Thursday, 20 Dec 2012

Written Answers Nos. 52-68

EU Presidency Expenditure

Questions (52)

Brendan Smith

Question:

52. Deputy Brendan Smith asked the Tánaiste and Minister for Foreign Affairs and Trade his priorities for the EU presidency; and if he will make a statement on the matter. [57598/12]

Written answers

Tánaiste and Minister for Foreign Affairs and Trade

The Irish Presidency of the Council of the European Union will focus on three core priorities: stability, and creating the conditions for sustainable jobs and growth. These priorities will drive work across all Council formations. Restoring stability and confidence through effective economic governance for Europe is necessary for creating the conditions necessary for employment and growth. The Presidency will work to restore stability by managing the implementation of the EU’s economic governance measures, and in particular the European Semester process, the new system of economic and budgetary policy coordination between Member States.

During our Presidency, Ireland will support the EU’s efforts to address the weaknesses in our Economic and Monetary Union exposed by the financial crisis. Much has already been achieved and we will build on the foundations laid by successive European Councils, in particular through working to advance proposals on Banking Union.

In preparing for the Presidency, the Government has identified in every sector proposals that they believe can best deliver stability, jobs and growth. These cover a wide area. There are measures to combat unemployment, particularly among our young people, through providing new skills and training and making it easier to work in other countries. There are a series of proposals to free up and develop the Single Market, from which Ireland as an export-led economy has benefitted so much. We will seek agreement on a new framework for research and innovation and progress on a number of proposals for boosting the digital economy, covering the areas of intellectual property, cyber security, e-signatures, data protection and high-speed broadband rollout. This work will be vital for creating the right environment for the jobs of the future.

Ireland will also make the case for improving Europe’s global trade relations, particularly with the United States, opening up markets across the world. Small and medium Enterprises are the backbone of the European economy and of the Irish economy; we will seek agreement on a programme to improve the competitiveness of the sector. We will also insist that the policies adopted by the European Union, whether in the field of agriculture, energy or the environment, are sustainable in the long-term.

Work on preparing for the Presidency is in the final stages and we will launch our detailed programme for the Presidency in early January. We take on the Presidency at a time of crisis and change but we are looking forward to making our contribution to resolving Europe’s difficulties and to meeting the needs of citizens in Ireland and across the European Union.

Humanitarian Aid

Questions (53)

Bernard Durkan

Question:

53. Deputy Bernard J. Durkan asked the Tánaiste and Minister for Foreign Affairs and Trade the degree to which the international community has been in a position to support aid and relief agencies in Syria, with particular reference to Médecins sans Frontières; and if he will make a statement on the matter. [57651/12]

Written answers

Minister of State at the Department of Foreign Affairs and Trade

The humanitarian crisis in Syria is of great concern to the Government. Since the uprising in Syria began in March 2011 an estimated 40,000 people have been killed in the violence. Over 2.5 million people inside Syria are in need of immediate humanitarian assistance, with 1.2 million people displaced inside the country. The number of registered refugees from Syria in the region has now passed half a million. Syrians’ access to the most basic medical care has been seriously undermined. Stocks of essential drugs are low, storage facilities for medicines have been destroyed and local production of medicines has been severely disrupted. Health workers find themselves increasingly under threat and medical facilities have been indiscriminately targeted.

Ireland has responded swiftly to the humanitarian crisis in Syria and in neighbouring countries. As early as March 2012 we provided €500,000 in emergency funding for the ICRC, UNHCR and the World Food Programme. In August I visited Jordan and witnessed firsthand the huge strain that the refugee population is placing on the host countries and partners underlined to me the critical health needs within Syria itself. Since then Ireland has provided additional support of €1,950,000 which brings Ireland’s total response to the crisis to €2,450,000. Part of this funding supported WHO (€300,000) and ICRC (€400,000) to respond specifically to the medical needs of Syria’s population, focusing on increasing the number of mobile health clinics and expanding their outreach to areas most affected by the conflict. A key partner of Irish Aid, Medecins Sans Frontières (MSF) is providing emergency health care in Syria. MSF has a policy in place which does not allow them to accept Governmental support for their activities in Syria. However, we are in regular contact with them regarding the health crisis in the country and the needs on the ground.

