Tuesday, 5 Feb 2013

Written Answers Nos. 260-284

Private Pension Levy Abolition

Questions (260)

Brendan Griffin

Question:

260. Deputy Brendan Griffin asked the Minister for Finance his plans for the abolition of the private pension levy; and if he will make a statement on the matter. [5393/13]

Written answers

Minister for Finance

The pension fund levy applies at a rate of 0.6% per annum to the market value, on the valuation date, of assets under management in pension funds and pension plans approved under Irish tax legislation. The levy will operate for a period of 4 years only (2011 to 2014) and the legislative provisions giving effect to the levy (section 4 of Finance (No. 2) Act 2011) were specifically drafted to reflect this. I confirmed in my Budget 2013 Speech that the levy will not be renewed after 2014.

State Savings Schemes

Questions (261)

Brendan Griffin

Question:

261. Deputy Brendan Griffin asked the Minister for Finance if he will reinstate higher interest rates for savers who save up to €10,000 in State saving schemes; and if he will make a statement on the matter. [5425/13]

Written answers

Minister for Finance

I am informed by the National Treasury Management Agency (NTMA), that reductions in the interest rates across the full range of State Savings products were announced in December 2012. This was done at a time when rates in the deposit market generally were coming down with the objective of remaining competitive while not incurring interest costs above the levels generally prevailing in the market on Government borrowings. The NTMA will continue to monitor market interest rates but at this time does not propose to increase interest rates for particular categories of saver.

Tax Reliefs Application

Questions (262)

Regina Doherty

Question:

262. Deputy Regina Doherty asked the Minister for Finance if consideration is to be given to index link the standard fund threshold on the proposed cap to tax relief for pension contributions that deliver incomes over €60,000; and if he will make a statement on the matter. [5426/13]

Written answers

Minister for Finance

Budget and Finance Act 2006 introduced a limit on the total capital value of pension benefits that an individual can draw down in their life-time from tax-relieved products where those benefits came into payment for the first time on or after 7 December 2005. The limit was introduced at a level of €5 million and is referred to in the legislation as the Standard Fund Threshold (SFT). A higher limit on the capital value of pension benefits may apply in certain circumstances and this limit is called the Personal Fund Threshold (PFT). The legislation contains provisions for the indexation of the SFT and PFT in line with an earnings adjustment factor at the discretion of the Minister for Finance. The thresholds were increased in both 2007 and 2008 such that, for example, the SFT was increased from its original level of €5 million to just over €5.418 million for 2008. No adjustment was made for 2009 and Budget and Finance Act 2010 reduced the SFT to its current level of €2.3 million.

In Budget 2013, I announced that changes to the 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.

I also announced that consultation on the specific changes required to the existing pension regime will continue with, among others, the pensions sector and the Departments of Public Expenditure and Reform and Social Protection. The future indexation or otherwise of the SFT will be considered as part of this process.

Tax Code

Questions (263)

Regina Doherty

Question:

263. Deputy Regina Doherty asked the Minister for Finance if consideration will be given to extending Section 787Q of the Taxes Consolidation Act 1997 to private sector pension schemes; and if he will make a statement on the matter. [5428/13]

Written answers

Minister for Finance

Chapter 2C of Part 30 of the Taxes Consolidation Act 1997 (TCA), incorporating sections 787O to 787U, and the associated Schedule 23B provide for a maximum allowable pension fund on retirement for tax purposes. The Chapter imposes a limit or ceiling on the total capital value of pension benefits that an individual can draw upon in their lifetime from tax-relieved pension products where those benefits come into payment for the first time on or after 7 December 2005. This limit is known as the Standard Fund Threshold (SFT) and is set at €2.3 million as on and from 7 December 2010. In certain circumstances, a higher threshold called a Personal Fund Threshold (PFT) may apply. Section 787Q deals with the concept of the “chargeable excess” and, among other things, with the arrangements for the recovery of tax paid upfront on a chargeable excess by a pension administrator in the public service. The SFT was introduced as a deterrent to prevent over-funding of supplementary pension provision from tax-relieved sources and there are penal tax consequences where benefits are taken from pension funds which exceed the SFT or a PFT, where applicable. There is an immediate ring-fenced tax charge of 41% on the “chargeable excess” over the value of the SFT or PFT. Furthermore, the remaining amount is taxed again at the individual’s marginal rate when taken as retirement benefits.

