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Thursday, 16 May 2013

Written Answers Nos. 97-107

Tax Reliefs Availability

Questions (97)

Catherine Murphy

Question:

97. Deputy Catherine Murphy asked the Minister for Finance if he will provide specific details on the liability formula for local property tax for homeowners who have carried out remedial works to provide for the physical disability of a resident or residents of the house in question; if he is satisfied that all possible scenarios which may arise under this category will be catered for without adversely discriminating based on the nature of the disability or disabilities in question; and if he will make a statement on the matter. [23415/13]

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Written answers

I assume that the Deputy is referring to the relief available under section 15A of the Finance (Local Property Tax) Act 2012 (as amended) for properties adapted for use by disabled persons. At the outset I would like to clarify that this relief only applies where the adaptation work increases the market value of the property. I would also refer the Deputy to my detailed reply to a similar Question No. 231 on 16th April. The Deputy has requested that all possible scenarios that may arise under this relief will be catered for without adversely discriminating based on the nature of the disability or disabilities in question. The relief under section 15A of the 2012 Act is provided to a person who has a disability within the meaning of section 2 of the Disability Act 2005. Under section 2 of the 2005 Act, disability means a substantial restriction in the capacity of the person to carry on a profession, business or occupation in the State or to participate in social or cultural life in the State by reason of an enduring physical, sensory, mental health or intellectual impairment. I am satisfied, therefore, that the LPT legislation provides for the widest possible application of the relief.

Section 15A of the 2012 Act provides for a reduction in the market value of a residential property that has been adapted for occupation by a disabled person where the adaptation has been grant-aided or approved for grant aid, by a local authority. The person with the disability must occupy the property as his or her sole or main residence after the adaptation is completed. The reduction in value is limited to the lesser of the chargeable value attributable to the adaptation work carried out on the property and the maximum grant payable under the relevant local authority scheme.

I am advised by the Revenue Commissioners that where adaptation work has increased the chargeable value of a property, the liable person determines the reduction in the chargeable value of the property and calculates the revised chargeable value and decides which valuation band is relevant to the property. He or she should include the appropriate valuation band on his or her LPT Return, select a payment preference, and submit the return to Revenue. No supporting documentation is required to be submitted with the Return.

It should also be noted that the impact of such adaptations on a property may decrease its value which may in turn impact on the LPT liability.

VAT Information Exchange System

Questions (98)

Seán Fleming

Question:

98. Deputy Sean Fleming asked the Minister for Finance the number of companies that make returns using the connect direct facility to submit VAT information exchange system returns; and if he will make a statement on the matter. [23422/13]

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Written answers

I am advised by the Revenue Commissioners that there are currently 6 companies who submit VIES (VAT Information Exchange System) returns using the Connect Direct facility. There are circa 10,000 registered VIES traders and the vast majority submit their returns using ROS, the Revenue Online system. Due to a technical limitation, the ROS system cannot cater for returns that contain more than 6,000 line items. Customers whose VIES returns exceed this limit are termed Large Filers and submit their returns via the Connect Direct secure upload facility.

Property Taxation Collection

Questions (99)

John Halligan

Question:

99. Deputy John Halligan asked the Minister for Finance the number of property tax return forms that have been received by the Revenue Commissioners; of those return forms received, the number that have chosen the deferral option; of those return forms received, the number have been left blank with an attackthetax sticker attached; and lastly if he will please confirm the number of the return forms received that have been filed by landlords and local authorities; and if he will make a statement on the matter. [23465/13]

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Written answers

I am advised by Revenue that in excess of 700,000 Local Property Tax (LPT) Returns have been successfully filed to date. As the Deputy will appreciate, with returns being filed on a constant basis, the Commissioners' focus is on processing the returns, dealing with correspondence, telephone calls and payment processing. It would not be practical or particularly useful for the Revenue Commissioners to carry out detailed analysis on the returns, including the type requested by the Deputy, until after the filing date on 28 May 2013. In regard to any forms that are returned blank, Revenue has confirmed to me that it will pursue the estimated liabilities in these cases, as part of the LPT compliance programme and that the individuals involved may be liable to interest, penalties and enforcement costs in addition to the estimated amount.