Ireland understands that while this is a humanitarian crisis, it is driven by politics and will only be solved with a political solution. We continue to strongly support the efforts of the UN/Arab League Joint Special Representative, Lakhdar Brahimi, to promote a political settlement. An Tánaiste and Minister for Foreign Affairs and Trade, Eamon Gilmore, T.D was very pleased to meet with Mr. Brahimi during the recent OSCE Ministerial Meeting in Dublin where he also met with Secretary of State Clinton and Foreign Minister Lavrov. Ireland has also participated actively within the framework of the Friends of Syria Group, which includes my own attendance at the most recent meeting of the group last week in Marrakesh.

Ireland has provided significant support to those in need as a result of this crisis. Into the future we will continue to monitor the situation so that we can assess when we may be able to further contribute, within our means, to the humanitarian needs within the region.

Property Taxation Exemptions

Questions (54)

Terence Flanagan

Question:

54. Deputy Terence Flanagan asked the Minister for Finance if persons acting in the capacity of executors of wills will be included in the list of persons allowed to defer payment of the property tax, save where the executor of the will, or the spouse or partner are the sole or joint beneficiary of the property concerned; and if he will make a statement on the matter. [57511/12]

Written answers

Minister for Finance

Under section 11 of the Finance (Local Property Tax) Bill, the personal representative of the estate of a person who was a liable person for Local Property Tax will be the liable person in relation to a relevant residential property. The reason for making a personal representative a liable person is to prevent the avoidance of the payment of local property tax by means of unnecessarily delaying the distribution of the estate and the transfer of a property to the person who would become the liable person in respect of the property. This might happen, for example, where the person who inherits the property is already living in the property and there are no other beneficiaries involved. The tax will be part of the expenses of the estate, along with other regular expenses, including other taxes, where applicable.

However, I appreciate that it might not always be possible for the personal representatives to fund the payment of local property tax, whether the tax was owed by the deceased person or by the personal representatives in respect of the period following death. Addressing this difficulty is not straightforward given the variety of complex circumstances that can pertain to the administration of an estate. As I indicated on Committee Stage of the Finance (Local Property Tax) Bill in the Dáil on 18 December last, I intend re-visit the provisions regarding executors, in the context of Finance Bill

Property Taxation Application

Questions (55)

Pearse Doherty

Question:

55. Deputy Pearse Doherty asked the Minister for Finance if he will provide the underlying calculations in support of the estimated yield from the proposed property tax of €250 million in 2013, such workings to set out the assumed range of property values and associated volume of properties, non-compliance rates, deferral volume and value. [57387/12]

Written answers

Minister for Finance

In order to estimate a potential yield from a property tax based on value bands, an estimate of the share of properties that fall within each band is needed. As a data set of the values of all of Ireland’s property does not exist, a methodology for estimation must be formulated. In order to build conservatism into the yield forecast from the new local property tax, no single methodology was exclusively used for estimating a distribution of property values. Instead the yield was based on a blend of three approaches.

The first approach was based on the data used in the Thornhill Report updated to include regional variation in property prices. At the time of the Thornhill report a national register of prices of property transactions did not exist. As an alternative, the Central Statistics Office (CSO) provided the number of properties sold across a range of value bands of €50,000 increments for each of the years 2005 to 2009. The data was based on mortgage transactions and is an input into the CSO’s residential property price index (RPPI). Using the national change in values in the CSO RPPI from the year of the transaction to April 2012, a national distribution of property values in 2012 prices was constructed. This is the distribution published in the Thornhill Report (see Table 1 below). Regional variation was added to the Thornhill distribution using county level housing stock from census 2011 data (see Table 2), and regional variation in prices from the CSO RPPI. Three property price distributions were constructed; Dublin, national, and national excluding Dublin. This compares with one distribution in the Thornhill Report.

A weighted average property charge for each of the three regional distributions was constructed, weighted by the share of properties in each band. A county level yield was then calculated based on the number of properties in each county according to data from Census 2011 and the estimated weighted average charge. By summing over all counties a national yield was estimated. This approach results in a larger indicative yield than does the Thornhill approach due to a higher weighting of higher value properties in counties with larger volumes of properties (e.g. Dublin).

Counties were assigned one of the three constructed distributions. The four Dublin local authority areas were assumed to have a distribution in line with the Dublin price distribution, counties with large urban areas and counties adjacent to Dublin were assumed a have a price distribution in line with the national distribution and the remaining counties were assumed to be in line with the national distribution that excludes Dublin (see Table 3).

