Tax Code

Questions (61)

Michael Healy-Rae

Question:

61. Deputy Michael Healy-Rae asked the Minister for Finance if he will consider reducing the amount of capital gains tax that has to be paid on co-operatives' shares when they are sold in view of the fodder crisis and the fact that farmers may have to sell off shares to themselves over their present financial crisis; and if he will make a statement on the matter. [20995/13]

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Written answers (Question to Finance)

The current rate of capital gains tax was set in Budget 2013 as part of an overall budgetary strategy to generate necessary additional tax revenue. An increase in the taxation of capital is preferable from the point of view of its impact on the economy to an increase in employment taxes such as income tax. Farmers who sell shares whether to ease financial difficulties or otherwise, are no different to any other taxpayers who may be required to similarly sell shares or other assets. It is not, therefore appropriate or justifiable to single out farmers for favoured treatment over and above other taxpayers. It is important to bear in mind that it is only an actual chargeable gain that is subject to capital gains tax, not the entire consideration to be derived from a sale of shares. In addition a farmer can sell shares and make a gain of €1270 each year without incurring any capital gains tax (€1270 is the annual capital gains tax personal exemption). In the circumstances it is not considered appropriate to reduce the rate of capital gains tax on the sale of shares by any taxpayer, including farmers.

Carbon Tax Collection

Questions (62)

Denis Naughten

Question:

62. Deputy Denis Naughten asked the Minister for Finance if the carbon tax for solid fuel applies only to the sale of dried turf; if the tax applies to the sale spreads of peat which must then be dried and rared; and if he will make a statement on the matter. [21004/13]

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Written answers (Question to Finance)

I can confirm that the carbon tax for solid fuel applies to the first supply in the State of peat as a fuel.

Departmental Funding

Questions (63)

Denis Naughten

Question:

63. Deputy Denis Naughten asked the Minister for Finance if he will provide bridging loan finance to the Department of Agriculture, Food and the Marine to allow it to issue the Exchequer funded element of area based compensation payments four months early to assist farmers with the purchase of fodder; and if he will make a statement on the matter. [21005/13]

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Written answers (Question to Finance)

My Department has advised me that payments can only issue directly from the Central Fund (Exchequer) i.e. non-voted disbursements if there is a statutory basis for them and a credit has been granted by the Comptroller and Auditor General under the Comptroller and Auditor General (Amendment) Act, 1993. There is no statutory basis for a payment from the Central Fund for the matter referred to by the Deputy. As regards payments from the Vote for the Office of the Minister for Agriculture, Food and the Marine, that is a matter for that Minister and the Minister for Public Expenditure and Reform who is the sanctioning authority for voted expenditure.

Small and Medium Enterprises Supports

Questions (64)

Michael McGrath

Question:

64. Deputy Michael McGrath asked the Minister for Finance his plans to put in place a formal timetable for banks to deal with restructuring small and medium enterprise loans in a manner similar to the targets set under the mortgage arrears resolution process; and if he will make a statement on the matter. [21022/13]

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Written answers (Question to Finance)

The Central Bank of Ireland will set quarterly institution-specific performance targets for covered banks to move distressed borrowers onto longer-term solutions by the end of this quarter. The targets set will reflect Banks’ capacity, processes and systems. I should stress that the Credit Review process remains available to any SMEs whose credit has been reduced or withdrawn by the pillar banks as well as when credit is refused by them. I would strongly advise any SME whose credit is reduced or withdrawn to avail of the services of the Credit Review Office.

Mortgage Interest Rates Issues

Questions (65)

Michael McGrath

Question:

65. Deputy Michael McGrath asked the Minister for Finance the reason he was willing to intervene with the State supported banks in 2011 to force them to pass an ECB rate reduction but will not now intervene in respect of the large widening gap between the ECB base rate and standard variable mortgage rates; and if he will make a statement on the matter. [21023/13]

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Written answers (Question to Finance)

As the Deputy will be aware the Relationship Framework with the banks provides that the State will not intervene in their day-to-day operations or their management decisions. These frameworks are published on the Department of Finance website. I must ensure that the banks are run on a commercial, cost effective and independent basis to ensure the value of the banks as an asset to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. Neither the Central Bank nor the Department of Finance has a statutory function in relation to interest rate decisions made by individual lending institutions at any particular time. The ECB rate bears no relationship to the cost of funding for Irish and indeed many other banks, and until the banking system normalises across Europe the ECB rate cannot be taken as an indicator of funding costs. The rates charged by the banks must cover their actual cost of funding to enable them to return to profitability, and support the economy.

Mortgage Arrears Rate

Questions (66)

Michael McGrath

Question:

66. Deputy Michael McGrath asked the Minister for Finance if he concurs with research of the Central Bank of Ireland that rising standard variable interest rates will increase mortgage arrears; the way this can be reconciled with the intention to deal with mortgage arrears under the mortgage arrears resolution targets process; and if he will make a statement on the matter. [21024/13]

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Written answers (Question to Finance)

I assume the Deputy is referring to the Central Bank’s Economic Letter of 28 March 2013, on The Impact of the Financial Crisis on Banks’ Net Interest Margins. As Minister for Finance, I have no statutory function in relation to setting interest rates by individual lending institutions. While the Government is acutely aware of the increasing financial stress that some households are facing in the current environment, ultimately the pricing of financial products, including standard variable mortgage interest rates, is a commercial decision for the management team and board of each bank, including the banks which the State has a shareholding interest.

