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Wednesday, 28 Nov 2012

Written Answers Nos. 66-74

Mortgage Resolution Processes

Questions (66)

Seán Kyne

Question:

66. Deputy Seán Kyne asked the Minister for Finance if he will confirm when the code of conduct on mortgage arrears will be amended to reflect the new mortgage arrears resolution strategy recently put in place by the Central Bank of Ireland; and if he will indicate the likely timeframe for same. [53170/12]

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Written answers

The Central Bank has informed me that it will commence a review of the Code of Conduct on Mortgage Arrears in the first quarter of 2013. The Central Bank would normally conduct a review following a reasonable time after implementation and the Code will require updating due to the proposed introduction of both the Personal Insolvency Arrangement insolvency framework and longer term mortgage resolution options. The review will take into consideration recent developments that may be relevant to the issue of mortgage arrears.

VAT Rates Exemptions

Questions (67)

Ciaran Lynch

Question:

67. Deputy Ciarán Lynch asked the Minister for Finance the number of defibrillators sold each year since 2009 and to date in 2012; the rate of VAT and the amount accruing each year on these sales; the number of submissions requesting reduction or removal of the VAT charged on defibrillators received by him; and if he will make a statement on the matter. [53190/12]

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Written answers

I am informed by the Revenue Commissioners that as the information furnished on VAT returns does not require the yield from particular commodities to be identified, the quantity and amount of VAT accruing each year on the sales of defibrillators cannot be identified. The VAT rating of goods and services is constrained by the requirements of EU VAT law with which Irish VAT law must comply. Defibrillators, other than implantable defibrillators, are liable to VAT at the standard rate of 23%. Parts or accessories are also liable to VAT at the standard rate.

There is no provision in VAT law that would make it possible to apply a reduced rate or zero rate to the supply of such products. Under the EU VAT Directive, Member States may retain the zero rate on goods and services which were in place on 1 January 1991, but cannot extend the zero rate to new goods and services. In addition, Member States may only apply a reduced VAT rate to those goods and services which are listed under Annex III of the VAT Directive. While Annex III does include the supply of medical equipment for the exclusive personal use of a disabled person, it does not include defibrillators for general use. In this regard, a reduced rate cannot be applied to the supply of defibrillators. Therefore the only rate of VAT that can apply to the supply of defibrillators is the standard VAT rate of 23%.

It is not possible to provide the number of submissions received which relate to VAT on defibrillators, as many of the submissions and representations received relate to a variety of issues.

VAT Rates Application

Questions (68)

Michael Healy-Rae

Question:

68. Deputy Michael Healy-Rae asked the Minister for Finance his views on whether there should be a reduction in the lower 13.5% VAT rate for servicing and repairs and a tax rate off for service/repair work undertaken in tax compliant businesses; and if he will make a statement on the matter. [53197/12]

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Written answers

VAT is charged on the supply of goods and services and the rate applying is subject to the requirements of EU VAT law with which Irish VAT law must comply. The repair and maintenance of movable goods, such as motor vehicles, is subject to VAT at the 13.5% rate and it is not possible to reduce the VAT rate applying to such repairs servicing below 12%. This is because such repairs, including many of the goods and services to which Ireland applies a reduced rate of VAT, are based on an EU derogation under Article 118 of the EU VAT Directive, which provides that as we applied a reduced rate to these items on 1 January 1991, we are entitled to continue to apply that reduced rate to those items, provided the rate is no less than 12%. Furthermore, while is it possible to reduce the VAT rate on repairs and servicing to 12%, this could only be done through the application of a 12% VAT rate to all goods and services that currently apply at the 13.5%, and such a move would be very costly to the Exchequer. However, it must be noted that in the majority of EU Member States, where the derogation under Article 118 does not apply, repair and servicing is subject to a higher VAT rate. With regard to removing VAT on the supply of service and repair work undertaken by tax compliant businesses, the EU VAT Directive does not allow for such a distinction between taxpayers, and in any case, it is not possible to remove the VAT on such supplies. Furthermore, the enforcement of tax law through tax reductions is not an advisable policy, especially in the current economic climate. The black economy in the construction sector is dealt with, and should continue to be dealt with, through ongoing enforcement procedures by the Revenue Commissioners.

Budget Submissions

Questions (69)

Michael Healy-Rae

Question:

69. Deputy Michael Healy-Rae asked the Minister for Finance his views on whether halfway through the year there should be a mid-year stimulus which would help the market and therefore help keep persons in employment in the motor industry (details supplied); and if he will make a statement on the matter. [53198/12]

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Written answers

I understand the Deputy’s question to refer to proposals contained in SIMI’s pre-Budget submission. Such proposals, together with a wide range of proposals submitted to my Department from a large number of interested parties in issues across all tax heads, are being considered in the context of the forthcoming Budget.

I am sure the Deputy will appreciate that I cannot comment on what might or might not be included in the Budget speech on the 5th of December.

Mortgage Applications Approvals

Questions (70)

Gerry Adams

Question:

70. Deputy Gerry Adams asked the Minister for Finance the penalties the Central Bank of Ireland impose for regulated entities here breaching the Central Bank of Ireland code of practice on the transfer of mortgages; if he will detail if the code of practice concerns all loans secured on all residential properties in this jurisdiction here irrespective of the owner of the loan; if he will detail the total number of regulated entities here in which the Central Bank of Ireland code of practice on the transfer of mortgages applies; and if he will make a statement on the matter. [53215/12]

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Written answers

I have been advised by the Central Bank that the ‘Code of Practice on the Transfer of Mortgages’ is a voluntary code. The Code was issued by the Central Bank in 1991 to financial institutions involved in the provision and transfer of mortgage credit. A copy of the Code and a list of regulated financial institutions are available at www.centralbank.ie. As the Code is voluntary in nature, it is not subject to the Central Bank’s administrative sanctions procedure.