Finally, as the Deputy may be aware, under section 7 of the Finance (Local Property Tax) (Amendment) Act 2013, local authorities will have until 1 January 2014 to pay their 2013 LPT on any properties which they are liable to pay the tax. Accordingly, Revenue is in discussions with local authorities to put in place a practical approach to LPT Return filing for properties where they are the liable person.

Mortgage Arrears Rate

Questions (100)

Joanna Tuffy

Question:

100. Deputy Joanna Tuffy asked the Minister for Finance if he will provide an update in tabular form of a breakdown of the number of mortgages in arrears according to the entire sum owed (details supplied); and if he will make a statement on the matter. [23494/13]

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Written answers

I am advised that the Central Bank does not publish statistical data on arrears broken down by the entire sum owed. However, the most recent Central Bank published mortgage arrears and repossession statistics, which is for the end of December 2012, contains information on the total outstanding sums owed in relation to mortgages in arrears, as well as details on the aggregate value of arrears owed.

http://www.centralbank.ie/press-area/press-releases/Pages/ResidentialMortgageArrearsandRepossessionsStatisticsQ42012.aspx

National Pensions Reserve Fund Investments

Questions (101)

Michael McGrath

Question:

101. Deputy Michael McGrath asked the Minister for Finance when the National Pensions Reserve Fund will commence investment in the small and medium enterprise fund managed by Blue Bay Asset Management; when he expects loan draw down from the fund to commence; the amount of funds the NPRF will commit to the fund in 2013; the approximate amount of jobs the fund can support; and if he will make a statement on the matter. [23502/13]

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Written answers

The National Treasury Management Agency (NTMA), as Manager of the National Pensions Reserve Fund (NPRF), has advised that a Letter of Intent was signed on 8 January 2013 in respect of the SME Credit Fund to be managed by BlueBay Asset Management. This fund aims to make loans of between €5 million and €50 million to borrowers that are established companies, with a strong credit profile and demonstrable ability to support sensible debt levels, and will not be mandated to lend to companies in distress. The SME Credit Fund may also seek to acquire existing loans from other institutions, where those loans are scheduled to mature in the near term and where the existing lender intends to exit the lending market in Ireland. The NPRF commitment will be €175 million to €325 million depending on the quantum of capital raised from Irish and international investors. The SME Credit Fund expects to have a portfolio of 25-30 investments once capital has been deployed.

The NTMA is currently finalising documentation with BlueBay and BlueBay is marketing the Fund to prospective investors both in Ireland and overseas. It is expected that the Fund will close and be launched by the middle of the year. The rate of drawdown will depend on the rate at which Bluebay is able to make loan investments. BlueBay is currently developing a pipeline of potential loan transactions.

Details of individual investments made by the NPRF are commercially sensitive and, as a commercial investor, the NPRF is subject to confidentiality provisions in the various fund formation agreements. The NPRF intends to publish a report regarding the investments made under the Strategic Investment Fund programme in July and January each year, commencing in July 2013. Future announcements in respect of any material developments in relation to the SME Credit Fund will be made available on the NPRF website.

National Treasury Management Agency Bond Issues

Questions (102)

Michael McGrath

Question:

102. Deputy Michael McGrath asked the Minister for Finance if the National Treasury Management Agency plans to publish a debt issuance strategy; if this is a requirement for Ireland to be eligible for outright monetary transactions; and if he will make a statement on the matter. [23503/13]

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Written answers

Over the course of 2012 and to date in 2013 the National Treasury Management Agency (NTMA) has been actively engaged with the bond and treasury bill markets. In January 2013 the NTMA sold €2.5 billion of the existing bond maturing in 2017 at a yield of 3.32%, the first such syndicated deal for three years. In March 2013 the NTMA sold €5 billion of a new 10 year bond, maturing in 2023, at a yield of 4.15%. These two bond sales alone account for over three quarters of the NTMA’s working plan to issue €10 billion in long-term debt during 2013. In parallel, the NTMA has continued with a regular schedule of treasury bill auctions in 2013 and saw the annualised yield demanded by investors for the three month maturity fall to 0.195% in April.

