Dominic Hannigan
Question:194. Deputy Dominic Hannigan asked the Minister for Finance if he will provide an update on the Strategic Investment Fund; when it will become available; and if he will make a statement on the matter. [6862/13]
View answerIreland Strategic Investment Fund Management
Questions (194)
Written answers
In announcing the Strategic Investment Fund initiative in September 2011, the Government indicated a refocusing of the investments of the National Pensions Reserve Fund (NPRF) towards productive investment in sectors of strategic importance to the Irish economy.
A key principle of the Strategic Investment Fund is that the NPRF investment, which is to be solely on a commercial basis, will seek matching investment from third-party investors. In this way the Fund’s assets can be used as a catalyst to attract additional capital for investment in the Irish economy.
Officials of my Department are liaising with the National Treasury Management Agency in preparing proposals for legislation to refocus the NPRF on investment in Ireland under the Strategic Investment Fund initiative. I expect to bring forward those proposals as soon as possible once that work is completed.
The NPRF continues to work on assembling and developing a pipeline of additional commercial opportunities for the Strategic Investment Fund, which is taking place in parallel with the legislative amendment process. A business plan is being developed which will address the sectors and range of assets to be considered for investment.
Within its existing statutory investment policy and in line with the SIF announcement, the NPRF has undertaken a number of investments and initiatives under which NPRF capital will be invested on a commercial basis in Ireland. The NPRF has committed to invest in: infrastructure (€250 million), PPP projects (€118 million) and finance for the SME sector (€500 million) and has entered into a collaborative relationship with Silicon Valley Bank. In addition, the Fund has been working closely with NewERA in respect of potential investment opportunities relating to the commercial semi-state sector.
Insurance Industry Regulation
Questions (195)
Pádraig MacLochlainn
Question:195. Deputy Pádraig Mac Lochlainn asked the Minister for Finance if his attention has been drawn to the fact that some insurance companies are refusing to provide coverage to drivers who committed driving offences more than five years ago but maintained a safe record since; and if he intends to bring forward any proposal to address this matter. [7133/13]
View answerWritten answers
At the outset, the Deputy should note that in my role as the Minister for Finance I have responsibility for the development of the legal framework governing financial regulation, including insurance. The day to day responsibility for the supervision of financial institutions is a matter for the Central Bank which is statutorily independent in the exercise of its regulatory functions.
The Central Bank has informed me that the decision to provide any specific form of insurance cover and the price at which it is offered is a commercial matter based on the assessment an insurer will make of the risks involved. The Bank has also indicated that it has no role in relation to issues of pricing or the scope of cover provided by insurance companies.
It should be noted that any person who has an unresolved complaint can refer the matter to the Financial Services Ombudsman, at www.financialombudsman.ie , for investigation and adjudication.
In view of the circumstances as outlined above, there are no proposals being brought forward by me in relation to the issue highlighted.
Universal Social Charge Payments
Questions (196)
Olivia Mitchell
Question:196. Deputy Olivia Mitchell asked the Minister for Finance if, in view of changes to the rate of universal social charge for the over-70s in budget 2013, he will provide an update to the example he previously cited in Dáil Éireann (details supplied) which outlined the difference between the gross and net take-home pay of a single public service pensioner over the age of 70 whose gross income is €125,000 after paying the PSPR, universal social charge and all other relevant taxes; and if he will make a statement on the matter. [7173/13]