A weighted average property charge for each of the three regional distributions was constructed, weighted by the share of properties in each band. A county level yield was then calculated based on the number of properties in each county according to data from Census 2011 and the estimated weighted average charge. By summing over all counties a national yield was estimated. This approach results in a larger indicative yield to the Thornhill approach due to a higher weighting of higher value properties in counties with larger volumes of properties (e.g. Dublin).

The second approach used was similar but was based on data from the property price register. In autumn 2012, the Property Services Regulatory Authority published a national register of property prices (www.propertypriceregister.ie). The register includes the date of sale, price and address of all residential properties purchased in Ireland since 1 January 2010, as declared to the Revenue Commissioners for Stamp Duty purposes. The register is updated on an on-going basis. Data from the register were used to produce county level distributions as well as distributions in line with the three regional price indices published by the CSO, namely Dublin, national, and national excluding Dublin. These distributions are set out in Table 4.

The distribution from the register results in a higher incidence of higher value properties and a less peaked distribution to that in the Thornhill Report at values around €100,000 to €200,000 and an analysis based entirely on the register would result in a higher yield compared with the first approach described above. However, caution should be applied to solely relying on the register given the low number of transactions, the high percentage of non-mortgage (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.

The final method of estimation is based on the ESRI tax-benefit model SWITCH. In the SWITCH model, data on house prices come from the self-assessed value provided by the respondents to the Survey on Income and Living Conditions (SILC) in 2010 with these values indexed to adjust to 2012 prices. The SILC data are based on a sample of all private households, giving it the potential to provide a broader picture than one based on transactions or mortgages.

For each of the approaches described above an assumed deferral rate of 16% was applied. This is based on work by the Economic and Social Research Institute on behalf of the Thornhill Group.

Table 1: Thornhill Report and Property Price Register Distribution

Bands	Thornhill Report	Property Price Register
0-100000	7.20%	27.40%
100001-150000	33.70%	21.00%
150001-200000	32.00%	19.20%
200001-250000	14.90%	11.20%
250001-300000	6.21%	6.70%
300001-350000	2.72%	4.40%
350001-400000	1.37%	2.60%
400001-450000	0.72%	1.70%
450001-500000	0.39%	1.30%
500001-550000	0.23%	1.00%
550001-600000	0.12%	0.60%
600001-650000	0.10%	0.50%
650001-700000	0.07%	0.40%
700001-750000	0.03%	0.30%
750001-800000	0.03%	0.20%
800001-850000	0.03%	0.20%
850001-900000	0.02%	0.20%
900001-950000	0.03%	0.10%
950001-1000000	0.01%	0.10%
>1000000	<1%	1.00%
Total	100%	100%

Table 2: Number of households

Bands	Number of Households
Carlow	19,436
Cavan	25,818
Clare	42,648
Cork Co Co	140,856
Cork City	47,163
Cork Total	188,019
Donegal	57,964
Dublin City	208,008
Fingal	93,146
D-L Rathdown	75,819
South Dublin	90,019
Dublin Total	466,992
Galway Co Co	60,952
Galway City	27,726
Galway Total	88,678
Kerry	53,306
Kildare	70,763
Kilkenny	33,679
Laois	28,020
Leitrim	12,308
Limerick Co Co	47,282
Limerick City	22,367
Limerick Total	69,649
Longford	14,453
Louth	43,972
Mayo	48,070
Meath	62,201
Monaghan	21,264
Offaly	26,750
Roscommon	23,672
Sligo	24,525
North Tipperary	25,703
South Tipperary	32,794
Waterford Co Co	24,114
Waterford City	18,221
Westmeath	30,739
Wexford	52,652
Wicklow	47,798

Table 3: Thornhill Distribution with regional variation

Bands	National	Dublin	National excl Dublin
0-100000	10.20%	3.04%	8.87%
100001-150000	34.02%	26.26%	36.55%
150001-200000	29.55%	35.42%	30.90%
200001-250000	14.27%	16.64%	13.90%
250001-300000	5.70%	7.93%	5.52%
300001-350000	2.74%	3.86%	2.28%
350001-400000	1.40%	2.35%	1.04%
400001-450000	0.75%	1.44%	0.51%
450001-500000	0.46%	0.69%	0.23%
500001-550000	0.26%	0.30%	0.12%
550001-600000	0.09%	0.05%	0.05%
600001-650000	0.05%	0.67%	0.02%
650001-700000	0.00%	0.52%	0.01%
700001-750000	0.08%	0.08%	0.00%
750001-800000	0.17%	0.46%	0.00%
800001-850000	0.05%	0.20%	0.00%
850001-900000	0.11%	0.06%	0.00%
900001-950000	0.07%	0.04%	0.00%
950001-1000000	0.01%	0.00%	0.01%
>1000000	0.04%	0.04%	0.04%
Total	100%	100%	100%

