Banking Sector Regulation

Questions (74)

Micheál Martin

Question:

74. Deputy Micheál Martin asked the Minister for Finance the progress there has been at EU Council meetings on tightening banking regulation; and if he will make a statement on the matter. [2380/13]

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Written answers (Question to Finance)

As the Deputy will be aware I have responded to a similar question in January 2013. I will therefore limit my response to progress since then. I chaired the ECOFIN Council meetings on 22 January and 12 February. Minister of State Hayes represented Ireland as the delegate at both of these meetings. At these meetings I provided Ministers with an update on the various banking regulation dossiers currently being discussed i.e. the Single Supervisory Mechanism (SSM), the Capital Requirements Regulation and Directive (CRD IV) and the Bank Resolution and Recovery Directive (BRR).

Having assumed the Presidency of the Council of European Union, Ireland is currently engaged in trilogue and tripartite discussions with the European Parliament and the Commission on the Capital Requirements Regulation and Directive and on the Single Supervisory Mechanism. In relation to these dossiers the engagement with the Parliament is now advanced and the Irish Presidency is hopeful of reaching a conclusion in the coming weeks.

Work is also progressing on the Bank Resolution and Recovery dossier. It would not therefore be appropriate for me to comment further at this stage except to say that in its European Presidency Ireland will be doing all it can to continue to progress work on these dossiers in the coming weeks.

Unemployment Levels

Questions (75, 76)

Peadar Tóibín

Question:

75. Deputy Peadar Tóibín asked the Minister for Finance following budget 2013, the level of unemployment forecast for the end of year 2013. [3247/13]

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Peadar Tóibín

Question:

76. Deputy Peadar Tóibín asked the Minister for Finance the level of long-term unemployment forecast for the end of 2013. [3222/13]

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Written answers (Question to Finance)

I propose to take Questions Nos. 75 and 76 together.

My Department produces and publishes forecasts for the total unemployment rate, and does not disaggregate this between short and long-term unemployed. Furthermore the projections are full year averages rather than end-year forecasts.

In this context, my Department’s latest forecast – published at Budget time – is for an average unemployment rate of 14.6 per cent this year.

I am fully conscious that the long-term unemployed make up a substantial part of those currently unemployed. For instance, figures published this morning show an unemployment rate of 13.7 per cent (unadjusted for seasonal factors) in the fourth quarter of last year; those unemployed for one year or longer account for three-fifths of these.

The Government is fully conscious of the scale of this problem and several initiatives have been introduced to mitigate the challenges faced by those suffering from long-term unemployment and to eliminate barriers preventing re-entry into the workforce. The JobsPlus Initiative , for example, which was introduced as part of the 2013 Action Plan for Jobs, aims to incentivise businesses to hire those who have been on the Live Register for 12 months or more by providing a cash-flow benefit to businesses based on the duration of unemployment.

Finally, I would draw attention to the labour market figures published this morning. These show annual employment growth in the fourth quarter of last year - the first time we have seen such growth since mid-2008. Also, Live Register figures for February show that the standardised unemployment rate now stands at 14.1 per cent, a significant fall from the 15.0 per cent figure seen in the same month in 2012.

In summary, while it is clear that progress is being made in tackling the unacceptably high level of unemployment, I recognise that there is still more to do. As such, job creation continues to be a key priority of the Government.

Tax Code

Questions (77)

Peadar Tóibín

Question:

77. Deputy Peadar Tóibín asked the Minister for Finance his views that businesses operating in the domestic economy would benefit from effective tax rates as being paid by multinationals in this State. [3227/13]

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Written answers (Question to Finance)

All companies in Ireland pay the standard 12.5% rate on their trading profits which are generated in Ireland. A higher 25% rate applies in respect of investment, rental and other non-trading profits and profits from certain petroleum, mining or land dealing activities. I am aware of recent media reports which refer to the ways that some multinational companies structure their international tax affairs to minimise their tax costs and I understand that some of these reports have suggested that some companies in multinational groups pay Irish corporation tax at rates that are lower than 12.5%.

At this point it is important to state clearly that such companies are not paying a low rate of Irish tax – as already stated all companies in Ireland pay the standard 12.5% rate on their profits which are generated in Ireland. The reports concerned appear to have incorrectly attributed to Ireland profits that represent the return due to assets in other jurisdictions, owned by group companies that are not resident in Ireland.

The ability of multinational entities to lower their world-wide rates of tax using international structures reflects the global context in which Ireland and indeed all countries operate. Differences arise in the legal and tax systems between countries. International tax-planning takes account of these differences in national systems and rules. The only way to effectively deal with such arrangements is for countries to work together to examine these structures and to consider how international rules can be amended to ensure fair levels of taxation.

In this regard, Ireland is participating in projects at EU and OECD level which aim to address these issues. The Deputy may be interested to note that the work being undertaken by the OECD as part of their Base Erosion and Profit Shifting (BEPS) project, makes explicit reference to how harmful international tax practices may lead to multinational companies having a competitive advantage over companies operating mainly on the domestic level. Irish officials have been actively involved in the BEPS project and have recently attended and contributed to meetings on this issue. In our current role as President of the EU Council, Ireland has invited the OECD to participate in an upcoming discussion on BEPS by high level officials.

There is broad agreement internationally that responses to the tax practices of transnational, indeed global, corporations requires international coordination of policy, legislation and tax administration. This level of coordination is necessary because the concerns arising are typically the result of the interaction of the tax regimes across countries in which multinationals operate — rather than the law or practice of any individual country.

