an update on the publication of the report of the transport working group, and he has said it will be published shortly. I hope it will be.
As the Minister said, there are over 700 people waiting for appeals. I am constantly contacted by people asking when their appeal will be heard and I have to tell them there is no board in place to hear appeals. What resources is the Minister going to put into the scheme to help deal with the backlog of cases?
This issue affects people living in rural Ireland in particular because there is very little public transport as it is, never mind accessible transport. Local Link services are sporadic in terms of where and how often they operate. While people in urban areas may have choices regarding public transport in terms of buses and trains, people in rural areas definitely do not and they need schemes in place to assist them.
I hear what the Deputy is saying. I have had quite an amount of experience as a Deputy over recent years dealing with this scheme. I have been dealing with people who qualify for the scheme and with others who have been waiting for their appeal to be heard. It is very frustrating for people who have very severe disabilities, in many instances, to be waiting so long to have their appeal heard and to get the benefits of this scheme. It is a good scheme, broadly but there is a need for reform and changes to it. The way that was agreed to progress that was through the working group that the Minister for Children, Equality, Disability, Integration and Youth, Deputy O'Gorman set up and which the Minister of State at the Department of Health, Deputy Rabbitte, chaired. The draft report, as I said, was considered on 8 December 2022 and is currently being finalised. I have not seen that report but I hope to receive it at an early date. I look forward to considering it and to acting on its recommendations in so far as they fall within my remit.
I wish to point out Chairman that Deputy Devlin's question was grouped with the previous one which was skipped. Perhaps we could respond to that now.
Yes, we can take that question now.
Tax Code
Joe Flaherty
Question:75. Deputy Joe Flaherty asked the Minister for Finance the proposals he will be bringing forward in relation to income tax over the medium term; and if he will make a statement on the matter. [2994/23]
Cormac Devlin
Question:79. Deputy Cormac Devlin asked the Minister for Finance his plans to undertake a review of the income tax system; and if he will make a statement on the matter. [3082/23]
I want to start by congratulating and wishing my colleague, Deputy Michael McGrath, well in his new role and thanking him for all of the work he did in the Department of Public Expenditure and Reform. I also want to formally congratulate my constituency colleague, Deputy Carroll MacNeill, and wish her well in her new role.
Turning to the question, I would like the Minister to outline his plans to undertake a review of the income tax system here, as committed to in the programme for Government. A Commission on Taxation and Welfare report was published in September of last year, entitled Foundations for the Future, taking a medium-term to long-term view of taxation in this country and I am interested in hearing the Minister's views on same.
I thank Deputy Devlin for his good wishes. The position is that the Programme for Government: Our Shared Future contains a number of specific commitments relating to income tax. These include the commitment that from budget 2022 onwards, in the event that incomes are again rising as the economy recovers, credits and bands will be index linked to earnings. This will be done to prevent an increase in the real burden of income tax, to prevent more low-income workers being taken into the tax net because of no changes to the tax system and to ensure there is no increase in the number of people having to pay higher income tax and USC rates. In addition, the programme states that the earned income tax credit will be equalised with the employee tax credit. It also includes a commitment to increase the home carer tax credit to support stay-at-home parents and those with caring responsibilities.
Significant progress has been made in achieving these commitments. For example, over the last two budgets the Government increased the standard rate cut-off point for single persons by 13.3% from €35,300 to €40,000, with commensurate increases for persons who are married or in civil partnerships. In addition, the main tax credits, namely the personal tax credit, employee tax credit and earned income credit, were increased by around 7.6% or €125 each from €1,650 to €1,775. It is also worth pointing out that the earned income tax credit was equalised with the employee tax credit in 2021. The home carer tax credit was also increased by €100 from €1,600 to €1,700, a 6.3 % increase, in budget 2023.
My Department has begun initial work on developing a medium-term roadmap for personal tax reform, taking account of the recent report of the Commission on Taxation and Welfare, and considering a range of measures across income tax, USC and PRSI, together with other related personal taxation issues. This exercise was signalled in the budget last autumn. I expect that when completed, the work will help inform deliberations relating to a number of aspects of the income tax system in the context of future budgets.
I thank the Minister and commend him in particular on the work done in relation to the tax credits and the tax bands. The programme for Government commits specifically to developing a circular economy and legislation in that area is being progressed, as the Minister knows. The structural shift to a circular economy should be supported with taxation changes to support labour-intensive sectors that underpin the repair of goods, particularly consumer goods, and retrofitting, in addition to the traditional labour-intensive sectors such as tourism, hairdressing, and personal services such as home care, which will be needed to support an ageing population. Conversely, VAT and other taxes on IT and automated services should be reviewed to ensure that they are fit for purpose and effective in the modern era. I look forward to hearing the Minister's views on this.