The SFT regime operates as it is intended to do in the private sector to deter over-funding of pensions, as individuals have the flexibility (which they generally exercise) to cease contributing to or accruing benefits under pension arrangements in order to avoid exceeding the SFT or the PFT, if applicable.

The situation is different for individuals in public service pension schemes who cannot opt-out of the schemes and have no control over their accrual of public service pension entitlements (other than to leave their jobs). Simply by continuing in their posts, a significant chargeable excess and tax liability could arise for certain individuals at the point at which they retire from the public service pension scheme. This situation is unlikely to arise in the private sector. It should also be borne in mind that in public service schemes there is generally no actual pension fund available out of which the tax liability can be met. For these various reasons, section 787Q sets out arrangements for the reimbursement of the administrator for tax paid on a chargeable excess in respect of a retiree in a public service context. This reimbursement can be effected by a reduction in the net retirement lump sum payable to the individual from the public service scheme, by recoupment directly from the individual, by recovery from the gross public service pension over a period or by a combination of these approaches.

I have not been made aware of similar difficulties to those that I have described above in a public service context arising in the private sector. If such difficulties exist and are outlined to me, I will examine the matter further.

Tax Collection

Questions (264)

Tony McLoughlin

Question:

264. Deputy Tony McLoughlin asked the Minister for Finance if he will review the decision of the Revenue Commissioners not to reduce a tax interest liability for late payment in respect of a person (details supplied) in County Leitrim. [5431/13]

Written answers

Minister for Finance

The Revenue Commissioners are charged with responsibility for the timely collection and recovery of a range of taxes and duties due to the Exchequer. Revenue has a clear focus on making sure that every person and business complies with the requirement to file the relevant returns and to pay the appropriate tax or duty on a timely basis. That is an appropriate and correct focus for Revenue and one that I fully endorse. Delays in the collection of tax revenues properly due, adds to the level of Government borrowing and public debt interest and confers an unfair competitive advantage on non-compliant businesses. In instances where taxpayers or businesses pay their taxes late then interest on late payment, which is a statutory charge is applied. This is designed to compensate the Exchequer for the loss of revenue suffered as a result of the late payment and to encourage timely payments in future. Revenue applies a balanced approach to the imposition of interest on late payment and ensures that customers are made fully aware that by paying late they risk being charged interest. I am informed by Revenue that the interest on late payment charge in question relates to the 2010 tax year and that the person was obliged under self assessment rules to pay preliminary tax for that year at an amount equal to either 100% of his final 2009 liability or 90% of his eventual 2010 liability on or before 31 October 2010. The person did not make the required payment within the statutory timeframe but did eventually make the payments on a phased basis between 17 November 2011 and 8 February 2012. Because the payments were made well outside of the statutory timeframe the person was charged interest on late payment of €7,701.28.

Unfortunately the person also breached preliminary tax payment rules in 2005 and 2009 and on those occasions suffered interest on late payment charges of €6,320.86 and €1,580.17 respectively. It is also noted that the person has again failed to adhere to preliminary tax rules for 2011 and has paid no preliminary tax for 2012 to date.

The Collector General’s Division of the Revenue Commissioners recently reviewed the application of interest on late payment against the 2010 tax year at the request of the person in question but found no grounds to mitigate the charge given the person’s track record of late payment. However if payment of the debt in one lump sum creates an undue burden on the person, then Revenue would be prepared to consider payment by way of an agreed phased payment plan. Should the person wish to avail of such an arrangement he should urgently contact Mr. Jim Deery, Collector-Generals Office, Limerick, Telephone [phone] or email [e-mail] to make a suitable arrangement for payment.

