Written Answers Nos 144-167
144. Deputy Michael McGrath asked the Minister for Finance if he will provide details of the total value of prize bonds at the end of December for each of the years 2010, 2011 and 2012; and if he will state the total value of the prizes awarded for each of the same years; and if he will make a statement on the matter. [1301/13]
View answerPrize Bonds are one of the range of State Savings products offered by the National Treasury Management Agency (NTMA). The total value of prize bonds outstanding at the end of December 2010, 2011 and 2012 was €1,328 million, €1,448 million and €1,648 and the value of prizes awarded each year was €36 million, €42 million and €46 million.
Consistent with a general reduction in market interest rates, the National Treasury Management Agency reduced interest rates on the full range of State Savings products on 16 December 2012. The rate of interest for the Prize Bond fund was reduced from 3% to 2.25% (effective from January 2013) and changes were made to the prize structure for lower value prizes so as to maintain the number of prizes at a high level.
As of January 2013, the top prize of €1 million (paid in the last weekly draw each month), the top prize of €20,000 paid in all other weekly draws and the five €1,000 prizes paid every week remain unchanged but the other lower value prizes were adjusted to take account of the new 2.25% rate of interest.
There are now 500 prizes of €100 and over 8,200 prizes of €50, whereas under the previous structure based on the 3% rate of interest, there were ten prizes of €250 and over 9,000 prizes of €75.
145. Deputy Terence Flanagan asked the Minister for Finance if he will clarify a query regarding the universal social charge in respect of a person (details supplied); and if he will make a statement on the matter. [1307/13]
View answerI am informed by the Revenue Commissioners that there appears to be no record of any contact from the person in question either by phone or correspondence in relation to this issue. However, I can confirm the following in relation to the Universal Social Charge (USC) liabilities of the person. Prior to 2013, the maximum rate of USC payable by individuals aged 70 years or over was 4%, irrespective of the level of their income, unless they had self-employment income in excess of €100,000 for a tax year, in which case the maximum rate was increased to 7% on the amount of income in excess of €100,000. The 2013 Budget amended the rates for USC from 2013 onwards. The position is that the standard rates of USC will now apply to those aged 70 and over who have aggregate income in excess of €60,000 per annum, which are as follows:
2% on the first €10,036
4% on next €5,980
7% on the balance.
The most recent information available to Revenue indicates that the aggregate income of the person in question exceeds €60,000 each year. This is exclusive of any income from the Department of Social Protection. The Tax Credit Certificate for 2013, which issued on 19 December 2012, correctly instructs the person’s pension providers that USC is to be charged at the above rates.
If the person’s aggregate income for 2013, exclusive of income from the Department of Social Protection, will be €60,000 or less he should contact Revenue, Fingal Tax District at ph: 01-8277042, to clarify the situation.
146. Deputy Patrick O'Donovan asked the Minister for Finance in view of the recent attendance of Pubic Interest Directors on the board of State supported banks at the Oireachtas Finance Committee and the level of responses and engagement that were provided by some in attendance, if he will provide details of the statutory responsibilities in terms of public accountability that these directors have; if he envisages extending the level of accountability that they should provide either to him, to the Oireachtas or to both; if he is permitted to change the public interest directors on the boards of State supported banks; if the directors are serving a fixed or unlimited term as public interest representatives; and if he will make a statement on the matter. [1350/13]
View answerAs I have stated many times before, the primary duty and responsibility of the public interest directors as well as all the other directors is to ensure that the institution on whose board they serve is run properly and appropriately. The responsibility of public interest directors under company law is to the institution on whose board they serve.
The legal position is that any director appointed to the board of the covered institutions whether under the Credit Institutions (Financial Support) Scheme 2008 or otherwise is subject to the requirements of company law in relation to the discharge of their responsibilities as a company director. As such, the director is legally bound to act in what he or she believes are the interests of the separate legal entity that is the institution itself. These are the directors' so called fiduciary responsibilities. To address the scope for actual and perceived conflicts between the fiduciary duties of the directors of financial institutions under company law and the wider public interest in circumstances where those institutions have received huge financial support from the State, legal clarity, not just to the role of the public interest director but to that of the entire boards of those institutions, was provided under Section 48 of the Credit Institutions (Stabilisation) Act 2010. It provides that the overriding duty of directors of the covered institutions relates to the public interest as set out in the Act.