Table 4: Property Price Register Distribution

Bands	National	Dublin	National excl Dublin
0-100000	27.40%	8.50%	37.60%
100001-150000	21.00%	15.90%	23.70%
150001-200000	19.20%	22.30%	17.50%
200001-250000	11.20%	14.50%	9.40%
250001-300000	6.70%	9.60%	5.20%
300001-350000	4.40%	7.40%	2.70%
350001-400000	2.60%	4.90%	1.40%
400001-450000	1.70%	3.30%	0.80%
450001-500000	1.30%	2.90%	0.40%
500001-550000	1.00%	2.20%	0.30%
550001-600000	0.60%	1.50%	0.20%
600001-650000	0.50%	1.10%	0.10%
650001-700000	0.40%	0.90%	0.10%
700001-750000	0.30%	0.80%	0.10%
750001-800000	0.20%	0.50%	0.10%
800001-850000	0.20%	0.50%	0.00%
850001-900000	0.20%	0.30%	0.10%
900001-950000	0.10%	0.30%	0.00%
950001-1000000	0.10%	0.20%	0.00%
>=1000000	1.00%	2.30%	0.20%
Total	100%	100%	100%

Property Taxation Collection

Questions (56)

Pearse Doherty

Question:

56. Deputy Pearse Doherty asked the Minister for Finance if he will provide an estimate of the cost of administering and collecting the proposed new property tax and household charge arrears in 2013; if he will provide an estimate of administering and collecting the household charge in 2012; and if he will indicate in the budget 2013 documentation where account has been taken of any increased cost. [57388/12]

Written answers

Minister for Finance

The Revenue Commissioners will be resourced to ensure the successful implementation of the Local Property Tax. The additional resources required for 2013 are noted in the Department of Public Expenditure and Reform Expenditure Report 2013. The information requested by the Deputy is set out in Page 52 of the Expenditure Report 2013. The Estimate cost for implementation of Property Tax in 2013 is €25.9 million. In line with standard costs associated with administering and collecting taxes, it is expected that Administrative Budget provisions equivalent to 2% of the annual property tax yield will be required in 2014 and 2015, decreasing to 1% after 2015.

With regard to the Household Charge arrears for 2013, it is not possible to say at this stage what the estimated cost of administering this will be but it is not likely to be as high as the standard cost of 2% of the tax yield, given the likelihood of significant efficiencies being achieved in the collection of any such arrears when those arrears are effectively re-characterised as Local Property Tax from July 2013 onwards. The cost of administering and collecting the Household Charge in 2012 and arrears up to end June 2013 are a matter for the Local Government Management Agency (LGMA) and my colleague the Minister for Environment, Community and Local Government.

Household Charge Collection

Questions (57, 76)

Pearse Doherty

Question:

57. Deputy Pearse Doherty asked the Minister for Finance if he will indicate in the Budget 2013 documentation where account has been taken of the discontinuance of the household charge revenue in 2013 which was estimated at €160 million in 2012 and the discontinuance of the non principal private residence revenue, estimated at €70 million in 2012. [57389/12]

Michael McGrath

Question:

76. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Question No. 62 of 12 December 2012, if he will point out specifically where in the budget documentation the cessation of the household charge in 2013 is taken account of; and his views on whether fairer and more consistent presentation of the budget numbers would have involved netting off the cessation of the household charge, which was shown as tax revenue in the Budget 2012 documentation, against the projected yield from the new local property tax. [57575/12]

Written answers

Minister for Finance

I propose to take Questions Nos. 57 and 76 together.

The Revised Estimates for Public Services 2012, published by my colleague, the Minister for Public Expenditure and Reform, showed that revenues from the Household Charge were paid directly into the Local Government Fund (LGF) and used to fund Local Government services (Vote No. 25, Page 114). With revenues going directly to the LGF, this meant that the Exchequer was no longer required to make a subvention to the fund. As a result, the impact of the charge was reflected as a reduction in Exchequer subventions to the LGF in Budget 2012 calculations, and not as a tax revenue. This reduction in Exchequer subventions to the LGF has been maintained for 2013, and is captured as such in the budgetary projections.

