Written Answers Nos. 30-37
30. Deputy Dara Calleary asked the Minister for Finance if he has sought assurances that employment levels at Irish Life will be protected following its sale to Great-West Lifeco; if an understanding has been reached that there will not be any compulsory redundancies; and if he will make a statement on the matter. [10596/13]
View answerI can inform the Deputy that following completion of the sale to Great-West Lifeco that all decisions on employment levels at Irish Life will be a matter for Great-West Lifeco. The Government will, as the Deputy would expect, have no role in any of these decisions. Allen Loney, the CEO of Great-West Lifeco has stated that any job losses that would occur following the acquisition of Irish Life would be on a voluntary basis, that no compulsory redundancies are envisaged and that all staff will be treated fairly. I was particularly taken with Mr. Loney’s comments at the press conference on 19 February 2013 that the company was in Ireland to “create jobs, not to destroy jobs”.
31. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he can foresee an improvement in economic growth over the next two years with particular reference to the need to use such growth as a means of reducing debt to GDP ratios and keeping in mind the need for continued reduction in the current budget deficit; and if he will make a statement on the matter. [10590/13]
View answerMy Department published its latest economic and fiscal outlook at budget time on 5 December 2012. At that time, GDP was forecast to grow by 1.5 per cent in real terms this year, with growth of 2.5 per cent projected for next year. As the Deputy will be aware, the fiscal projections outlined in Budget 2013 point to a steady improvement in the General Government deficit over the coming years. Annual deficit limits, as set by the ECOFIN Council in December 2010 will be achieved and the deficit is projected to be below 3 per cent of GDP by 2015. The Budgetary projections assumed that the debt-to-GDP ratio would peak this year and fall from next year.
The Government’s focus is on stabilising the General Government debt to GDP ratio and beginning the process of reducing it to a lower, safer level over time. Indeed, I would point out that recent financial asset sales - namely contingent convertible capital in Bank of Ireland and Irish Life - will, with all other things being equal, have a favourable impact on General Government Debt this year.
Revised macro-economic and budgetary projections will be published in the Stability Programme Update in April. At this stage, I would stress that we remain on track on the fiscal front both in terms of reducing the deficit and putting the debt ratio on a declining path.
32. Deputy Richard Boyd Barrett asked the Minister for Finance if, given EUROSTAT figures that put Ireland's implicit tax rate at 6.8%, he will consider establishing a minimum effective corporation tax rate of 12.5% on the full amount of corporation pre-tax profits; if he will provide figures or projections on what such a minimum effective rate would yield in extra revenue to the State; and if he will make a statement on the matter. [10628/13]
View answer44. Deputy Joan Collins asked the Minister for Finance if, given EUROSTAT figures that put Ireland's implicit tax rate at 6.8%, he will consider establishing a minimum effective corporation tax rate of 12.5% on the full amount of corporation pre-tax profits; if he will provide figures or projections on what such a minimum effective rate would yield in extra revenue to the State; and if he will make a statement on the matter. [10629/13]
View answerI propose to take Questions Nos. 32 and 44 together.
In a number of answers to previous Parliamentary Questions on this issue I have repeatedly advised that there is no agreed international methodology for calculating the ‘effective rate’ of corporation tax. With that in mind, I am unsure as to the premise of the Deputies’ questions which seems to imply that Ireland has an ‘effective rate’ that is significantly lower than our 12.5% rate.
I would reiterate that companies in Ireland pay the standard 12.5% rate on their 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.
Unlike some other countries who have a high headline rate of corporation tax but also have a significant number of reliefs, the approach in Ireland is transparent. Our policy in relation to the corporation tax rate in Ireland is clear: we have a relatively low headline rate of corporation tax which is applied to a broad base. There are only a small number of targeted incentives in Ireland. Such reliefs include, for example, the R&D tax credit and the 3 year exemption from corporation tax for start-up companies. These few reliefs are tightly focussed: firstly on the creation of additional employment as is consistent with current Government policy, and secondly on areas of innovation with a view to generating high value-added economic activity in the country.
Specifically in relation to the Eurostat figure referred to in the Deputies’ questions, I understand that this figure is based on national accounts data and the report itself highlights that the tax base derived from national accounts data does not correspond to the actual or legal tax base used in computing tax liabilities.
In answer to previous Parliamentary Questions on this subject, I referred to an estimate from a report produced by the World Bank and PricewaterhouseCoopers which put the effective rate in Ireland at 11.9% (Paying Taxes, 2013). This comparative report looked at 183 countries and calculated the effective rate based on the tax obligations of a standardised company operating in each country, using standard assumptions regarding exemptions, deductions and allowances. I also referred to a study by the European Commission (Taxation Trends in the EU 2011), which indicates Ireland has an effective corporate tax rate which is close to or indeed higher than the statutory 12.5% rate (this is likely because of the 25% rate that applies generally to non-trading income).
I have been clear that my Department does not take ownership of these reports, but rather have quoted them to give the Deputy an example of the differences that exist in comparative studies on effective tax rates, depending on how the rate is calculated or who carries out the calculation. Given the absence of an agreed definition and the fact that certain of the estimates appear to show Ireland as having an effective rate of tax even higher than the headline rate of 12.5% - it is not possible to provide projections on what a minimum ‘effective rate’ would yield.