As I have highlighted, the only way to effectively address this issue is at the international level and the appropriate action is being considered in this regard. Ireland remains fully committed to this approach to ensure fair play in international taxation.

Small and Medium Enterprises Supports

Questions (78, 79)

Peadar Tóibín

Question:

78. Deputy Peadar Tóibín asked the Minister for Finance the steps he is taking to deal with the issue of debt overhang that is impacting on the small and medium sized enterprise sector. [3223/13]

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Peadar Tóibín

Question:

79. Deputy Peadar Tóibín asked the Minister for Finance the meetings that he has had with representatives of the banking sector to address the problem of debt overhang impacting on the small and medium enterprise sector especially amongst small business and micro business. [3224/13]

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Written answers (Question to Finance)

I propose to take Questions Nos. 78 and 79 together.

Debt overhang and SME arrears are issues which impact on the ability of a SME to meet its existing commitments as well as hindering its ability to secure additional credit which it may need. I meet regularly with representatives of the banking sector about all aspects of the economy and this is a topic addressed in those meetings.

The Central Bank has acknowledged that the work already done by banks on mortgage arrears needs to be matched by the banks’ efforts on their small business portfolios. There has been engagement by the Central Bank with the lenders on their approaches in this area and this will be a major area of focus for the Central Bank in 2013. It will encourage a clear strategy, better specialist skills and operational capabilities within the banking sector and a more determined effort to work through the existing stock of troubled loans to try to recover or resolve individual cases.

Maternity Benefit

Questions (80)

Willie O'Dea

Question:

80. Deputy Willie O'Dea asked the Minister for Finance the estimated number of women affected by changes to maternity benefit in budget 2013, broken down by county; the estimated amount saved; and if he will make a statement on the matter. [4050/13]

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Written answers (Question to Finance)

I am informed by the Revenue Commissioners that the expected yield from the taxation of Maternity Benefit payments, which will take effect from 1 July 2013, is estimated at €15 million in 2013 and €40 million in a full year. Such payments will remain exempt from Universal Social Charge. The statistical basis of this estimate was the estimated aggregate amount of the benefit likely to be paid and the proportion of that amount expected to yield income tax, and not the expected numbers of recipients. Accordingly, a precise number of recipients that will be liable to income tax on the benefit is not available. However, I understand that the Department of Social Protection have estimated that the average weekly maternity benefit recipients in 2013 to be 22,800, including those who will not have an increased liability to income tax.

A breakdown of the numbers of recipients on a county basis is not available.

In addition, I would point out that as a result of Maternity Benefit payments becoming liable to income tax for all claimants with effect from 1 July 2013, three possible tax outcomes could arise:-

- 1. An individual will pay no income tax on their maternity benefit payment as their tax credits will be sufficient to reduce their tax liability to zero.

- 2. An individual will pay income tax on their maternity benefit payments at the standard rate.

- 3. An individual will pay income tax on their maternity benefit payments at the higher rate.

Different Cases

Maternity Benefit

Tax liability on Maternity Benefit Payment

Case 1 No tax due

€6,812

Nil

Case 2 (taxed at 20%)

€6,812

€1,362

Case 3 (taxed at 41%)

€6,812

€2,793

Additional Voluntary Contributions

Questions (81)

David Stanton

Question:

81. Deputy David Stanton asked the Minister for Finance if he has considered introducing legislation to allow indebted persons with supplementary private pension coverage early access to a proportion of their retirement savings; and if he will make a statement on the matter. [4044/13]

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Written answers (Question to Finance)

Finance Bill 2013 provides that persons making Additional Voluntary Contributions (AVCs) used to supplement their main scheme retirement benefits can withdraw up to 30% of the value of those contributions. Any amounts withdrawn will be subject to tax at the individual’s marginal rate. The option will be available for 3 years from the passing of the Finance Bill. This is a restricted measure which will enable rather than incentivize certain individuals to access part of their pension savings beyond their regular or compulsory pension contributions. I do not wish to damage future pension provision and it is important that individuals continue to provide for their retirement. For these reasons, I have no plans to extend the measure beyond AVCs.

Property Taxation Application

Question No. 83 answered with Question No. 71.

Questions (82)

Barry Cowen

Question:

82. Deputy Barry Cowen asked the Minister for Finance the communications he has had with local authorities regarding the impact of the property tax on local authority housing; and if he will make a statement on the matter. [5568/13]

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Written answers (Question to Finance)

The Finance (Local Property Tax) Act 2012 provides that local authorities will be liable to pay the Local Property Tax (LPT) on their properties in the same way as any other residential property owner, unless the properties are used to accommodate people with special housing needs. I am informed by the Revenue Commissioners that they are liaising with the Department of the Environment, Community and Local Government to establish how local authorities will provide the Revenue Commissioners with information in relation to their LPT liability and the timing and manner of the payment of this liability. The recently published Finance (Local Property Tax) (Amendment) Bill 2013, which provides that where local authority owned properties are not exempt from LPT, the market value of each of these properties will be deemed to fall into the first valuation band, that is €100,000 or less, which represents an LPT charge of €45 per property for 2013. This initial valuation of local authority owned properties will be valid up to and including 2016. It will be a matter for the local authorities themselves to decide whether they will pass on the LPT liability to their tenants in the form of an increase in rent or whether they will absorb the liability without recourse to their tenants. The 2013 Bill also provides that local authorities will have until 1 January 2014 to pay the LPT due for 2013. These changes are of course subject to the Bill being passed by the Oireachtas.

Question No. 83 answered with Question No. 71.