As a matter of budgetary consistency, the impact of the cessation of the Household Charge as a revenue raising measure will be reflected in the Revised Estimates for Public Services 2013, scheduled for publication next February. With regard to revenues from the Non-Principal Private Residence Charge, Budget 2013 outlines that the charge will cease with effect from 1 January 2014. In light of this, the impact of the discontinuance of this measure will be reflected in later publications.

Banking Sector Regulation

Questions (58)

Pearse Doherty

Question:

58. Deputy Pearse Doherty asked the Minister for Finance the controls that exist in the Irish Bank Resolution Corporation to prevent employees, their spouses, family and associates from benefitting from confidential information obtained from the bank, in the purchase of property from persons and companies which have or have had loans with IBRC. [57395/12]

Written answers

Minister for Finance

I have been informed that IBRC has a Conflicts of Interest Policy (the “Policy”). This policy outlines what the Bank’s Board of Directors and the Group Executive Committee (GEXCO) believes are the essential standards of behaviour expected of employees. All directors and employees of the Bank and its relevant subsidiaries, in all jurisdictions, must adhere to the letter, spirit and intention of the principles set forth in this Policy. Directors and employees must also adhere to all additional policies and procedures in their local jurisdictions. The Policy specifically states that all directors and employees of the Bank have a duty to discharge their contracted duties and responsibilities to the Bank. Directors and employees must not influence, or be perceived to influence, any decisions directly or by association which could benefit connected borrowers and/or an entity in which they have an interest and, this includes any lending decisions, and/or implementation of debt management strategy decisions for connected borrowers.

In order to undertake their job properly, maintain objectivity and impartiality and ensure that judgement cannot be compromised, directors and employees must avoid being put in a position where their personal interests could conflict, or be perceived to conflict with the interests of the Bank. In addition, certain obligations arise under the Ethics in Public Office Acts 1995 and 2001 ('Ethics Acts') in respect of Irish Bank Resolution Corporation Limited ('the Bank') and its designated subsidiaries. Under these Regulations, all Irish employed directors and certain Irish employed employees of the Bank and its subsidiaries are required by law to comply with the provisions of the Ethics Acts.

Banking Sector Regulation

Questions (59)

Pearse Doherty

Question:

59. Deputy Pearse Doherty asked the Minister for Finance the number of Irish Bank Resolution Corporation employees that have, either by themselves or with others, purchased property in each of 2011 and 2012 from persons or companies, which have or have had loans with IBRC. [57396/12]

Written answers

Minister for Finance

I have been informed that IBRC does not have the requisite data to answer this parliamentary question. However all directors and employees of the Bank are governed by a Conflicts of Interest Policy. In addition, all Irish employed directors and certain Irish employees are governed by the Ethics in Public Office Acts 1995 and 2001.

Bank Debt Restructuring

Questions (60)

Pearse Doherty

Question:

60. Deputy Pearse Doherty asked the Minister for Finance the protocols and practices taken by the Irish Bank Resolution Corporation to ensure that assets disposed of by IBRC itself, or its borrowers under the auspices of IBRC, are disposed of in a manner which maximises the return to the taxpayer from the disposal. [57397/12]

Written answers

Minister for Finance

The overriding mandate of IBRC is to maximise the recovery of its loans on behalf of the State and by extension the taxpayer. I have been advised that the underlying approach of the Bank is to work constructively with each borrower on an individual basis to identify the most appropriate loan repayment plan. The strategies for loan recovery vary depending on the particular circumstances of the borrower. All credit related decisions are overseen by a multi-faceted governance structure established by the new Board of the Bank. Formal approvals for all credit decisions, including restructuring, extension of facilities, forbearance and disposal of assets are required from one or more of the Bank’s Asset Quality Forums, Group Credit Committee, Transaction Review Committee, Investment Committee, the Board Risk and Compliance Committee, the Board of Directors and in certain instances the Department of Finance. I have been informed by the Bank that a fundamental tenet of this governance structure is that no single business unit or person in IBRC can individually determine the treatment of any borrower or group of borrowers.