The NTMA has indicated to investors and the market generally that it will continue with regular treasury bill auctions this year and, in that regard, it has already set out its specific plans for Quarter 2 of 2013. The NTMA has also engaged with the market in relation to a return to regular bond auctions during 2013 subject to market conditions, with the specific details to be announced at a later date.

The new legislation on economic governance of the euro area, the so-called Two Pack, is expected to come into force on 30 May 2013. Under this legislation the State is required to provide quarterly and annual estimates of its debt issuance to the EU Commission but only after it is no longer in a macroeconomic adjustment programme.

The Governing Council of the ECB made a decision to establish the Outright Monetary Transaction (OMT) scheme on 2nd August 2012, and issued a press statement on 6th September 2012 which outlined its technical features. This press statement sets out that a necessary condition for OMT is strict and effective conditionality attached to an appropriate European Financial Stability Facility/European Stability Mechanism (EFSF/ESM) programme. Such programmes can take the form of a full EFSF/ESM macroeconomic adjustment programme or a precautionary programme (Enhanced Conditions Credit Line), provided that they include the possibility of EFSF/ESM primary market purchases. The ECB has also stated that OMT may also be considered for Member States currently under a macroeconomic adjustment programme “when they will be regaining bond market access”. The ECB press statement also notes that the ECB’s Governing Council will decide on the start, continuation and suspension of OMT, following a thorough assessment, in full discretion and acting in accordance with its monetary policy mandate. The decision on whether to grant OMT or otherwise in any particular case is therefore a matter for the ECB.

EU-IMF Programme of Support Issues

Questions (103)

Michael McGrath

Question:

103. Deputy Michael McGrath asked the Minister for Finance if he will provide further detail on a note to the stability programme update (details supplied); and if he will make a statement on the matter. [23504/13]

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Written answers

In order to improve analysis of the fiscal statistics provided by my Department and in the spirit of transparency, the Stability Programme Update includes, in table A1.3, a comparison of the receipts and expenditures in the current table with the most recent table produced at Budget time. In table A1.3, note 4 refers to the reclassification of an item from 'other expenditure, to 'social payments'.

Before 2012, voluntary secondary schools were classified outside the general government sector. In September 2012 the CSO agreed with Eurostat to reclassify the non-fee paying voluntary secondary schools from non-profit institutions serving households (NPISH, S.15) to general government (S.13) with retrospective effect.

Although, this reclassification has little effect on the general government balance, the payment to non-fee paying voluntary secondary schools which was previously classified as a transfer payment (from the 'other' category) is now classified as compensation of employees and intermediate consumption.

Initially the switch between categories was made from the 'social payments' category. It was subsequently deemed more appropriate to switch from the 'other' category. It is the transposition between these two categories that the note 4 of table A1.3 refers.

The reduction in the 'other' expenditure category is offset by increased expenditure under ELG and derivative guarantees.

It is important to state that this the action simply transposes an item from one type of transfer payment to another type of transfer payment. It has no effect on the balance. Nor does it affect the future or historic time series aligned to the new Government Finance Statistics tables produced by the CSO, as the effect is true for the whole time series.

Property Taxation Administration

Questions (104)

Michael Healy-Rae

Question:

104. Deputy Michael Healy-Rae asked the Minister for Finance his views on the property tax (details supplied); and if he will make a statement on the matter. [23505/13]

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Written answers

As I outlined in my speech to this House on Budget Day and subsequently throughout the passage of the Finance (Local Property Tax) Act 2012 through the Oireachtas, from 1 January 2015 local authorities will have discretion to vary the rate by 15% above or below the national central rate. This is not new information, it was made clear when the legislation was first published. It is preferable that local councillors have a specific electoral mandate to vary the rate, which will be possible following the local elections in 2014.

