Thursday, 20 Dec 2012

Written Answers Nos. 69 - 85

Property Valuations

Questions (69, 74)

Brendan Griffin

Question:

69. Deputy Brendan Griffin asked the Minister for Finance if he will provide a county breakdown of properties nationwide valued at less than €100,000; and if he will make a statement on the matter. [57524/12]

Brendan Griffin

Question:

74. Deputy Brendan Griffin asked the Minister for Finance the estimated number of properties nationwide valued at less than €100,000; and if he will make a statement on the matter. [57549/12]

Written answers

Minister for Finance

I propose to take Questions Nos. 69 and 74 together.

No database exists as yet containing the valuations of the housing stock in the State. Neither a nationwide or county breakdown of properties valued at less that €100,000 is therefore available. The estimated percentages of residential properties valued at less than €100,000 based on (a) the property price register and (b) data used in the Report of the Inter-Departmental Group on the Design of a Local Property Tax, chaired by Dr Don Thornhill (the “Thornhill Report”) are as follows:

Band	Property Price Register	Thornhill Report
0-100000	27.4%	7.20%

In the absence of a property price register at the time of the Thornhill group, the group used unpublished Central Statistics Office (CSO) data based on mortgage transactions and the CSO’s property price index to estimate a distribution of property values.

In Autumn 2012, a national register of property values was published for the first time based on actual transactions in the years 2010 to 2012. The register is published by the Property Services Regulatory Authority (PRSA) based on Stamp Duty data from the Revenue Commissioners and is updated on an on-going basis. The distribution from the register results in a higher incidence of higher value properties. However, caution should be applied to this approach given the low number of transactions, the high percentage of non-mortgage transactions (i.e., cash transactions) and the possible bias in recent transactions towards transactions of higher quality housing stock which may not represent the generality of housing valuations in the State.

Budget Submissions

Questions (70)

Brendan Griffin

Question:

70. Deputy Brendan Griffin asked the Minister for Finance the reason the VFI proposals to introduce a €250 million lid levy was not adopted in budget 2013; and if he will make a statement on the matter. [57545/12]

Written answers

Minister for Finance

The Deputy will be aware that I received a large number of pre-Budget submissions including a proposal for the introduction of a lid-on levy from vintners’ organisations. Preliminary advice suggests that the proposal may not be consistent with the EU Directive concerning the general arrangements for excise duty on alcohol products.

Tax Code

Questions (71)

Brendan Griffin

Question:

71. Deputy Brendan Griffin asked the Minister for Finance the reason the €120 million proposal to place a 1c levy on SMS and MMS was not adopted in Budget 2013; and if he will make a statement on the matter. [57546/12]

Written answers

Minister for Finance

The total number of SMS and MMS messages sent in the twelve months to the end of June 2012 was in the region of 12.6 billion. This would suggest a yield of c. €126 million from a 1 cent levy on such messages. However, the projected yield from such a levy cannot be directly inferred from the total number of messages sent, as the levy’s imposition could result in considerable behavioural impact among consumers, and could have significant implications for the charging arrangements of providers. The matter will be kept under review by my Department. I am aware of the recent introduction of a similar tax in Hungary.

While any additional revenue would be welcome in the current circumstances, wider social and economic factors which may militate against the introduction of a further tax on text messages would also have to be taken into account. Mobile phone calls and text messages are already subject to VAT at 23%. An additional flat rate levy of the order referred to by the Deputy on text messages could significantly increase the overall rate of taxation on mobile phone accounts, particularly given that the average monthly spend per user is of the order of €35.

Tax Code

Questions (72)

Brendan Griffin

Question:

72. Deputy Brendan Griffin asked the Minister for Finance the reason a windfall winnings tax, such as the taxes in place in many other countries and recently adopted by Spain, was not adopted in budget 2013; and if he will make a statement on the matter. [57547/12]

Written answers

Minister for Finance

The receipt by a person of any sum bona fide by way of windfall winnings from betting or from any licensed lottery including the National Lottery is exempt from Income Tax, Capital Gains Tax and Capital Acquisitions Tax. A tax such as is proposed in the question could affect income for the National Lottery, the surplus from which may be used for national culture, including the Irish language; the arts, within the meaning of the Arts Act 1951; the health of the community; and for youth, welfare, national heritage and amenities. For reasons of equity, a windfall winnings tax such as is proposed in the question might have to be imposed on winnings from other lotteries, which could affect fundraising by charities and sports clubs. I have no plans to introduce a levy on windfall winnings at this time.