The Code states that it applies to a loan secured by the mortgage of residential property. For the purposes of this Code, residential property is not limited to principal private residences of the mortgagor.

The ‘Code of Practice on the Transfer of Mortgages’ may be applied, on a voluntary basis by all financial institutions involved in the provision and transfer of mortgages. Notwithstanding its voluntary nature, I expect that best practice dictates that it be applied by all such institutions.

Banking Sector Staff Issues

Questions (71)

Gerry Adams

Question:

71. Deputy Gerry Adams asked the Minister for Finance if, further to the chairman of Irish Bank Resolution Corporation's statement in the Oireachtas Committee on Finance, Public Expenditure and Reform on 31 October 2012 that there have been some increases in pay for a limited number of persons who had taken on extra responsibilities, he will detail the total number of persons who received these increases; if he will detail for these increases in pay what their original salary was and the amount increased; and if he will make a statement on the matter. [53216/12]

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Written answers

I am informed by IBRC that this information is not readily available at this time and the compilation of this information is likely to delay completion of the Mercer Remuneration Report which is a Government priority. I have committed to publishing the details underpinning the review in view of the public interest in the matter. The report will provide a comprehensive and professional analysis of remuneration structures and levels across IBRC and the other Covered Banks both now and before the onset of the banking crisis.

IBRC Investigations

Questions (72)

Gerry Adams

Question:

72. Deputy Gerry Adams asked the Minister for Finance if, further to Irish Bank Resolution Corporation’s appearance at the Oireachtas Committee on Finance, Public Expenditure and Reform on the 31 of October 2012, he will detail the total cost to IBRC for the estimated 230 full-time people in the bank working on the National Asset Management Agency portfolio for 2010, 2011 and projected for 2012; if he will detail the total income for IBRC for 2010, 2011 and to date in 2012 generated from the remuneration of up to a maximum of ten basis points on the total gross quantum of NAMA loans; and if he will make a statement on the matter. [53217/12]

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Written answers

Participating Institutions' fees for services to NAMA are based on 10 basis points of loans managed or actual costs incurred, whichever is the lesser. IBRC have advised me that as disclosed in IBRC’s 2012 Interim Report (page 35), which covers the period from January to June 2012, NAMA were charged €15m in relation to the servicing of loans acquired from the Bank. The corresponding charge for IBRC for 2011 (Annual Report page 60), was €28m (includes former INBS for H2 2011) and for the former Anglo Irish Bank for 2010 was €7m. I am further advised that income received from NAMA covers the cost of the Bank servicing the NAMA portfolio in 2011 and H1 2012. In 2010, there was a small net cost incurred by the former Anglo Irish Bank for servicing the NAMA portfolio. On 1 January 2011, the maximum amount that could be recharged to NAMA increased to 10 basis points of loans being serviced on their behalf.

IBRC Investigations

Questions (73)

Gerry Adams

Question:

73. Deputy Gerry Adams asked the Minister for Finance if further to Irish Bank Resolution Corporation’s appearance at the Oireachtas Committee on Finance, Public Expenditure and Reform on the 31 of October 2012, he will detail the percentage or portion of IBRC clients who are not co-operating with IBRC; if he will detail the total amount of rental income that is now directly mandated straight into IBRC as a percentage of total rental income from IBRC assets; and if he will make a statement on the matter. [53218/12]

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Written answers

The overriding mandate of IBRC is to maximise the recovery of loans on behalf of the State and to wind down over time. I have been advised that the underlying approach of the Bank is to work constructively with each borrower on an individual basis. IBRC does not disclose the numbers of clients who are/ are not cooperating with the Bank as this information is commercially sensitive. In addition, IBRC have informed me that it is not the Bank’s practice to separately disclose rental income received in relation to repossessed collateral. As per the 2011 Annual Report & Accounts, IBRC does however disclose that during 2011 the Bank repossessed collateral, consisting of land and property, equities and cash, of €40m on balances of €91m (2010: €52m on balances of €350m). It is the Bank’s policy to dispose of repossessed assets in an orderly fashion and the proceeds, together with any rental income received in the interim, are used to reduce or repay the outstanding balance.

IBRC Investigations

Questions (74)

Gerry Adams

Question:

74. Deputy Gerry Adams asked the Minister for Finance if, further to Irish Bank Resolution Corporation’s appearance at the Oireachtas Committee on Finance, Public Expenditure and Reform on the 31 of October 2012 that their strategy is to continue through this process of preparation and maintenance of data tapes that they can put portfolios or more individual loans into the marketplace and close it earlier, this includes the entire UK loan book; if he will confirm if the preparation and maintenance of data tapes for the UK loan book has been completed in preparation in the event of a large portfolio transaction sale taking place; and if he will make a statement on the matter. [53219/12]

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Written answers

I have been informed that IBRC does not disclose details of its strategic or tactical plans relating to the loan recovery process due to the various associated commercial risks. The Bank considers all options for debt recovery in its efforts to maximise recoveries for the State.

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