Accordingly, public interest directors do not have a formal reporting relationship to the Minister or to the Department of Finance. As Minister for Finance, I am strongly committed to ensuring that the boards of the covered institutions act at all times in a manner fully consistent with key public interest objectives for the banking sector.
The public interest directors serve at my request and it is the prerogative of the Government to request them to step down or be replaced.
The public interest directors at Bank of Ireland do not have a specified time in office as stated in response to PQ 49476/12. The same situation applies to the public interest directors at AIB. In PTSB, as stated in PQ 49482/12 the public interest directors were appointed until 30 September 2010 but have remained since that date as a replacement Government guarantee scheme has remained in place since then. The Memorandum and Articles of Association of the Permanent TSB require each director to retire every third year but in practice each public interest director has been subject to re-election by shareholders at each AGM since their appointment.
Subsequent to the recent meeting of the Oireachtas Finance Committee I await with interest their deliberations. However, the Deputy should also be aware that officials from my Department meet with representatives of the various banks on a regular basis – including a monthly management meeting with each covered institution at which the CEO would usually attend.
149. Deputy Jack Wall asked the Minister for Finance his views on correspondence (details supplied) regarding the price of diesel; the actions or plans he is proposing to address on the concerns expressed; and if he will make a statement on the matter. [1397/13]
View answer163. Deputy Éamon Ó Cuív asked the Minister for Finance if he intends to reduce the total tax take on marked diesel oil or to intorduce a rebate from the carbon tax for registered agricultural contractors; and if he will make a statement on the matter. [1489/13]
View answerI propose to take Questions Nos. 149 and 163 together.
Ireland, as with other countries, has experienced an increase in fuel prices. This increase is an international phenomenon. Fuel prices are driven by a number of factors including the price of oil on international markets, exchange rates, production costs and refining costs. The rise in oil prices over recent periods reflected additional factors such as geopolitical uncertainty in Northern Africa and the Middle East with potential supply disruptions. Tax rates were not the main driver with increasing fuel prices. However, fuels prices have receded in recent times from highs experienced last year.
The Exchequer yield from excise, as excise is set at a nominal amount, does not increase as the price of fuels increase. On the other hand, the yield from VAT per litre of fuel, as VAT is set as a percentage of the price, increases as the price of fuels increase.
Contractors using machinery in the course of farming work are entitled to use Marked Gas Oil (MGO). The current excise duty including the carbon charge on MGO is 10.23 cents per litre, this compares to 47.9 cents per litre in respect of auto-diesel. In terms of VAT, the reduced VAT rate of 13.5% applies to MGO and the standard VAT rate of 23% applies to auto-diesel. MGO is therefore taxed more favourably compared to auto-diesel. I will not be introducing a tax rebate for users of MGO.
151. Deputy Thomas P. Broughan asked the Minister for Finance the amount of financial support allocated by the Troika that has been drawn down to date; if he will estimate the total amount allocated that will be drawn down by the end of 2013; and if he will make a statement on the matter. [1447/13]
View answerIreland’s EU-IMF Programme of Financial Support, which is due to expire at the end of 2013, comes to €85 billion, of which we are providing €17.5 billion from our own resources, with the balance of €67.5 billion, being provided from the EU’s EFSF (€17.7 billion) and EFSM (€22.5 billion) facilities, the IMF (€22.5 billion) and bilateral loans of €4.8 billion (UK - €3.8 billion, Sweden - €0.6 billion and Denmark - €0.4 billion). The table below, which has been provided by the NTMA, shows the loans drawn down by Ireland under the EU/IMF Programme as of 31 December 2012 (there have been no subsequent draw-downs).