Property Taxation Application

Questions (73)

Brendan Griffin

Question:

73. Deputy Brendan Griffin asked the Minister for Finance the way property tax rates proposed in this jurisdiction compare with rates in Northern Ireland; and if he will make a statement on the matter. [57548/12]

Written answers

Minister for Finance

The Northern Ireland domestic rate is made up of two parts. The regional rate is set by central government and makes up c. 55 per cent of the rates bill; it is used to pay for services such as roads, education and health. From 1 April 2011, the regional rate, expressed in terms of pence per pound, for domestic properties, was 0.3698 pence (in 2010/11 it was 0.3608). The district rate, which is in addition to the regional rate, is fixed annually by individual councils and is their main source of income (over 75% of total income).

The Local Property Tax will have a central national rate of 0.18% on values up to €1 million and 0.25% on the balance over €1 million, but from 2015 local authorities will have the power to vary the rate by 15% above or below the national central rate. I have made a commitment that the central national rate will not change for the lifetime of this Government. The average domestic rates bill in Northern Ireland in 2011 was £789 (c. €964). For LPT purposes, it is estimated that 85% to 90% of properties will be valued at €300,000 or less, and the maximum amount of LPT payable on such properties will be €247 in 2013 (half year charge) and €495 in 2014 (full year charge).

Question No. 74 answered with Question No. 69.

Alcohol Pricing

Questions (75)

Patrick O'Donovan

Question:

75. Deputy Patrick O'Donovan asked the Minister for Finance in view of the deliberations in budget 2013, if he will quantify the amount of potential lost revenue to the State by the selling of alcohol in supermarket outlets at prices below the cost at which the supermarkets bought the product; if he will quantify the amount paid by the State as a VAT rebate in 2011 in respect of alcohol pricing by supermarkets and other multiples; and if he will make a statement on the matter. [57553/12]

Written answers

Minister for Finance

With regard to the VAT treatment of below cost selling, VAT is a tax on the value added to a supply, and the collection and recovery of VAT takes place at each stage of the chain of supply from manufacturing to retailer. Under EU and domestic VAT rules traders who are registered for VAT collect VAT on the goods and services that they sell. In turn such traders are entitled to recover the VAT they incur on their business inputs used in the purchase or production of goods or delivery of services. Consequently, if there is a decrease in value at any stage in the process the trader is entitled to a refund of the excess of VAT incurred over that collected.

In this case, where a retailer is in a situation of net VAT gain as a result of below cost selling, this is not a loss to the Exchequer or an additional benefit to the retailer, it is merely how VAT is charged. As regards calculating the VAT impact of below cost sales of alcohol, separate figures are not available for input VAT on goods that were subsequently sold at a discount because traders’ VAT returns show only the total input VAT and the total output VAT for the period covered by the return.

Question No. 76 answered with Question No. 57.

Mortgage Debt

Questions (77)

Michael McGrath

Question:

77. Deputy Michael McGrath asked the Minister for Finance the number of regulated financial institutions that have sold all or part of their mortgage loan books in the past three years; the protection that mortgage holders are entitled to when such sales occur to institutions that are not covered by the mortgage arrears resolution process; and if he will make a statement on the matter. [57591/12]

Written answers

Minister for Finance

The Central Bank has advised me that the sale of a mortgage book is a commercial matter for the financial institutions concerned. However, I have been informed that Allied Irish Bank and Bank of Ireland have sold all or part of their loan book in the past three years. In relation to other financial institutions which provide mortgages, the Central Bank has advised me that the information requested by the Deputy is not available.

The Central Bank has also advised me that the Code of Conduct on Mortgage Arrears (CCMA) applies to the mortgage lending activities of all regulated financial institutions except credit unions, operating in the State, including:

- a financial services institution authorised, registered or licensed by the Central Bank of Ireland and

- a financial services institution authorised, registered or licensed in another EU or EEA Member State and which has provided, or is providing, mortgage lending activities in the State.

Where regulated financial institutions sell part, or all, of their mortgage book to another regulated financial institution, the same protections apply to borrowers, namely, the CCMA and the Consumer Protection Code. Where a regulated financial institution outsources part, or all, of their mortgage book, the same protections apply to borrowers and the institutions have responsibility for ensuring that these protections are applied by the outsourced company. Where a regulated financial institution sells part, or all, of a mortgage book to an unregulated institution, then the borrower will not be afforded the same level of protections. In their case, the conditions of the original contract will apply.