Tax Collection

Questions (265)

Dominic Hannigan

Question:

265. Deputy Dominic Hannigan asked the Minister for Finance if the Revenue has plans to advise pensioners in advance of letters that may be issued in December advising them of tax that they owe; and if he will make a statement on the matter. [5454/13]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that they are not in a position to provide a full reply to the question in the time available. However, having received additional information from the Deputy, they will respond directly to him as soon as possible.

Credit Unions

Questions (266)

Finian McGrath

Question:

266. Deputy Finian McGrath asked the Minister for Finance if he will support this matter regarding a credit union question on NTMA (details supplied) [5458/13]

Written answers

Minister for Finance

I am advised by the National Treasury Management Agency (NTMA) that it has not been possible to compile 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.

Local Authority Finances

Questions (267)

Thomas P. Broughan

Question:

267. Deputy Thomas P. Broughan asked the Minister for Finance if, in relation to sections 20 and 21 of the Finance (Local Property Tax) Act 2012, he will outline the timeframe he envisages for local authorities to do their estimates in view of the 30 September deadline for setting the adjustment and the legislative specification for a public consultation process; and if he will make a statement on the matter. [5463/13]

Written answers

Minister for Finance

Sections 19 to 21 of the Finance (Local Property Tax) Act 2012, which deal with the local adjustment factor, do not come into operation until 1 July 2014. The first liability date for which the local adjustment factor will be operational is 1 November 2014. The local adjustment factor will be decided as part of the local authorities’ budgetary process. The 30 September deadline will allow the Revenue Commissioners time to update their systems accordingly. The reference to a public consultation process in the Act relates to regulations which the Minister for the Environment, Community and Local Government may make with respect to the setting of the local adjustment factor. No such regulations have been put in place by the Minister as of yet.

The Deputy may be aware that one of a further two draft economic and budgetary regulations, known as the “two-pack”, nearing finalisation in Europe, will introduce a common budgetary timeline for all euro area Member States. When this regulation is adopted and in force, all euro area Member States will be required to publish their draft budget for central government and the main parameters of all other General Government sub-sectors, including local government, no later than 15 October each year. The common budgetary timeline also foresees that the final budget should be adopted or fixed upon annually by 31 December. Accordingly, much of our existing budgetary process will have to be finalised earlier in the year.

As the two-pack has not yet been adopted, this requirement has not yet come into force but I can assure the Deputy that we will take the necessary actions to ensure that Ireland will comply with the new requirements once they have been agreed.

Tax Yield

Questions (268)

Seán Kenny

Question:

268. Deputy Seán Kenny asked the Minister for Finance the amount of tax the Exchequer receives for a pint of lager beer priced at five euro, a pint of stout at €4.35, half glass of spirits at €3.90, a small glass of wine at €5.50; and if he will make a statement on the matter. [5509/13]

Written answers

Minister for Finance

The amount of tax payable on a pint of beer or stout, a half glass of spirits and a small glass of wine, at the prices indicated are set out below:

Tax Take on Alcohol Products

-	Stout	Lager	Spirits	Wine
-	Pint	Pint	35.5ml	175ml
Price	4.35	5	3.9	5.5
Excise Duty	0.46	0.46	0.52	0.65
VAT 23%	0.81	0.93	0.73	1.03
Total Duty	1.27	1.39	1.25	1.68

The Deputy should be aware that the excise payable on each of the above will be the same regardless of the price at which it is sold. The VAT content will, however vary according to price.