Loans drawn down by Ireland under the EU/IMF Programme - as of 31st December 2012
|
Funding Mechanism |
Currency |
Currency Principal (Billion) |
Net Eur drawdown (Billion) |
|
European Financial Stability Facility |
EUR |
12.7 |
12.2 |
|
European Financial Stabilistation Mechanism |
EUR |
21.7 |
21.6 |
|
International Monetary Fund |
SDR* |
16.5 |
19.0 |
|
UK Bilateral Loan |
GBP |
2.0 |
2.5 |
|
Denmark Bilateral Loan |
EUR |
0.2 |
0.2 |
|
Sweden Bilateral Loan |
EUR |
0.3 |
0.3 |
|
- |
- |
- |
Total: 55.7 |
Notes: The net euro drawdown figures are net of deductions including the prepaid margin on the first EFSF disbursement and discounts applied for below par issuance and also reflect the effect of foreign exchange transactions.
*The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies (the euro, Japanese yen, pound sterling and U.S. dollar), and it can be exchanged for freely usable currencies
As the total amount of the loans available to Ireland under the EU/IMF programme, which expires at the end of 2013, is €67.5 billion, at 31 December 2012 we had drawn down slightly less than 83% of the available funds.
The schedule for drawing down programme funding is agreed in advance between the EU, the ECB and the IMF (the Troika) and Ireland during the quarterly review process. The schedule agreed following the 8th review provides for the full draw down of the available funding, and any change to this would be subject to agreement with the Troika and consultation with the bilateral lenders. This drawdown schedule will of course be subject to review as we progress through this year.
154. Deputy Thomas P. Broughan asked the Minister for Finance the other sources of funding that may be drawn upon for Budget 2014; and if he will make a statement on the matter. [1450/13]
View answer160. Deputy Thomas P. Broughan asked the Minister for Finance the estimated deficit reduction target in 2014; and if he will make a statement on the matter. [1456/13]
View answerI propose to take Questions Nos. 154 and 160 together.
Targets for the underlying General Government balance (GGB) expressed as a percentage of Gross Domestic Product(GDP), covering the period 2012 to 2015, are set in table 9 on page C.18 of the Budget 2013 booklet.
Under the Stability and Growth Pact, the general government deficit should not exceed 3% of GDP. As our current GGB is in excess of this, an Excessive Deficit Procedure applies. Under this Procedure, we have a target GGB of -2.9% of GDP in 2015.
For 2013, the target GGB is -7.5% of GDP and for 2014 the target is -5.1% of GGB. The Government remains committed to meeting these targets.
Regarding sources of funding for Budget 2014, Table 12 on page C.21 of the Budget 2013 booklet sets out the projected revenue for the period 2013 to 2015. This table shows a projected General Government Deficit of €8.9 billion for 2014. This deficit will be funded by the activities of the National Treasury Management Agency (NTMA).
As per NTMA’s press release on the 9th of January 2013, the NTMA intends to step up its re-engagement process with the market during 2013 so that Ireland is positioned to successfully exit the EU/IMF programme, having already eliminated the funding cliff presented by a €11.9 billion bond repayment due in mid January 2014.
155. Deputy Thomas P. Broughan asked the Minister for Finance if he will estimate the level of financing for the State that will be raised this year on the bond markets; and if he will make a statement on the matter. [1451/13]
View answerThe NTMA has announced that it plans to raise €10 billion in the bond debt markets during 2013, of which one quarter has already been done in a syndicated tap issue carried out on 8 January. In addition, the NTMA will continue to raise shorter-term funds via the Treasury Bill auction programme and medium-term funds through the State Savings products.
156. Deputy Thomas P. Broughan asked the Minister for Finance the amount of cash-in-hand from the National Treasury Management Agency and excluding funding from Troika sources that is available to fund the general deficit in 2013 and 2014; and if he will make a statement on the matter. [1452/13]
View answerAt end 2012, the Exchequer had €19.3 billion on hand in cash and deposits. Because the proceeds of all borrowing, as well as tax revenue, are lodged to the Exchequer account to fund general expenditure, it is not possible to disaggregate the balance on that account by source.
Total disbursements to date under the EU-IMF Programme amount to some €55.7 billion. This represents slightly less than 83% of the total external financing available under the Programme. Ireland expects that a further €11.8 billion will be disbursed by the EU/IMF during 2013.
The NTMA has announced that it intends to raise €10 billion in the debt markets in 2013, of which €2.5 billion has already been raised in a syndicated tap issue carried out on 8 January.