View answerWritten answers
The indicative calculations of the amounts of Public Service Pension Reduction (PSPR), Income Tax, and Universal Social Charge (USC) in 2012 and 2013 which apply to a single public service pensioner aged 70 years of age with gross income of €125,000 are set out as follows:
|
- |
Public Service Pensions |
- |
|
2012 – Single Public Service Pensioner aged 70 |
- |
- |
|
Gross Income |
- |
€125,000 |
|
Public Service Pension Reduction (PSPR) |
- |
- |
|
First €12,000 @ 0% |
= €0 |
- |
|
Next €12,000 @ 6% |
= €720 |
- |
|
Next €36,000 @ 9% |
= €3,240 |
- |
|
Next €40,000 @ 12% |
= €4,800 |
- |
|
Balance @ 20% |
= €5,000 |
(€13,760) |
|
Universal Social Charge |
- |
- |
|
€10,036 @ 2% |
= €200.72 |
- |
|
€101,204 @ 4% |
= €4,048.16 |
(€4,249) |
|
Income Tax |
- |
- |
|
€32,800 @ 20% |
= €6,560 |
- |
|
€78,440 @ 41% |
= €32,160 |
- |
|
- |
€38,720 |
- |
|
Less Tax Credits |
- |
- |
|
Personal Tax Credit |
(€1,650) |
- |
|
PAYE Tax Credit |
(€1,650) |
- |
|
Age Tax Credit |
(€245) |
(€35,175) |
|
Total Deduction |
- |
(€53,184) |
|
Net Income |
- |
€71,816 |
|
2013 – Single Public Service Pensioner aged 70 |
- |
- |
|
Gross Income |
- |
€125,000 |
|
Public Service Pension Reduction (PSPR) |
- |
- |
|
First €12,000 @ 0% |
= €0 |
- |
|
Next €12,000 @ 6% |
= €720 |
- |
|
Next €36,000 @ 9% |
= €3,240 |
- |
|
Next €40,000 @ 12% |
= €4,800 |
- |
|
Balance @ 20% |
= €5,000 |
(€13,760) |
|
Universal Social Charge |
- |
- |
|
€10,036 @ 2% |
= €200.72 |
- |
|
€5,980 @ 4% |
= €239.20 |
- |
|
€95,224 @ 7% |
= €6,665.68 |
(€7,106) |
|
Income Tax |
- |
- |
|
€32,800 @ 20% |
= €6,560 |
- |
|
€78,440 @ 41% |
= €32,160 |
- |
|
- |
€38,720 |
- |
|
Less Tax Credits |
- |
- |
|
Personal Tax Credit |
(€1,650) |
- |
|
PAYE Tax Credit |
(€1,650) |
- |
|
Age Tax Credit |
(€245) |
(€35,175) |
|
Total Deduction |
- |
(€56,041) |
|
Net Income |
- |
€68,959 |
Mortgage Interest Relief Application
Questions (197)
Brendan Griffin
Question:197. Deputy Brendan Griffin asked the Minister for Finance if mortgage interest relief will continue to be made available to first-time buyers in recognition of the economic benefits of the scheme, including the freeing up of cashflow in the economy and increased tax revenue for the State; and if he will make a statement on the matter. [6587/13]
View answerWritten answers
The position is that mortgage interest relief for principal private residences is no longer available to house purchasers who purchase in 2013.
In response, I am sure that the Deputy is aware of recent evidence that property prices stabilised in 2012. Indeed data from the CSO’s Residential Property Price Index show that national prices have been broadly stable for 9 months now, with prices in Dublin experiencing upward price pressure towards in the latter part of 2012. Indeed recent releases by both Daft.ie and myHome.ie have pointed to the same outcome.
Whilst some commentators attributed some of the stabilisation to the ending of mortgage interest relief to new first-time buyers, it is not possible to separate out this effect from wider economic factors. Indeed, even if the ending of the relief did lead to an increase in transactions this may be because first-time buyers brought forward their planned purchases from 2013 to 2012 so as to benefit from mortgage interest relief. This may therefore have helped to stabilise property prices whilst the fundamentals of the economy improved. It is therefore hoped that stability will be maintained in 2013 and beyond with further improvements in economic fundamentals without the need for further measures.
I would like to point out that there are a number of economic considerations that might mitigate against such a scheme going forward.
Firstly, it is not clear that such a subsidy is necessary in the current environment. The price of housing is now at an affordable level for most individuals, with prices at a low level for housing suitable for first-time buyers. Providing a subsidy to mortgages would risk distorting a natural and sustainable growth in prices in the medium term. It would also need to be borne in mind, that a universal subsidy may not be the best way of making housing affordable to those who may have difficulties in securing mortgages as it also benefits those without difficulties.
