Written Answers Nos. 60 - 68
60. Deputy Michael Healy-Rae asked the Minister for Finance if he will give an assurance that no carbon tax will be imposed on solid fuel considering that at present solid fuel is the only option of heating for many people; and if he will make a statement on the matter. [51974/12]
View answerThis question relates to a potential Budgetary measure. It is the usual practice for the Minister for Finance not to speculate or comment in advance of the Budget on what it will contain and I do not propose to deviate from that practice.
61. Deputy Alan Farrell asked the Minister for Finance the feasibility and cost of taxing child benefit for high income earners who may fall over a defined high income threshold; and if he will make a statement on the matter. [52097/12]
View answerAs the Deputy will be aware, the position is that there is no specific proposal in the Programme for Government to means test or tax child benefit payments. It is a longstanding practice of the Minister for Finance not to comment in advance of the Budget on any tax matters that might be the subject of Budget decisions.
62. Deputy Terence Flanagan asked the Minister for Finance if the deadline for mortgage interest relief applications will be extended past the end of 2012; and if he will make a statement on the matter. [51930/12]
View answerThe position is, as I stated in my Budget day speech on 6 December 2011, and on many occasions in this House since, that mortgage interest relief for principal private residences will no longer be available to house purchasers who purchase after the end of 2012 and will be fully abolished from 2018. This means that a loan will have to be drawn down on or before 31 December 2012 in order to qualify for this relief. I have no plans to review this decision and I believe that more than adequate notice of this decision has been provided.
As you will appreciate, I receive numerous requests for the introduction of new tax reliefs and the extension of existing ones. You will also appreciate that I must be mindful of the public finances and the many demands on the Exchequer given the current significant budgetary constraints. Tax reliefs, no matter how worthwhile in themselves, reduce the tax base and make general reform of the tax system that much more difficult.
63. Deputy Kevin Humphreys asked the Minister for Finance the level of money at which a pension becomes subject to the marginal rate; the number of pensioners that were subject to taxation at the standard rate in 2010; the number at the marginal rate in 2010; and if he will make a statement on the matter. [51936/12]
View answerThe current system of taxation provides that tax is to be charged on an individual’s income, or the joint income of a couple at the following rates:
- A single or widowed individual or a surviving civil partner without qualifying children; the first €32,800 @ 20%, with any balance @ 41%.
- A single or widowed individual or a surviving civil partner qualifying for One Parent Family Tax Credit; the first €36,800 @ 20%, with any balance @ 41%.
- A married couple or individuals in a civil partnership who are jointly assessed – where only one spouse or civil partner has an income source; the first €41,800 @ 20%, with any balance @ 41%.
- A married couple or individuals in a civil partnership who are jointly assessed – where both spouses or civil partners have income sources; the first €41,800 @ 20% (with an increase of up to €23,800 max in respect of the second income), with any balance @ 41%.
The tax chargeable is then reduced by the various credits that the individuals qualify for, as determined by their personal circumstances.
With regard to individuals aged 65 or over, section 188 of the Taxes Consolidation Act 1997 provides for exemption limits:
- For married individuals or civil partners, where either spouse or civil partner is aged 65 or over at any time during the tax year, the exemption limit is €36,000.
- In the case of single individuals, widowed individuals, surviving civil partners and married individuals or civil partners assessed as single individuals, who at any time during the tax year are aged 65 or over, the exemption limit is €18,000.
In addition, these exemption limits are increased by €575 in respect of each of the first 2 qualifying children and by €830 in respect of each subsequent qualifying child.
Marginal relief applies where an individual’s total income exceeds the exemption limit applicable to that individual, but does not exceed a sum equal to twice that limit.
In such circumstances, the individual is taxed at 40% on all income above the exemption limits to a ceiling of twice the exemption limit. However, the taxpayer is always given the benefit of the more favourable tax treatment as between marginal relief or the normal tax system.
Once the income exceeds twice the exemption limit, marginal relief is not available and the individual pays tax under the normal tax system on all his or her income. Exemption limits for individuals aged less than 65 years ceased to apply with effect from 1 January 2008.
Further information on all tax credits, reliefs and exemptions for over 65s is available from the Revenue website at the following link: http://www.revenue.ie/en/tax/it/leaflets/it45.html#section1
I am advised by the Revenue Commissioners that while social welfare pensions can be separately identified from other sources of income in Revenue statistics, it is not possible to do so in respect of income from other pensions. Consequently, there is no complete or reliable basis available to Revenue on which the number of pension income earners that were subject to taxation at the standard rate (20%) and at the higher rate (41%) in 2010 could be compiled.
However, information on the distribution of income earners aged 65 or over by income tax rate bands can be provided for income tax year 2010 as shown in the table below, based on incomes data derived from income tax returns held on Revenue records which have been grossed-up to an overall expected level to adjust for incompleteness in the numbers of returns on record at the time the data was extracted for analytical purposes.