The Government does recognise the difficulty an increase in variable mortgage rates can have for some borrowers. However, I can assure the Deputy that the Government is very much aware of the difficulties in this area and it is committed to advancing appropriate measures to assist those mortgage holders who are experiencing real and genuine difficulty.

Building on the 2011 ‘Keane Report’, the Central Bank, under its Mortgage Arrears Resolution Strategies project, has for some time been working intensively with lenders to ensure that they can offer a range of longer term forbearance options to their customers who are experiencing mortgage difficulty. These include Central Bank engagement with the main mortgage lenders to require them to progressively resolve mortgage arrears cases and to, where appropriate, offer sustainable solutions to borrowers. In addition, the full implementation of the new insolvency frameworks will shortly come on stream and the Government also provides mortgage interest supplement support to particular borrowers in difficulty and more general support through the taxation system to mortgaged borrowers.

The Government is making significant progress to address the problem of mortgage arrears and believes that the ingredients of a transparent resolution process for borrowers are now in place.

Property Taxation Administration

Questions (67)

Michael McGrath

Question:

67. Deputy Michael McGrath asked the Minister for Finance if he is concerned that errors in compiling the list of liable persons for the local property tax could result in Revenue making an incorrect deduction from a person's salary or State benefit payment from 1 July; the procedure that will apply to correct such occurrences if they arise; and if he will make a statement on the matter. [21025/13]

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Written answers (Question to Finance)

A key aspect of the work undertaken by Revenue for the Local Property Tax (LPT) was the development of a comprehensive Register of residential properties in the State. The Register was developed using data drawn from a range of sources including Revenue’s own databases, the Local Government Management Agency (LGMA) database and data from utility companies. Data from the various sources has been cross-checked to ensure that the Register is as accurate as possible. As previously indicated to the House, the Register was used to issue LPT correspondence to property owners. While the Commissioners have made every effort to correctly match residential properties to owners, they have clearly stated that, in a small number of cases, some individuals who are not liable persons will have received LPT Returns in error. This may have occurred, for example, where landlords are not registered with the Private Residential Tenancy Board which caused the tenant to receive the Return; in cases where a person paid the Household Charge for another person; or in cases where a person's address on Revenue's database is out of date.

The Commissioners have stressed the importance of not ignoring the LPT Return. A person who received an LPT Return but who is not the liable person in respect of the stated property, has been advised to notify Revenue in writing that they are not the liable person, who the liable person is, and to provide supporting documentation where available. This will ensure that the LPT Register can be corrected and no further correspondence will issue to the person in respect of the LPT liability for the property. I am advised that individuals who have received LPT Returns in error are contacting Revenue and the Register is being updated accordingly.

However, where individuals fail to notify Revenue, they are likely to be included in the compliance campaign which is expected to commence in the second half of June with a view to deductions beginning in July. The compliance campaign will initially focus on pursuing payment of the Revenue Notice of Estimate through mandatory deduction at source from employment income and occupational pensions.

Prior to any such mandatory deductions taking place, individuals who have not engaged with the LPT process will receive a compliance reminder. Individuals who receive a compliance reminder from Revenue in June, and who are not the liable person in respect of the property but have failed to notify Revenue of this, will have a very short final opportunity, probably no more than a few days, to contact Revenue to provide the details of the liable person and to allow Revenue to update the Register.

Some public comment suggests that non-liable persons may be deciding, or may be being advised or even encouraged not to contact Revenue and not to tell Revenue who is the owner of the property. I consider this to be irresponsible advice. The law provides that if a person is on the LPT Register s/he is liable for the tax. Furthermore, from a practical point of view, this is not a good idea. As long as Revenue continues to connect an individual with a particular property, s/he will be pursued for payment. Against a background of non-engagement, or engagement which is simply too late, mandatory deduction at source will inevitably take place in some cases where the person is not liable for LPT.

The Commissioners have assured me that where an incorrect mandatory deduction at source has commenced, arrangements will be made in due course to cancel it and to refund the LPT deducted, once details of the correct liable person are advised to them and have been validated. Clearly, this is a situation which Revenue would prefer to avoid. It will create unnecessary inconvenience for people who are not liable, unnecessary work for employers and Revenue and arrangements for refunds will take time.

However, I am very satisfied that as part of Revenue’s communications around the general issue of LPT Returns, the Commissioners sought to forewarn taxpayers that errors may occur and to provide very clear guidance on the steps that should be taken in these cases. I am also satisfied that opportunities are being provided to individuals, who receive an LPT Return and who are not liable persons, to notify Revenue of the correct liable person so as avoid an incorrect deduction.

Budget 2014 Issues

Questions (68)

Michael McGrath

Question:

68. Deputy Michael McGrath asked the Minister for Finance his plans to publish a medium term fiscal statement in advance of budget 2014; if this will update the planned fiscal adjustment over the period 2014-15; and if he will make a statement on the matter. [21026/13]

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Written answers (Question to Finance)

Under the draft regulations known as the “two-pack” which are expected to be formally adopted in May or June, a common budgetary timeline is being introduced for all Euro area member states. In line with the requirements under the “two-pack” Budget day will be on the 15th of October this year. As the Budget date is moving forward, the Medium Term Fiscal Statement which is normally produced in October/November will become unnecessary. Under the new budgetary framework, both the Stability Programme Update and the Budget will show medium-term macroeconomic and fiscal projections. As such, it has been proposed to combine the information normally contained in the Medium Term Fiscal Statement with the Budget.

As is normal practice the Budget will update the planned fiscal adjustment for the coming 3 years, this will cover the period 2014-2016.