There is also the consideration that subsidies of this kind very often result in higher purchase prices and higher mortgages rather than more affordable housing and mortgages as the subsidy is generally passed through to the purchase price. To the extent that the mortgage interest subsidy results in higher prices and larger borrowings, I would be concerned that it would not in fact free up cash flow for the economy.
Even if some of the subsidy does in fact result in greater disposable income, it is not clear that the income would be spent on additional consumption in the domestic economy. Given the high import propensity of a small open economy like Ireland, there is a risk that any additional expenditure would leak out of the economy. This of course assumes that individuals would actually spend any additional disposable income rather than saving or paying down extra capital on their mortgage. This would mean that the exchequer gains from the measure referred to by the Deputy may be overstated.
In addition, you will also appreciate, I receive numerous requests for the introduction of new tax reliefs and the extension of existing ones. You will also appreciate that I must be mindful of the public finances and the many demands on the Exchequer given the current significant budgetary constraints. Tax reliefs, no matter how worthwhile in themselves, reduce the tax base and make general reform of the tax system that much more difficult.
Tax Reliefs Application
Questions (198, 229)
Brendan Griffin
Question:198. Deputy Brendan Griffin asked the Minister for Finance if the fuel rebate will be extended to private coach operators; and if he will make a statement on the matter. [6588/13]
View answer
Joe McHugh
Question:229. Deputy Joe McHugh asked the Minister for Finance with reference to the Finance Bill, his views on the findings by Compecon Consultants, which estimates that a rebate of 15 cents per litre for bus and coach companies would cost the Exchequer between €2.202 million and €3.79 million per annum; and if he will make a statement on the matter. [6908/13]
View answerWritten answers
I propose to take Questions Nos. 198 and 229 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 these proposals and the level of the rebate in the context of the Finance Bill.
Mortgage Interest Relief Application
Questions (199)
Brendan Griffin
Question:199. Deputy Brendan Griffin asked the Minister for Finance his views that recipients of mortgage interest relief in respect of homes that were bought at the height of the boom will be losing the relief this year and next year; if he has any further measures planned to assist these people; and if he will make a statement on the matter. [6589/13]
View answerWritten answers
The position is that in Supplementary Budget 2009, mortgage interest relief was limited so that interest payable on a qualifying home loan would only qualify for tax relief for the first seven tax years of the life of that loan (7 year rule). However, in Finance Act 2010, mortgage interest relief was extended up to the end of 2017 for those whose entitlement to relief was due to end in 2010 or after (i.e. those who purchased in 2004 or after).
Accordingly, individuals who took out qualifying loans in the period 2004 to 2012 will continue to be entitled to mortgage interest relief up until the end of 2017.
It should be noted that, where there is an entitlement to mortgage interest relief, it is available at varying rates and subject to certain ceilings. For example, individuals who are in the first seven tax years of their qualifying loan are entitled to a higher interest ceiling, on which the rate of relief is applied. For such individuals, the interest ceilings are €10,000 per annum for a single individual and €20,000 per annum for married couples and civil partnerships. For individuals who have an entitlement to mortgage interest relief and who are in their eighth or subsequent years of their qualifying loan a lower interest ceiling applies. For such individuals, the interest ceilings are €3,000 per annum for single and €6,000 per annum for married couples/civil partnerships. Therefore, some individuals will experience a reduction in the level of relief they receive as they enter into their eighth and subsequent years of their qualifying loans. However, they will continue to receive mortgage interest relief up until the end of 2017.
Furthermore, as you are aware, this Government is fully committed to helping address the particular problems faced by those that bought homes at the height of the property boom between 2004 and 2008. In this regard, in Budget 2012, I announced my intention to fulfil the commitment in the Programme for Government to increase the rate of mortgage interest relief to 30 per cent for first time buyers who took out their first mortgage in that period.
First time buyers will qualify for the increased rate if they made their first mortgage interest payment in the period 2004 to 2008 or if they drew down their mortgage in that period. The rate of tax relief on the interest paid on such loans will, for the tax years 2012 to 2017, be 30%. A document which illustrates the maximum gains for such individuals is available on the Department of Finance’s tax policy website at http://taxpolicy.gov.ie/wp-content/uploads/2011/12/Mortgage-Interest-Relief.pdf .