Property Taxation Exemptions

Questions (61)

Ciaran Lynch

Question:

61. Deputy Ciarán Lynch asked the Minister for Finance with regard to the property tax, the reason that no exemptionor concession was given to persons who paid large amounts of stamp duty in recent years; and if he will make a statement on the matter. [57398/12]

Written answers

Minister for Finance

The Finance (Local Property Tax) Bill 2012 does not provide an exemption or concession for persons who paid large amounts of stamp duty. The Inter-Departmental Expert Group on the Design of a Property Tax (the “Thornhill Group”) recommended against allowances for Stamp Duty because such allowances would not be targeted at need.

Pension Provisions

Questions (62)

Gerald Nash

Question:

62. Deputy Gerald Nash asked the Minister for Finance if he will bring forward his decision announced in his recent budget speech in respect of the maximum allowable pension fund, to a point in 2013 as opposed to 2014; and if he will make a statement on the matter. [57414/12]

Written answers

Minister for Finance

In Budget 2013, I announced that changes to the maximum allowable pension fund at retirement for tax purposes (the Standard Fund Threshold - SFT) and other possible changes to give effect to the commitment in the Programme for Government to cap taxpayers’ subsidies for pension schemes which deliver pension income of more than €60,000 will be put in place in 2014. The existing SFT regime is designed to cater for relatively small numbers of individuals. The current structure and operation of the regime, which applies across all pension arrangements in the private and public sectors, would not effectively or efficiently cope with an expected minimum ten-fold increase in the numbers of individuals who would be affected by the Budget decision. A number of significant and fundamental changes to the current SFT regime may be required in order to deliver on the decision announced in the Budget. Alternatives to the use of the SFT regime to deliver on the Government’s commitment will also be explored and consultations will be required with, among others, various Departments and this will take time. For these reasons, I am not in a position to accede to the request in the Deputy’s question.

Financial Services Regulation

Questions (63)

Aodhán Ó Ríordáin

Question:

63. Deputy Aodhán Ó Ríordáin asked the Minister for Finance if he will provide a detailed account of the way private monetary transactions between accounts that is bank transfers, in the State are monitored by the Revenue Commissioners; if there is a cut off amount on which such transactions would require inspection by the Revenue Commissioners to guarantee that they were tax compliant; if there is, the figure of said amount; and if he will make a statement on the matter. [57415/12]

Written answers

Minister for Finance

I am informed by the Revenue Commissioners that they do not directly monitor private monetary transactions. However, Section 42 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 obliges banks, in addition to other designated bodies, to report any financial transaction, private or otherwise, to the Revenue Commissioners and An Garda Síochána where there is a suspicion that an offence of money laundering may have been committed. Section 7 of the Act defines money laundering as the laundering of the proceeds of criminal conduct. Section 6 of the Act includes Revenue offences in its definition of criminal conduct. The legislation does not specify any minimum amount for which a report must be made. Revenue assesses all such reports for appropriate action. In addition, financial institutions are required to make annual returns of information to Revenue, including the details of interest or interest-type payments over €635 in a year. This information is included in Revenue’s Risk Analysis and Profiling system.

State Bodies Expenditure

Questions (64)

Ciaran Lynch

Question:

64. Deputy Ciarán Lynch asked the Minister for Finance the number of cases from 2008 to date in which the State Claims Agency was successful, but costs were awarded to the plaintiff; if he will indicate the total of such costs paid each year; and if he will make a statement on the matter. [57422/12]

Written answers

Minister for Finance

It is not possible to provide the information requested by the Deputy in the time available. However, I will be in contact with the Deputy when the information has been compiled.

Revenue Commissioners Investigations

Questions (65)

Thomas P. Broughan

Question:

65. Deputy Thomas P. Broughan asked the Minister for Finance if he will allocate additional resources to the Revenue Commissioners in 2013 to tackle the black economy; and if he will make a statement on the matter. [57437/12]

Written answers

Minister for Finance

Shadow/hidden economy activity creates distortions in the economy and competitive disadvantages for compliant businesses. For these reasons, Revenue focuses on deterring shadow/hidden economy activity and non-compliance through its audit and investigation programmes based on risk analysis, use of Revenue powers and their intelligence and information systems. I am advised by the Revenue Commissioners that its compliance programmes are under constant review to ensure that they are focussed on the areas of greatest risk, including risks from the shadow economy, and that this approach contributes to optimising the effectiveness of their audit resources. The results of its audit and compliance programmes are published each year in the Revenue Annual Report and in 2011, Revenue carried out over 11,000 audits that resulted in additional yield of €440.5m to the Exchequer, with a further €81.3m collected from other compliance interventions and assurance checks,