I thank Deputy Devlin who has raised issues that are very important to the future of our income tax code, including the recognition of the ambition to move to a circular economy and the importance of schemes and supports for retrofitting. He also mentioned specific sectors of our economy.
It is worth highlighting the specific income tax and USC recommendations that were made by the Commission on Taxation and Welfare. This was an enormous body of work and the report is one that we should all take seriously. We must very closely examine the recommendations that the commission made. It recommended that the Government should focus on maintaining the progressivity of the existing personal taxes system. Without further erosion of the income tax or USC, future base-broadening reforms should focus on PRSI and on addressing horizontal equity concerns. To promote equity and sustainability, preferential income tax or USC treatment based on factors such as age or personal characteristics should be phased out, according to the commission. As far as possible, and with limited exceptions, income tax and PRSI charges should be based on income only and different types of income should be treated equally. The commission made a number of other recommendations in relation to cliff edges, the USC, individualisation and other issues as well.
I appreciate the Minister's response and look forward to working with him and his officials over the coming months, particularly in relation to the base reform, PRSI, the tax credit system, USC and the income bands. I am sure we will flesh all of that out over the coming months.
Mortgage Resolution Processes
Matt Carthy
Question:77. Deputy Matt Carthy asked the Minister for Finance his views on the requirements of third parties and funds in possession of mortgage contracts with regard to the code of conduct on mortgage arrears; and his views regarding the refusal of third parties and funds to engage with borrowers, including with respect to alternative repayment arrangements under the mortgage arrears resolution process. [3095/23]
We have touched on this issue previously. The question relates to the cohort of around 114,000 individuals who have mortgages with the vulture funds. The issue is the code of conduct on mortgage arrears. The Minister gave me an answer last week suggesting that they could look at alternatives or could move to a different mortgage provider but these people have no alternative. These vulture funds do not offer fixed rates or split mortgages or go through the waterfall of restructuring options, which means these people only have one option. When they get a letter from the funds - and many have received four letters over the past six months - they have nobody to talk to. The code of conduct on mortgage arrears is useless to these people. We cannot allow this situation to fester. We are talking about 114,000 people and I am asking for Government intervention to support them.
I thank the Deputy. Many of these individuals have been in touch with me directly as well and a number of Oireachtas colleagues have raised this issue with me. It is an issue of which I am very conscious. I recognise that the rate that many of these mortgage holders would have been on prior to the changes in the ECB interest rate would have been 4% or 4.5% but all of the ECB increases have been passed on in full. That has brought many of them to rates that are at, approaching, or above 7%. That has made life really difficult for many of these people.
I had my first meeting today with the Governor of the Central Bank and I raised this issue with him directly. My Department has also written to the Central Bank in relation to its supervisory and consumer protection functions, drawing its attention to this issue and the impact that interest rates of this kind will potentially have on many of these people. I understand that the Governor will appear before the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach tomorrow and I am sure Deputy Doherty and other colleagues will be raising this specific issue with him.
Many of these customers cannot switch their mortgage provider. That said, the point should be made that there may well be some people whose mortgages are no longer classified as non-performing exposure mortgages and who potentially could go back to the mainstream bank lenders. That may be an option for some of these people but I acknowledge that it is not an option for all of them. It is an issue of concern which is why I raised it directly with the Governor of the Central Bank and why my Department wrote to the Central Bank bringing this matter to its attention and asking it to consider what can be done within the suite of supervisory and consumer protection powers of the bank.
A person of whom I am aware is paying €400 a month more. That is €4,800 to the vulture fund. The code of conduct states that where a borrower is experiencing repayment difficulty, a regulated entity must explore all the options for alternative repayment arrangements offered by the entity. There are no options in this case. The vulture fund offers no options. The Government committed to review the CCMA but, two years on, it has not done so. It is not acceptable to leave these people high and dry. We need action. On this side of the House, I am willing to work with the Minister in whatever way is needed to ensure adequate protections are in place for these mortgage holders.
I have put on the record my concern for these customers. I recognise that interest rates at that level can cause real problems for these borrowers, some of whom are already in arrears, while others have cleared and come out of arrears. It is very challenging for them. I acknowledge that point. That is why, as a new Minister for Finance, I have raised it directly with the Central Bank to examine what can be done within the suite of powers it has. I look forward to engaging further with it on the matter.
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Written Answers are published on the Oireachtas website.
Is féidir teacht ar Cheisteanna Scríofa ar
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Written Answers are published on the Oireachtas website.