Mortgage Interest Relief Application

Questions (78)

Michael McGrath

Question:

78. Deputy Michael McGrath asked the Minister for Finance the number of mortgage customers whose mortgage interest relief has been stopped in 2012 due to arrears or non payment in respect of their mortgage; the guidelines he has issued regarding same; if a person may have their mortgage interest relief re-instated once their repayments are once again on schedule; and if he will make a statement on the matter. [57592/12]

Written answers

Minister for Finance

This is a matter for the Revenue Commissioners who are responsible for the administration of mortgage interest relief through the tax relief at source system. I am advised by Revenue that where cumulative mortgage arrears exist for a period exceeding 18 months, there is a requirement on lenders to notify Revenue so that a determination can be made as to continued eligibility, or otherwise, on a case-by-case basis. Where an amount of interest is being paid, mortgage relief will continue to be granted in accordance with the relevant interest relief provisions. Lenders are also required to report cases to Revenue where payments have not been made for a six-month period to allow continued eligibility for the relief on an individual basis to be determined. Where the relief is ceased it can be restored once three consecutive mortgage payments have been made. I am informed by Revenue that some 6,982 accounts have been ceased for mortgage interest relief in 2012 due to non-payment.

Credit Unions Regulation

Questions (79)

Michael McGrath

Question:

79. Deputy Michael McGrath asked the Minister for Finance if lending restrictions have been applied to a credit union (details supplied) by the Central Bank of Ireland [57593/12]

Written answers

Minister for Finance

The imposition of lending restrictions is the responsibility of the Registrar of Credit Unions, who is the independent regulator for credit unions. Within his independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members. As Minister for Finance, my role is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions. The Central Bank cannot comment on matters in relation to individual credit unions. Any regulatory action by the Central Bank is taken with the specific purpose of protecting members’ savings.

Promissory Note Negotiations

Questions (80)

Michael McGrath

Question:

80. Deputy Michael McGrath asked the Minister for Finance if an indicative timetable has been agreed with the European Central Bank in respect of ELA lending made by the Central Bank of Ireland to Irish Bank Resolution Corporation; and if he will make a statement on the matter. [57594/12]

Written answers

Minister for Finance

The Promissory Notes and other banking assets act as collateral in relation to exceptional liquidity assistance (ELA) loan (repo) agreements between IBRC and the Central Bank of Ireland (CBI). Repayments on the Promissory Notes and cash generated from banking assets provide cash to IBRC which is available to reduce outstanding ELA. Such repayments of the Promissory Notes and cash flows from IBRC’s banking assets will repay ELA over time. The ELA itself is funded by the CBI through Intra-Eurosystem liabilities and any repayments of ELA are used to reduce this liability on the Central Bank’s balance sheet. Other than that there is no link between the Promissory Notes and ELA. Whilst there is an implicit link between the current repayment schedule on the Promissory Note and ELA, as described above, there is no specific repayment schedule, as such, in relation to ELA.

Universal Social Charge Payments

Questions (81)

Seán Fleming

Question:

81. Deputy Sean Fleming asked the Minister for Finance if he will outline the situation whereby public servants receive arrears as salary paid to them in 2012 which relate to 2010 and 2011; the level at which the universal social charge is payable in respect of these arrears; and if he will make a statement on the matter. [57596/12]

Written answers

Minister for Finance

The position is that Universal Social Charge (USC) is payable on aggregate income arising in the tax year. This includes any arrears, bonuses or deferred pay that may be paid during the year. Therefore, where any individual receives arrears of salary in 2012 which relate to 2010 or 2011, USC is chargeable in 2012.

The standard rates of Universal Social Charge for 2012 are:

- 2% on the first €10,036

- 4% on the next €5,980

- 7% on the balance.

An individual whose total income for a year does not exceed €10,036 is exempt from USC. Further information on the USC is available from the Revenue website at: http://www.revenue.ie/en/tax/usc/index.html.

Question No. 82 answered with Question No. 66.