VAT Rate Increases
Questions (200)
Brendan Griffin
Question:200. Deputy Brendan Griffin asked the Minister for Finance if he will consider measures to assist the construction industry by reducing VAT on building materials for home improvement schemes being carried out by registered contractors; and if he will make a statement on the matter. [6590/13]
View answerWritten answers
I would point out that a reduced VAT rate already applies to many building materials used for home improvement. While the supply of building materials is in general subject to VAT at the standard rate of 23%, Ireland applies a reduced rate of 13.5% to the supply of ready-to-pour concrete and certain concrete blocks. In addition, where a building contractor carries out home improvements and the materials cost does not exceed two-thirds of the cost of the improvements then the reduced rate of 13.5% applies to the total building service. A consequence of this is that a VAT registered building contractor will generally be entitled to recover VAT at the 23% standard rate on most building materials purchased while the contractor is only liable to charge VAT at the 13.5% reduced rate on the supply to the home owner.
The VAT rating of goods is subject to the requirements of the EU VAT Directive with which Irish VAT law must comply. The application of the 13.5% rate to construction work and building materials is the subject of a derogation from EU VAT law, where most other EU Member States apply higher rates of VAT to building materials. In this context, home improvement works are already incentivised through the VAT system.
Banking Sector Regulation
Questions (201, 202, 203, 204)
Pearse Doherty
Question:201. Deputy Pearse Doherty asked the Minister for Finance following the conclusion of the trial of two men in Britain who were convicted of defrauding Allied Irish Bank in a scheme whereby £740 million has been advanced by AIB based on bogus documents, if he will outline the response by AIB to the fraud; the steps that have been taken to prevent a reoccurrence of such a fraud; and if he will outline any sanctions or disciplinary action taken by AIB against employees responsible for the approval of the loans. [6618/13]
View answerPearse Doherty
Question:202. Deputy Pearse Doherty asked the Minister for Finance following the conclusion of the trial or two men in Britain who were convicted of defrauding Allied Irish Bank in a scheme whereby £740 million had been advanced by AIB based on bogus documents, if he will confirm the bank's policy with respect to accepting hospitality from borrowers; and if he will provide an assessment as to whether the hospitality outlined in the trial was accepted in breach of its policies. [6619/13]
View answerPearse Doherty
Question:203. Deputy Pearse Doherty asked the Minister for Finance following the conclusion of the trial or two men in Britain who were convicted of defrauding Allied Irish Bank, if he will provide an estimate of bonuses and commissions paid to its employees relating to the advancing of the loans. [6620/13]
View answerPearse Doherty
Question:204. Deputy Pearse Doherty asked the Minister for Finance following the conclusion of the trial of two men in Britain who were convicted of defrauding Allied Irish Banks if he will outline the way AIB ensured that it maximised the sale price in the disposal of the portfolio of properties subject to the loans to Green Property; the way the portfolio was marketed to ensure potential purchasers were aware of the sale; the way AIB ensured each potential purchaser had access to equal information about the portfolio; and if he will state when it began marketing the portfolio to the market and when the sale closed. [6621/13]
View answerWritten answers
I propose to take Questions Nos. 201 to 204, inclusive, together.
AIB has informed me that the Bank is satisfied that it took all necessary steps to maximise value and minimise losses when selling this portfolio of properties to Green Property during very difficult market conditions.
Unfortunately, as normal customer confidentiality applies between Green Property and AIB, the Bank is not in a position to comment on any of the details of this transaction. AIB can confirm however that it has taken steps within its controls to prevent a re-occurrence of such a fraud.
AIB does not comment specifically on issues relating to current or former individual staff members. The events that the Deputy refers to occurred over a period of years prior to 2008. Since the State Guarantee in 2008 AIB has completely overhauled its management and governance structure. This included the appointment of a new Board and Management Team, all of whom have been appointed since 2009. AIB has continually updated its Code of Conduct for employees, incorporating a policy on corporate hospitality, which is strictly enforced. This code is also available on AIB’s Group website.