157. Deputy Thomas P. Broughan asked the Minister for Finance if he will outline the range of possible growth scenarios for 2013 and their potential impact on the economy here and the impact on the amount of money needed to run the State in 2013; and if he will make a statement on the matter. [1453/13]
View answerMy Department’s latest forecasts are set out in the Economic and Fiscal Outlook which accompanied Budget 2013 and which was based on the Medium Term Fiscal Statement (MTFS) published on 24 November 2012. The baseline scenario is one in which real GDP grows by 1.5 per cent this year. However, there is considerable uncertainty attached to the outlook at present, given the somewhat fragile situation in many of our main export markets. There is also uncertainty attached to the outlook for domestic demand in Ireland this year – for instance it is unclear how the household savings rate will evolve in the short term.
In this context, the MTFS outlines the impact of a number of scenarios based on the ESRI’s macroeconomic model (HERMES). For instance, it is estimated that a 1 per cent reduction in world growth relative to the assumptions upon which the Department’s forecasts are based, would lower the real level of Ireland’s GDP relative to the baseline projection by 1.4 per cent in 2013 and add around 0.5 percentage points to the general government deficit. These HERMES results are broadly symmetric - similar but opposite results could be expected in the event of stronger-than-assumed world growth.
In addition, a one percentage point fall in the household savings rate relative to the assumptions would boost GDP growth by around 0.4 per cent this year relative to the baseline and improve the deficit by around 0.2 per cent. Again, these results are broadly symmetric.
158. Deputy Thomas P. Broughan asked the Minister for Finance if he will estimate the national debt at the start and end of 2013 and the ratio of the debt to GDP and GNP at the same time periods; and if he will make a statement on the matter. [1454/13]
View answerThe national debt at the start of 2013 is €137.6 billion, as reported by the NTMA and available from their website. This represents 105.2% of forecast 2012 GNP and 84.3% of forecast 2012 GDP. Table 9 in the Budget 2013 booklet projects an Exchequer deficit of €15.4 billion for 2013.
This results in a forecast national debt for end 2013 of €153 billion, which represents 114.3% of forecast 2013 GNP and 91.2% of forecast 2013 GDP.
Information on general government debt projections are set out in table 10 on the Budget 2013 booklet. The General Government Debt (GGD) is a measure of the total debt of the State and is the measure used for comparative purposes across the European Union.
159. Deputy Thomas P. Broughan asked the Minister for Finance the level of support that he envisages will be available post-2013 for Irish budgets from the European Stability Mechanism; and if he will make a statement on the matter. [1455/13]
View answerThe purpose of the ESM is to arrange funding and provide financial assistance, under strict economic policy conditionality, to the benefit of such ESM Members (i.e. Euro Area members) as may be either experiencing, or threatened by, severe financing problems, if seen as indispensable to safeguarding the financial stability of the euro area as a whole.
Ireland’s EU-IMF Programme runs to the end of this year and it is the Government’s intention to successfully exit from our EU/IMF programme at that time. We are taking all steps necessary to achieve this objective. This means meeting all of our commitments – as we have done to date. It also means securing a satisfactory outcome in relation to alleviating the cost of our banking support measures.
Both the EU and IMF have in place facilities that allow countries that have exited programmes and find they are unable to fully fund themselves to receive support. The ESM will be the source of such funding from the EU. Such facilities of course involve additional conditionality.
On our successful exit from our programme I fully expect that Ireland will be able to fund itself through the international financial markets. In that context, the availability of the ESM to Ireland, as to all other Euro Area member states, provides a safety net, or insurance policy, that gives reassurance to financial markets on the availability of a funding source. The availability to Ireland of a credible funding backup as provided by the ESM Treaty will be very important in terms of market re-entry and leaving the EU / IMF Programme of Support. However, I do not expect that we will need to avail of this.
161. Deputy James Bannon asked the Minister for Finance his plans to increase duty on the higher alcohol products like spirits and on non-returnable long drinks, especially cans, which are sold predominately in the off-licence trade where there is no control on the amount that can be consumed; and if he will make a statement on the matter. [1473/13]
View answerThe Deputy will be aware that EU Directive 92/93, which governs the structure of alcohol taxation, requires that such taxes are applied by reference to the nature and strength of the product rather than the means of packaging or the type of premises in which the product is sold.