The type of initiatives aimed specifically at shadow economy activity include:

- Joint Investigation activities with the Department of Social Protection aimed at uncovering either non-declaration or under declaration of income and/or fraudulent DSP claims;

- Strengthening tax legislation to provide for a robust framework within which the Revenue Commissioners may tackle tax and duty evasion, including recent provisions relating to the making of returns of transactions by merchant acquirers and the more effective investigation of white-collar crime;

- A comprehensive package of measures in relation to Excise (Oils) including, a requirement for separate licences for auto-fuel traders and marked fuel traders, a requirement to have a separate licence for every premises or place at which the fuel concerned is dealt in, and a requirement that a licence must be clearly displayed at the premises or place;

- Revenue’s tobacco strategy, “Strategy On Combating the Illicit Tobacco Trade (2011- 2013)” was published on the Revenue website in June 2011. This three-year strategy is underpinned by annual action plans;

- Regulations introduced in 2011 requiring Government Departments and State Bodies to supply details of payments made to the Revenue Commissioners;

- Revenue has a prioritised focus on those sectors that traditionally have been susceptible to shadow activity such as cash businesses. All possible sources of information, including following up on services advertised on TV, Radio, Local newspapers, Internet, special interest publications are used by Revenue;

- Holding meetings with trade and representative bodies through The Hidden Economy Monitoring Group where mutual interest issues are discussed;

- Focusing Revenue investigations on the use of computer programmes or electronic devices to alter or conceal sales records;

- Streetscape programmes, in which every cash business in an area is visited, without prior announcement, have been carried out to detect unregistered businesses and non-recording of cash sales.

The Deputy will appreciate that the scale and range of activities carried out by the Revenue Commissioners to tackle the shadow economy are extensive. In addition, the nature of these activities is highly resource intensive however, as is the case with all public service organisations, the Revenue Commissioners must play its part in meeting Government policy on reducing public service staffing numbers. I am satisfied that Revenue is optimising the outputs from its existing audit and compliance resource, and is affording as much priority as possible to shadow economy activities. I can further confirm that the question of resources for Revenue is kept under review by my colleague the Minister for Public Expenditure and Reform in the context of competing demands for resources across the public service.

Fuel Rebate Scheme

Questions (66, 82, 100, 101)

Brendan Griffin

Question:

66. Deputy Brendan Griffin asked the Minister for Finance if the auto-diesel excise duty rebate relief will be extended to private coach operators; and if he will make a statement on the matter. [57461/12]

Willie Penrose

Question:

82. Deputy Willie Penrose asked the Minister for Finance if, in respect of budget 2013 whereby an excise rebate was announced on diesel for haulage companies to come into effect on 1 July 2013, he will indicate that same applies to passenger transport companies and particularly those involved in the coach and bus operation businesses; if in this context that the rebate definition would have to include the carriage of passengers by a motor vehicle of category M2 of category M3 as defined in Council Directive 70/156/EEC; if he will consider ensuring that the said rebate is extended to bus and coach companies in the forthcoming Finance Bill; and if he will make a statement on the matter. [57605/12]

Éamon Ó Cuív

Question:

100. Deputy Éamon Ó Cuív asked the Minister for Finance in view of his statement that under EU law a fuel rebate system may not be restricted to Irish licensed hauliers but would have to be extended to all vehicles intended exclusively for the carriage of goods by road with a maximum permissible gross laden weight of no less than 7.5 tonnes, as well as the carriage of passengers by a category M2 vehicle or category M3 vehicle; if it is lawful now to confine the fuel rebate scheme announced in the budget to goods vehicles only; and if he will make a statement on the matter. [57740/12]

Éamon Ó Cuív

Question:

101. Deputy Éamon Ó Cuív asked the Minister for Finance if permission has or will have to be sought from the EU for the essential users rebate for road haulage operators; the reason that was given for excluding vehicle for the carriage of passengers; if it is now intended to include M2 and M3 category passenger vehicles; and if he will make a statement on the matter. [57741/12]

Written answers

Minister for Finance

I propose to take Questions Nos. 66, 82, 100 and 101 together.