33. Deputy Catherine Murphy asked the Minister for Finance the number of persons who paid the domicile levy in 2012; the sum collected under the levy in the same period; the number of persons who are declared non-resident for tax purposes; the number of these who would qualify for the domicile levy in 2012; and if he will make a statement on the matter. [10496/13]
View answerI am informed by the Revenue Commissioners that the Domicile Levy returns and payments for the tax year 2011 were due to be filed on 31 October 2012, or 15 November 2012 for persons who file their income tax returns using the Revenue Online System (ROS). In all, 11 persons submitted returns declaring a liability in respect of the Domicile Levy for the tax year 2011 and these persons paid a total of €1,719,768. Of these 11 persons, seven have declared they were non-resident in Ireland for tax purposes for the tax year 2011. I am further informed by the Revenue Commissioners that for 2011, the last year for which figures are available, 11,317 persons filed Income Tax returns that indicated that they were non-resident for Income Tax purposes. As these figures relate to the tax year 2011, it is not possible to say how many of these persons may have a liability to domicile levy for the tax year 2012. Domicile Levy returns in relation to the tax year 2012 are due to be filed on 31 October 2013.
34. Deputy Charlie McConalogue asked the Minister for Finance his views on the implications for Ireland of the imposition of a financial transaction tax in 12 EU countries; and if he will make a statement on the matter. [10612/13]
View answerA formal European Commission proposal for a Directive implementing, via enhanced cooperation, a financial transactions tax (FTT) was issued on 14 February 2013. An economic impact assessment was published at the time of the original Commission proposal in September 2011. The Commission has concluded that a revised impact assessment is not warranted in connection with the current proposal but they have published a paper which provides additional information which should be considered in conjunction with the original impact assessment.
All 27 EU Member States are participating in the working party meetings on the FTT, currently under the chair of the Irish presidency, which is examining the proposal in detail, including the potential impact of the proposal for those countries that will not be participating in the tax.
Eleven Member States have agreed to move ahead with the introduction of an FTT in some form and only these Member States, participating in enhanced cooperation, will have the right to vote on the proposal.
The first working party meeting on the FTT took place on the 21 February 2013. At this early stage of discussions, it is not possible to estimate the impact for Ireland, or indeed for other non-participating Member States, of the introduction of an FTT in the 11 participating Member States, given that it is not yet clear what form this tax might eventually take.
I can assure the Deputy that my officials will be raising any concerns that may arise as the proposal develops with a view to ensuring that any potential negative implications for Ireland from the proposal are given due consideration by the participating Member States.
35. Deputy Patrick O'Donovan asked the Minister for Finance if he will consider reviewing the recent decision on mortgage interest relief in the budget and allow persons to claim the relief on the whole of their mortgage, as long as they started drawing down the mortgage; and if he will make a statement on the matter. [10514/13]
View answerI will consider this matter as part of my deliberations in relation to potential amendments to the Finance Bill as it progresses through the Oireachtas.
37. Deputy Sean Fleming asked the Minister for Finance if the National Asset Management Agency has adequate resources to support its efforts to gain security over assets controlled by its debtors that were not secured at the time when loans were transferred to the agency from the banks and where these assets were subsequently transferred to family members of the debtor; the amount of the €750 million secured by reversal of asset transfers has been achieved by voluntary agreement with developers; his views on whether legislative change is needed in this area to secure the interests of the State; and if he will make a statement on the matter. [10604/13]
View answerNAMA’s significant record of achievement in this area indicates that it has adequate resources and has fully utilised these resources to support its efforts to gain additional security for its debtors’ loans. NAMA advises that, to ensure that debtors repay their debt to their full capacity, it requires, inter alia, that they provide security over unencumbered assets not previously pledged as loan security, where such assets exist, and the reversal of asset transfers to relatives and others, where they have occurred.
NAMA advises that, in this way, since inception to date it has obtained charges over additional security with an aggregate value of approximately €642 million, and that it is in the process of taking security over further assets identified in the course of its intensive engagements with debtors. In the past week, the NAMA Chairman publicly stated that the Agency expects, after all negotiations have completed, to obtain about €750 million by taking charges over previously unencumbered assets and by reversing assets transfers by certain debtors. NAMA advises that the realised proceeds from these sources will be used to pay down debts owed to the taxpayer. These assets have been identified in a number of ways, including through the valuation and business review process and through searches of assets undeclared by debtors by NAMA’s dedicated asset search team.
As part of the business plan process, a sworn statement of affairs was requested from personal debtors and guarantors, including details of any unencumbered assets which might be available to support repayment capacity and of any transfers of assets in recent years by debtors to relatives and associates. In completing that statement of affairs, debtors were reminded that the provision of false or inaccurate information to NAMA is a criminal offence, under Section 7 of the NAMA Act.
As previously advised to this House, NAMA has referred two formal complaints to the Garda Bureau of Fraud investigation arising from a possible failure by debtors to fully disclose their assets and liabilities in their statement of affairs to the Agency. NAMA has also initiated cases in the Irish and English High Courts and in the US Courts for the reversal of asset transfers, including residential property, shares and other assets. €750 million in additional security represents significant further protection for the Irish taxpayer and underlines the determination with which NAMA has approached this area of its work.