Departmental Staff Redeployment

Questions (269)

Gerry Adams

Question:

269. Deputy Gerry Adams asked the Minister for Finance if a person (details supplied) from his Department continues to hold a senior position with the Irish Bank Resolution Corporation; the person's responsibilities within the bank; if he has had any recent correspondence with the chairman of the Irish Bank Resolution Corporation on the person's position; and if he will make a statement on the matter. [5518/13]

Written answers

Minister for Finance

The person referred to by the Deputy was seconded to the Irish Bank Resolution Corporation on 2nd October 2012 for a period of six months after which time the secondment would be reviewed. As the Head of Market Solutions and a member of the Executive Management Committee the secondee is responsible for all aspects of deal execution in respect of certain designated portfolios. In addition, this person is also participating fully in the formulation of strategy for IBRC as a whole. I have been communicating with the Chairman on a regular basis over the period of the secondment in order to best maximise the joint advantages to both the Department and IBRC from this arrangement.

Banking Sector Regulation

Questions (270)

Stephen Donnelly

Question:

270. Deputy Stephen S. Donnelly asked the Minister for Finance if an application for a banking licence was made by Irish Bank Resolution Corporation, in which he is the sole shareholder of 100% of the shares, whether a banking licence would be granted; and if he will make a statement on the matter. [5521/13]

Written answers

Minister for Finance

IBRC have a banking licence and continue to be regulated by the Central Bank of Ireland. The Central Bank is the competent authority in Ireland for the issuing of banking licences. Unfortunately I am not in a position to answer the question posed by the Deputy as it is hypothetical in nature.

Banking Licence Breaches

Questions (271, 274, 275, 276)

Pearse Doherty

Question:

271. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 275 of 29 January 2013, if he will outline the nature of the breach or breaches referred to. [5613/13]

Pearse Doherty

Question:

274. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 275 of 29 January 2013, if he will confirm if the breach or breaches to the terms of the banking licence have prevented or hindered Irish Bank Resolution Corporation in pursuing its objectives. [5616/13]

Pearse Doherty

Question:

275. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 275 of 29 January 2013, if he will detail the actions taken by Irish Bank Resolution Corporation in response to the breach or breaches. [5617/13]

Pearse Doherty

Question:

276. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 275 of 29 January 2013, if he will confirm if the European Central Bank has been made aware of the breach or breaches at Irish Bank Resolution Corporation; and if so, if he will provide the response of the ECB to the breach or breaches. [5618/13]

Written answers

Minister for Finance

I propose to take Questions Nos. 271 and 274 to 276, inclusive, together.

I have been advised that as disclosed previously in IBRC’s published account and as the organisation in wind down, IBRC is not in full compliance with Irish regulatory requirements. The Central Bank of Ireland, as the primary regulator of IBRC, is fully aware of this. Any breaches of certain technical requirements that apply to credit institutions do not impinge on the organisation in achieving its wind down objectives.

Page 18 of the Bank’s 2012 Interim Report clearly discloses the following under ‘Regulatory Compliance Risk’:

“Regulatory compliance risk primarily arises from a failure or inability to comply fully with the laws, regulations, standards or codes applicable specifically to regulated entities in the financial services industry. The Bank continues to operate as a regulated entity and, as such, is therefore subject to certain minimum prudential and other regulatory requirements. At 30 June 2012, the Bank is not in full compliance with all Irish regulatory requirements. While the Bank ensures that the relevant Authorities are kept fully informed in this regard, non-compliance may result in the Group being subject to regulatory sanctions, material financial loss and/or loss of reputation.”

Banking Licence Breaches

Questions (272)

Pearse Doherty

Question:

272. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 275 of 29 January 2013, if he will confirm the number of banks in the State operating under licences granted by the Central Bank of Ireland, that have been in breach of the terms of their banking licence since 1 January 2012. [5614/13]

Written answers

Minister for Finance

The Central Bank of Ireland has informed me that under Section 33AK of the Central Bank Act 1942, the Bank is restricted in its ability to disclose details of the supervision of individual credit institutions, and cannot therefore provide details of any breaches of the its licensing and supervision requirements. The Central Bank has confirmed that in the event of a breach occurring, action would be taken to ensure that the credit institution remediates the cause of the breach immediately and to ensure that such a breach does not recur. Depending on the nature of the breach, further Central Bank action would be considered, including possible enforcement action and other regulatory sanction.