Distribution of Income Earners aged 65 or over for 2010
|
Tax Year |
Exempt (standard rate liability fully covered by credits or age exemption limits) |
- |
Standard rate (including those whose liability at the higher rate us fully offset by credits) |
- |
Higher rate (liability not fully offset by credits) |
- |
All cases |
|
Numbers |
% |
Numbers |
% |
Numbers |
% |
||
|
2010 |
149,500 |
64.2 |
65,600 |
28.2 |
17,800 |
7.6 |
232,900 |
* Numbers are rounded to nearest hundred.
It should be noted that a married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit.
64. Deputy Jim Daly asked the Minister for Finance if he will consider extending the first time buyer interest tax relief deadline; and if he will make a statement on the matter. [51937/12]
View answerThe position is, as I stated in my Budget day speech on 6 December 2011, and on many occasions in this House since, that mortgage interest relief for principal private residences will no longer be available to house purchasers who purchase after the end of 2012 and will be fully abolished from 2018. This means that a loan will have to be drawn down on or before 31 December 2012 in order to qualify for this relief. I have no plans to review this decision and I believe that more than adequate notice of this decision has been provided.
As you will appreciate, I receive numerous requests for the introduction of new tax reliefs and the extension of existing ones. You will also appreciate that I must be mindful of the public finances and the many demands on the Exchequer given the current significant budgetary constraints. Tax reliefs, no matter how worthwhile in themselves, reduce the tax base and make general reform of the tax system that much more difficult.
65. Deputy Caoimhghín Ó Caoláin asked the Minister for Finance the loss of revenue to the Exchequer caused by the black economy operators in the motor vehicle tyre industry; and if he will make a statement on the matter. [51990/12]
View answerI am advised by the Revenue Commissioners that they are fully aware of the unfair competitive advantage to be gained by those businesses that do not fulfil their tax obligations. It is the role of Revenue to ensure that all businesses, regardless of the type of activity they are engaged in, are registered for the appropriate taxes and duties, and that they fulfil their obligations with regard to the filing of returns and the payment of taxes. Revenue’s tax compliance programmes are under constant review to ensure that they are focussed on the areas of greatest risk, including risks from the shadow/hidden economy. I am advised that Revenue tackles the problem of tax and duty evasion through their range of compliance and audit interventions including through targeted special projects. Case interventions are undertaken based on Revenue’s assessment of compliance risks, the level of those risks and other relevant information available.
In addition, Revenue uses a wide range of methodologies to identify those who under-declare their income and/or are operating in the shadow/hidden economy, and deploys the full range of compliance interventions to tackle those risks. Activities undertaken can include covert surveillance, cold calls to businesses and venues as well as pre-arranged aspect queries on specific items. This work is continuing. There is a strong focus on cash businesses, given its potential high-risk nature, and I am informed that in the first eight months of 2012 audits specifically targeted at these businesses yielded over €12m.
I am further advised by the Commissioners that, specifically regarding the retail and wholesale motor vehicle parts and accessories sector, 25 Audits have been carried out so far in 2012, yielding €407,063. In 2011, 37 audits were carried out in this sector, yielding €483,070. These statistics are compiled from Revenue’s records and I am informed that within their records, the motor vehicle parts and accessories sector includes the tyre distributor industry.
66. Deputy Michael McGrath asked the Minister for Finance in view of the recent announcement of job losses at Liberty Insurance, the status of the commitment given at the time of the sale of the company last year that employment levels would be maintained for at least two years; and if he will make a statement on the matter. [52010/12]
View answerThe sale of the Quinn Insurance Ltd (QIL) to Liberty Insurance was a matter for the Joint Administrators subject to the approval of the High Court. As Minister for Finance I was not a party to the transaction. Consequently, I sought clarification from the QIL Joint Administrators on whether any commitment was given by Liberty Insurance at the time of the sale in relation to the retention of jobs in the company for a particular period of time.
The Joint Administrators have advised me that the employees of QIL were transferred to Liberty Insurance under TUPE (Protection of Employees Rights on Transfer of Undertakings) thereby protecting their terms and conditions at the time.
However, they have informed me that there was no commitment given regarding the maintenance of employment levels for a particular period of time as part of the contractual agreement signed between the respective parties.
67. Deputy Michael Creed asked the Minister for Finance the initiatives he proposes for the Revenue Commissioners to combat fraud particularly in the construction sector; if he will consider linking tax relief to evidence of tax compliant contractors and the facility of all construction projects above a certain value having to notify the Revenue of commencement; and if he will make a statement on the matter. [52057/12]
View answerI am advised by the Revenue Commissioners that their tax and duty compliance programmes are under constant review to ensure that they are focused on the areas of greatest risk, including risks from fraudulent activity. In the construction sector, Relevant Contracts Tax (RCT) applies to payments made by a principal contractor to a subcontractor under a relevant contract (this is a contract to carry out, or supply labour for the performance of relevant operations in the construction industry). RCT applies to both resident and non-resident contractors.