The proposal to introduce an auto-diesel excise duty relief for licensed road hauliers that I announced in the Budget is confined to licensed and tax compliant hauliers. However, I have received a number of submissions from, and on behalf of, private coach operators seeking to have this relief extended to them. I will consider this proposal in the context of the Finance Bill. I will inform the European Commission when the measure is introduced.

Pension Provisions

Questions (67)

Brendan Griffin

Question:

67. Deputy Brendan Griffin asked the Minister for Finance if legislative proposals furnished to him by this Deputy in relation to imposing a super-levy on bailed out bankers, former politicians and civil servants will be implemented; if not, if he will provide specific detailed reasons; if he has specific proposals of his own to tackle the unjust pensions currently being paid; and if he will make a statement on the matter. [57477/12]

Written answers

Minister for Finance

As the Deputy will be aware, Government pension policy formed a key theme of my recent Budget. In framing that Budget, I considered a range of complex issues and proposals relating to pensions policy including the draft legislative proposals furnished by the Deputy. As the Deputy will appreciate, the pensions sector is a very important part of the financial services industry in Ireland and provides a service to enable people to make provision for their retirement and for their old age. As it is in everyone’s best interest the Government wishes to encourage as many citizens as possible to continue to invest in pension schemes.

It is the case that some people have been allowed by previous Governments to benefit from hugely generous pension arrangements subsidised by the taxpayer. While this Government wants to encourage those on lower and middle incomes to save for pensions, it will not allow pensions of the scale previously allowed to be accumulated at the expense of taxpayers whose actual earnings are, in many cases, a fraction of those large pensions.

In Budget 2013, I set out this Government’s policy on a number of important issues:

Tax relief on pension contributions will only serve to subsidise pension schemes that deliver income of up to €60,000 per annum. This will take effect from 1st January, 2014.

Tax relief on pension contributions will continue at the marginal rate of tax.

The Pension Levy announced as part of the Jobs Initiative will not be renewed after 2014.

Constitutional and legal constraints severely limit what steps the Government can take in relation to pensions already in payment. However, in order to ensure equity between all citizens based on their level of income, the reduced rate of USC for those over seventy with an income in excess of €60,000 will be discontinued from the 1st of January 2013 and the standard rates of USC will apply.

In addition, in the interest of fairness, Top Slicing relief will no longer be available from the 1st of January 2013 on ex-gratia lump sums in respect of termination and severance payments where the non-statutory payment is €200,000 or over. At present the individual’s average tax rate for the previous three years applies to such lump sums rather than the marginal rate of 41 per cent.

I have been advised in numerous submissions of the value of allowing limited early withdrawal from AVCs. Therefore, in the forthcoming Finance Bill, I will make provision for persons with AVCs to withdraw up to 30 per cent of their value. Any amounts withdrawn will be subject to tax at the individual’s marginal rate since marginal rate relief was provided on the contributions on the way in. The option will be available for a 3 year period from the passing of Finance Bill 2013. As the Deputy will be aware, the Bills Office is available to assist Deputies in developing and preparing any legislative proposals they may have. The Deputy may wish to consult with that office in relation to his legislative proposals on this matter.

Universal Social Charge Payments

Questions (68)

Michael Creed

Question:

68. Deputy Michael Creed asked the Minister for Finance if he will quantify the amount of money that could be raised by persons paying Class S PRSI, if they were liable to the 3% universal social charge on income in excess of €100,000; and if he will make a statement on the matter. [57516/12]

Written answers

Minister for Finance

The position is that individuals paying Class S PRSI are broadly self-employed income earners and proprietary directors. These individuals are already liable to a USC rate of 10% on income in excess of €100,000 per annum, being 3% higher from the USC rate applying to employees. I am advised by the Revenue Commissioners that, assuming the enactment of changes announced in the 2013 Budget, the full year yield, estimated by reference to 2013 incomes, from increasing the existing rate of universal social charge by 3 percentage points to 13% on self-employed income earned in excess of €100,000 per annum would be of the order of €130 million.

The Universal Social Charge is an individualised charge and as such, the estimate of yield is based on individual incomes of more than €100,000. The estimated yield is based on confining the extension of the 3 percentage point rate increase to the portion of income which is in excess of €100,000, that is, the increase is not applied to the portion of total income earned up to €100,000. The figure is an estimate from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. It is, therefore, provisional and likely to be revised.