Banking Licence Breaches

Questions (273)

Pearse Doherty

Question:

273. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 275 of 29 January 2013, if he will confirm when the Central Bank of Ireland first became aware of breaches at Irish Bank Resolution Corporation; and if he will detail the actions the Central Bank of Ireland has taken in response to the breach or breaches. [5615/13]

Written answers

Minister for Finance

The Central Bank has informed me that in the context of efforts to address the difficulties in the Irish banking sector, it was made aware of the challenges faced by institutions to maintain minimum regulatory standards. The breaches were first reported in IBRC’s Interim 2010 accounts which cover the first six months of that year. In this regard and given Irish Bank Resolution Corporation’s balance sheet structure of a wind down entity and primary reliance on central bank funding to fund its assets, it is not possible for that entity to comply with certain minimum requirements as prescribed by the Central Bank of Ireland.

Questions Nos. 274 to 276, inclusive, answered with Question No. 271.

Excise Duties Reliefs

Questions (277)

Michael McGrath

Question:

277. Deputy Michael McGrath asked the Minister for Finance if he will respond to an issue raised concerning excise duty for Irish craft cider makers in correspondence (details supplied) in County Cork; and if he will make a statement on the matter. [5619/13]

Written answers

Minister for Finance

Article 4 of Directive 92/83/EEC allows for a lower rate to be applied to beer produced by small breweries. This provision is however specific to beer, and there is no corresponding provision to cover other fermented beverages, including cider. Under EU law (Art 13(2) of Council Directive 92/83/EEC) we are obliged to apply the same rate of excise duty to all other fermented beverages, which include cider. Ireland has however used the option under paragraph (3) of that article, to apply two lower rates to cider below 8.5% vol and 6% vol. A reduced rate of tax for low strength cider was also introduced, with effect from 15 October 2008, for cider of a strength not exceeding 2.8% alcohol by volume, as provided for under Article 5 of the Directive. Under the current EU legislative framework, a reduced rate could not be introduced for cider produced by small operators.

While there is an exemption for small scale cider producers in the UK of up to 7000 hectolitres, I understand that this exemption pre-dates the Directive.

A cider manufacturer's licence is also required for the production of cider on a commercial basis under the Finance (1909-1910) Act 1910.

Tax Collection

Questions (278)

Jack Wall

Question:

278. Deputy Jack Wall asked the Minister for Finance the reason a person (details supplied) in County Kildare is being deducted tax from their pension; and if he will make a statement on the matter. [5627/13]

Written answers

Minister for Finance

I have been advised by the Revenue Commissioners that contact has been made with the pension provider who has advised that a small amount of Universal Social Charge has been deducted in error from the pension. The error will be corrected and the amount deducted will be refunded.

Departmental Expenditure

Questions (279)

Thomas Pringle

Question:

279. Deputy Thomas Pringle asked the Minister for Finance if he will outline in tabular form the total cost of all conferences and seminars attended by his Department in 2012; the purpose of each conference/seminar; the location; the number of delegates that attended from his Department/agencies or otherwise that were represented; the total cost of each conference/seminar; and if he will make a statement on the matter. [5636/13]

Written answers

Minister for Finance

The information requested by the Deputy could not be collated in the time available. My Department will respond directly to the Deputy as soon as possible.

Mortgage Arrears Rate

Questions (280, 281)

Michael McGrath

Question:

280. Deputy Michael McGrath asked the Minister for Finance the number of people in mortgage arrears in County Meath; and if he will make a statement on the matter. [5778/13]

Michael McGrath

Question:

281. Deputy Michael McGrath asked the Minister for Finance the number of people in mortgage arrears for more than ninety days in County Meath; and if he will make a statement on the matter. [5779/13]

Written answers

Minister for Finance

I propose to take Questions Nos. 280 and 281 together.