Following a review of the operation of the RCT system in 2010, a new, streamlined system was developed in 2011 and introduced from the 1st January 2012. All transactions subject to RCT must be notified to Revenue through the Revenue Online Service. This process provides the Revenue Commissioners with real time information on the activities of principal and subcontractors, which reduces the opportunities for fraud, allows for early intervention in suspected cases, and facilitates a more focused compliance approach allowing Revenue to concentrate its resources on tackling the non-compliant contractor and levelling the playing field for compliant contractors.
Revenue has always maintained a significant presence in monitoring activities in the construction sector and is involved in an ongoing programme of construction related audits, compliance interventions and site visits, including one off housing, repairs, maintenance and enhancements.
Some of the specific measures being implemented are:
- Revenue chairs the Hidden Economy Monitoring Group, which provides a forum for the exchange of views and insights into combating the hidden economy. Its membership includes representatives from Irish Business and Employers Confederation, Small Firms Association, Construction Industry Federation, Irish Congress of Trade Unions, DSP, NERA, Department of Enterprise, Trade and Innovation, and Revenue. There are now 4 Regional Shadow Economy Liaison Groups. These regional groups have the same representation as the main group and are more effective at addressing local issues. Other bodies are asked to participate where appropriate.
- Sharing information with the Department of Social Protection, the Department of Enterprise, Trade and Innovation and the National Employment Rights Authority, where appropriate, on shadow activity in the sector is ongoing. Revenue’s Joint Investigation Unit (JIU) continues to work closely with the Department of Social Protection and the National Employment Rights Agency to investigate the shadow economy and carry out joint investigations where appropriate.
- The joint Revenue/Department of Social Protection high-level Steering Group that was set up in late 2009 between Revenue and Department of Social Protection meets regularly to oversee joint initiatives in tackling the shadow economy and welfare fraud. Information/data exchanges have been streamlined recently with the introduction of shared (cloud) computing facilities
- Unannounced visits to one off housing and self -build sites are a regular feature of Revenue activity across all of the regions. In the course of these visits the status of all workers engaged on the site, together with the source of materials used, is checked to ensure compliance with VAT requirements.
- Revenue officers as part of projects to identify suitable sites to visit examine planning applications, and Commencement Notices filed with Local Authorities.
- Revenue uses confidential information and local intelligence to target suspect sites. While they mainly source cases through information in their own systems, I am advised that they also use intelligence gathered from a number of third party sources, including the general public
- Where grants or subsidies are paid out of public funds for construction related works, the contractor must provide evidence that they are tax compliant.
I am further advised by the Revenue Commissioners that they carried out 375 audits on construction related activities in the period January to August 2012, yielding just over €16m.
I am aware that proposals have been made previously to link the granting of tax relief with evidence of tax compliance and, that Revenue would receive notification of the commencement of all construction projects. I am advised by the Revenue Commissioners that they are prepared to consider any proposals that would increase the level of tax compliance in the construction sector. However, they will need to work through the proposals in more detail and consider, in particular, how they would operate in practice. The Commissioners further advise that this can be done as part of their ongoing discussions with industry and other parties. If, following this consultation process, it is felt that implementing the proposals would have value, I would be prepared to consider introducing legislation to cater for any such changes.
68. Deputy Alan Farrell asked the Minister for Finance the possible impact that a sugar tax would have on inflation; his views on the possibility of reducing VAT for some healthier foods in order to neutralise the impact of inflation; and if he will make a statement on the matter. [52099/12]
View answerWithout specific details, it is not possible to estimate the effect on inflation of a sugar tax. With regard to reducing the VAT rate on healthier foods, I would point out that the VAT rating of various foods already provides for such a distinction. Most food products sold by retail shops are liable to VAT at the zero rate, including basic foodstuffs, for example, bread, butter, tea, meat, milk and vegetables. However, flour or egg-based bakery products such as cakes, crackers and certain wafers and biscuits are liable to VAT at the 13.5% reduced rate. Furthermore, the standard VAT rate of 23% applies to sweets, chocolates, chocolate wafers and biscuits and other similar products, confectionery, crisps, ice-creams and soft drinks, and also frozen desserts, frozen yogurts and similar frozen products.
I would also point out that the zero VAT rate that applies to bread is specifically designed to include healthy breads, such as breads with seeds and grains, gluten-free breads; and to exclude those breads that contain excessively high levels of sugar and fat, such as croissants, brioche and danishes, which are liable to VAT at 13.5%.
In general the VAT treatment of food is historic, where the application of the zero rate to healthier food products is a derogation from general EU VAT law, that Ireland is entitled to continue under the EU VAT Directive as we applied the zero rate to such foods on and from 1 January 1991. It is not possible to apply the zero rate to any new food products.