Tax Collection Forecasts

Questions (83)

Joanna Tuffy

Question:

83. Deputy Joanna Tuffy asked the Minister for Finance further to Parliamentary Question No.4 of 6 December 2012 in which he estimated a total revenue of €395 million from the taxation of child benefit, the rate and amount of tax a month that would be deducted from child benefit in the examples (detailed supplied) this information to be furnished in tabular form. [57609/12]

Written answers

Minister for Finance

As I stated in my reply to Parliamentary Question No.4 of 6 December 2012, the issue and the yield from taxing Child Benefit is fully dependent on resolving a number of significant and complex policy and legal issues before the question of implementing a charge to taxation on this payment can be considered. These policy issues include clearly determining who is the owner of the Child Benefit payment, whether by taxing the payment, there follows an entitlement to the PAYE tax credit, how the payment is treated for tax purposes in the hands of jointly assessed couples and legal issues surrounding the tax treatment of married couples and co-habiting couples.

In view of the considerable legal and policy issues involved, it is extremely difficult to estimate the tax liability that may arise in each specific case as a result of taxation of Child Benefit. However, if all of the above issues were resolved and it was assumed that the mother is the recipient and owner of the child benefit payment, then the taxation of Child Benefit would result in three possible tax outcomes:

1. An individual would pay no income tax on their child benefit as their tax credits would be sufficient to reduce their tax liability to zero.

2. An individual would pay tax on their child benefit at the standard rate of tax.

3. An individual would pay tax on their child benefit at the higher rate of tax.

The tableis provided purely for illustration purposes to demonstrate the tax liability that may arise in respect of a Child Benefit payment for one child under each of the different tax outcomes.

Different Cases	Child Benefit in respect of one child	Tax liability on Child Benefit
Case 1 No tax due	€1,560	Nil
Case 2 (taxed at 20%)	€1,560	€312
Case 3 (taxed at 41%)	€1,560	€640

Furthermore, as I previous stated, I understand that the Advisory Group on Tax and Social Welfare, established by the Minister for Social Protection, has considered these and other issues in relation to Child Benefit in the context of a report on child and family income supports which is being considered by the Minister.

Tax Code

Questions (84)

Joanna Tuffy

Question:

84. Deputy Joanna Tuffy asked the Minister for Finance the cost to the Exchequer of allowing unmarried couples for joint assessment; and if he will make a statement on the matter. [57610/12]

Written answers

Minister for Finance

I am informed by the Revenue Commissioners that, as unmarried cohabiting couples are not separately identified in tax statistics, it is not possible to provide the precise information requested by the Deputy. However, in the event that a formal registration scheme for unmarried cohabiting couples were introduced, it is estimated that the cost of extending married treatment under the income tax code to such couples could be of the order of €1 million per annum for every 1,000 unmarried couples registered.

Mortgage Arrears Rate

Questions (85)

Michael McGrath

Question:

85. Deputy Michael McGrath asked the Minister for Finance his views on the level of arrears across the buy-to-let mortgage book; the Government's strategy for dealing with the problem; and if he will make a statement on the matter. [57611/12]

Written answers

Minister for Finance

The Deputy will be aware that the Central Bank of Ireland recently published its mortgage arrears data for end of September 2012 which, for the first time, included data on buy-to-let properties. This data can be found on the Central Bank’s website www.centralbank.ie and indicates that 17.9% of buy to let mortgage accounts (25.5% in terms of balance amounts) were in arrears of more than 90 days. The focus by Government is primarily on formulating and implementing appropriate measures to assist those homeowners who are experiencing genuine difficulty with the mortgage repayments on their principal home. In that regard, the Report of the Inter-Departmental Working Group on Mortgage Arrears (“Keane Report”) which was published in October 2011, made a number of key recommendations and the Government is now actively progressing the implementation of those main recommendations. However, some of these initiatives will also be of assistance in addressing significant ‘buy to let’ mortgage arrears and over indebtedness.

For example, the personal insolvency reforms will be of significant benefit to all insolvent debtors and their creditors as it will enable unsustainable debt positions to be addressed in a holistic way. In particular, the Personal Insolvency Arrangement framework for secured debt is formulated in such a way that it will also allow in the context of the whole of debt situation of the debtor for unsustainable ‘buy to let’ mortgage debts to be dealt with under arrangements formulated by the Personal Insolvency Practitioner and agreed between debtor and creditor. However, the particular protection provisions in the personal insolvency legislation regarding the principal private residence will not be available to ‘buy to let’ mortgages or any other secured debts.

Also, under the Mortgage Arrears Resolution structure overseen by the Central Bank, mortgage lenders are required to develop and implement appropriate resolution strategies and implementation plans for ‘buy to let’ mortgages as well as mortgages on the debtor’s primary home. In that regard, it is noted that 22,553 ‘buy to let’ mortgages were ‘restructured’ at the end of September 2012.