The Central Bank of Ireland compiles and publishes data on a quarterly basis on mortgage arrears, repossessions and mortgage restructures on an aggregate basis across the State and the latest data was published in December 2012 for end Quarter 3, 2012. The Central Bank has advised me that it does not publish mortgage arrears data on a county by county basis.

Property Taxation Exemptions

Questions (282)

Pearse Doherty

Question:

282. Deputy Pearse Doherty asked the Minister for Finance the reason for allowing property owners to be exempt from the proposed property tax for land over one acre; and if he will estimate the revenue he is willing to forego by limiting the property tax to the valuation of property on one acre. [5782/13]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that in line with other taxes such as Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT), where the market value of residential property is relevant to the assessment for a tax, the curtilage of the dwelling house includes an area of up to one acre. This is regarded as land which is enjoyed as an amenity with the dwelling-house and includes driveways, yards and gardens which belong with the dwelling-house. The tax is intended to be a tax on residential property as normally defined so I do not agree that taxing a residential property plus one acre means that revenue is being foregone. In any event, it is not possible to estimate what yield would arise from applying the Local Property Tax to a larger area as no valuation of such property is available. If a property is situated on grounds in excess of one acre, while the LPT will only apply to the house plus one acre, the balance of the property will be liable to CGT on disposal as it will not benefit from the CGT relief for principal private residences.

Consultancy Contracts

Questions (283)

Micheál Martin

Question:

283. Deputy Micheál Martin asked the Minister for Finance if he will state the identity of all persons external to the Civil Service whom he has retained since March 2011 to assist on technical and strategic matters relating to negotiations on the restructuring of promissory note repayments; the duration and terms of such assistance; and if he will make a statement on the matter. [5802/13]

Written answers

Minister for Finance

As the Deputy is aware discussions in relation to the Promissory Notes have been on-going for some time. This has been part of a wider range of considerations on national debt sustainability and the cost of recapitalising and supporting the Irish banking industry. A number of resources external to the civil service have been retained since March 2011 to assist in technical and strategic matters relating to the restructuring of the Promissory Notes. These included McKinsey & Company, Arthur Cox, PWC and staff seconded from the NTMA and the banking sector.

McKinsey & Company was engaged by the banking unit in the NTMA in May 2011 up to the end of 2011 initially as external adviser on strategic options including funding of IBRC. This engagement was extended into 2012 to cover other work, including restructuring proposals for the IBRC Promissory Notes and the assessment of other proposals in relation to the restructuring of the banking sector. This engagement ended in April 2012. A fixed fee, including expenses, of €2.75m was agreed for the engagement of McKinsey & Company in 2011 and a further fee of €0.87m was paid in relation to the work in 2012. An element of the fixed fee for 2011 related to the IBRC funding and the Promissory Note structures.

Arthur Cox was engaged by the banking unit in the NTMA from March 2011 for the supply of on-going legal advice on restructuring of the Irish banking system, related litigation and further emerging issues. This contract was novated to the Department of Finance, taking effect from January 2012. This work is on-going and a final fee has of yet not been agreed.

PWC provided accounting advice in 2012 in relation to the restructuring of the Promissory Notes.

As detailed last week in my response to Parliamentary Questions 65,66 & 68 on Wednesday 30 January, the staff in my department have been supplemented by employees of the NTMA, for so long as is required by the Department to fulfil its functions in respect of the banking sector; and by from the banking industry by way of secondee arrangement. These resources are sufficient to support the negotiations at this point.

The Deputy will appreciate that it is not appropriate to disclose individual details of those involved in this work.

Tax Rebates

Questions (284)

Seán Ó Fearghaíl

Question:

284. Deputy Seán Ó Fearghaíl asked the Minister for Finance if any tax rebate is due to a person (details supplied) in County Kildare; and if he will make a statement on the matter. [5846/13]

Written answers

Minister for Finance

I have been advised by the Revenue Commissioners that, as the person concerned did not pay income tax or Universal Social Charge during 2012, there is no rebate due.