As I am sure the Deputy is aware 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.
A National Substance Misuse Strategy was established in 2009. Its report in 2012 made recommendations in relation to the development of policy to deal with a wide range of key issues relating to the supply, pricing, availability and marketing of alcohol – including the question of a minimum price for alcohol - along with measures for the policy areas of prevention strategies, treatment, rehabilitation and substance dependency, research and information. Those issues are being dealt with by the Minister of State at the Department of Health, Mr Alex White TD.
In the EU, Ireland has the highest tax rate for sparkling wine, the third highest for still wine and fourth highest for beer and spirits.
162. Deputy Éamon Ó Cuív asked the Minister for Finance the rate of tax in total on a litre of marked diesel oil including carbon tax, excise duty and VAT; and if he will make a statement on the matter. [1488/13]
View answerI am informed by the Revenue Commissioners that, based on a market price of €930 per 1000 litres, the total tax on marked diesel oil is €212.9 per 1000 litres or €0.21 cent per litre.
165. Deputy John Lyons asked the Minister for Finance the measures he has considered to regulate the mortgage interest rates being applied by certain lenders particularly sub prime lenders; if his attention has been drawn to the fact that borrowers form these lenders find it difficult to refinance their mortgages with other providers and so are trapped paying penalty rates; and if he will make a statement on the matter. [1534/13]
View answerThe Central Bank of Ireland has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations. However, the Central Bank has no statutory role in the setting of interest rates by regulated financial institutions, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act, 1997. The mortgage interest rates that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned. This interest rate is determined taking into account a broad range of factors, including European Central Bank base rates, deposit rates, market funding costs, the competitive environment and an institution’s overall funding.
However, as part of the Central Bank’s work on mortgage arrears, lenders were asked to consider all avenues to help customers in arrears, including interest rate reductions. This is particularly relevant to the sub-prime lenders who historically charge higher rates on higher risk loans. Currently, several lenders do consider a temporary interest rate reduction but this is on a case by case basis.
Lending institutions are independent commercial entities and, as such, it is a commercial decision for each lender to decide what loans they will provide or agree to have switched to them.
166. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question 115 of 25 September 2012, if he will provide an assessment of the profit foregone in the National Asset Management Agency as a result of the proscription in section 99 and 202 of the NAMA Act 2009, blocking NAMA from selling assets to borrowers who are in default. [1548/13]
View answerI am advised by NAMA that Sections 99 and 202 of the NAMA Act 2009 relate to debtor confidentiality, not to the sale of assets. We assume the Deputy is referring to Section 172 of the NAMA Act which relates to Limitations on certain dealings in land etc. As NAMA is not permitted to sell assets to borrowers in default, neither I nor NAMA are in a position to assess the potential foregone profit (if any) if NAMA were permitted to sell assets to borrowers in default.
167. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Questions Nos. 179 to 182, inclusive, of 16 October 2012, if the National Asset Management Agency sells loans without placing such loans on the open market. [1549/13]
View answerI am advised by NAMA that its policy in relation to loan sales, as with the sale of properties by its debtors and receivers, is that they should, where practicable, be openly marketed. For this purpose, two panels of loan sale advisors have been approved for loan sales in the US and in Ireland/Britain/Europe. NAMA advises that, to date, it has chosen in a number of cases to sell loans through loan sale brokers in the US and in some continental European jurisdictions where the sale of loans is a widely practiced method of realising the value of the secured property. In Ireland and Britain the sale of loans has mainly been in response to approaches to NAMA by third parties. NAMA advises that, after receiving such approaches, loan sale brokers have been appointed to market the loans and to deal with offers from the original bidder and other interested parties.
NAMA advises also that in certain cases a loan sale may follow the open marketing of the related property. NAMA points out that in a limited number of cases where properties or portfolios of properties have been openly marketed, the preferred bidder has ultimately suggested acquiring the related loans rather than the properties, with the value of the loans fully reflecting the successful bid for the underlying property.
NAMA advises that in situations where an offer of full par value is received for a loan, there is no merit in further marketing the loan if NAMA has no entitlement beyond the full repayment of the loan. In such cases, a loan may be sold without open marketing.