The Government sees the necessary introduction of the LPT as an opportunity for very real political reform at Local Government level. The LPT will provide a stable funding base for the local authority sector, incorporating appropriate elements of local authority responsibility. Providing local authorities with significant responsibility for raising local revenue has the potential to increase the level of oversight of local authority operations by the electors and thereby strengthen democracy at local level. This will strongly reinforce local democratic decision-making and will encourage greater efficiency by local authorities on behalf of their electorates.

For the purposes of Local Property Tax (LPT), the initial property valuations for the valuation date of 1 May 2013, will be valid up to and including 2016. The next valuation date will be 1 November 2016 which will cover the period 2017 to 2019.

The national central rate of LPT is 0.18% for properties valued up to €1 million with the liability calculated based on the mid-point of the appropriate band. The national central rates for properties valued over €1 million are 0.18% on the first €1 million and 0.25% on the excess value over €1 million with no banding applied. The Government has committed not to amend these rates for the lifetime of this Government.

Mortgage Applications Approvals

Questions (105)

Michael Healy-Rae

Question:

105. Deputy Michael Healy-Rae asked the Minister for Finance his views on loans (details supplied); and if he will make a statement on the matter. [23506/13]

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Written answers

I note the Deputy’s concerns regarding the checks being made by the banks prior to granting credit to individuals. Affordability is the key test in terms of meeting mortgage commitments and against the current backdrop of high levels of mortgage arrears, prudential policy by the financial institutions has led to more extensive analysis of present and prospective ability of by individuals and businesses to meet with credit commitments. It is not in the interest of the banks or the individual for finance to be provided unless the individual has the capacity to meet the interest payments and repay the sum borrowed, however credit policy would be expected to take account of the ability to repay against a backdrop of evolving circumstances. The interaction which the Government has with the banks is governed by the Relationship Frameworks, precluding the State from intervening in the day-to-day operations of the banks or their management decisions including with respect to pricing and lending decisions. These frameworks are published on my Department’s website at http://banking.finance.gov.ie/presentations-and-latest-documents/.

EU Directives

Questions (106)

Andrew Doyle

Question:

106. Deputy Andrew Doyle asked the Minister for Finance the discussions he had with his counterparts at the 14 May ECOFIN meeting in Brussels regarding the bail-in tool; and if he will make a statement on the matter. [23545/13]

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Written answers

At the ECOFIN meeting on 14th May Finance Ministers discussed a range of items including the proposal for a bank recovery and resolution directive ("BRRD"). The BRRD proposal aims to introduce an effective recovery and resolution framework for credit institutions and investment firms at national level to ensure minimum harmonisation at EU level. The proposal provides for three stages of crisis prevention and management - a preventative stage, an early intervention stage, and a resolution stage. Part of the resolution stage seeks inter alia to establish a hierarchy of bail-inable claims that would apply in a resolution context. The discussion on 14th May focused on the design of the bail-in tool which would enable resolution authorities to write down or convert into equity the claims of shareholders and creditors of institutions that are failing or likely to fail. Recent developments have highlighted the political importance of finding a common understanding on the scope and functioning of this tool and, in particular how uninsured deposits over €100,000 should be dealt with in bail-in.

I am glad to report that the discussion provided the Presidency with sufficient clarity on the position of Member States to enable us to press ahead with our efforts to achieve agreement on this file. In particular I noted convergence on a number of points:

- agreement among Member States that deposits under €100,000 must be fully guaranteed;

- considerable support for depositor preference for uninsured deposits i.e. they would be the last category to be bailed-in;

- general agreement on a broad scope for bail-in, with a limited list of defined exclusions;

- general agreement that the level of loss absorbing capacity of an institution must be set at a level to match the scope of exclusions.

The objective of the Irish Presidency in placing this item on the May ECOFIN agenda was to try to achieve a sensible compromise on this key issue which would help to unlock discussion on other areas of the BRRD notably the financing element. I am proposing to bring the BRRD dossier back to the ECOFIN on 21st June with a view to reaching a Council agreement.

However the Deputy will appreciate that much depends on the willingness of all Member States to compromise on what are complex and difficult issues. For the Irish Presidency's part we will continue to afford top priority to the legislative files relating to Banking Union, including the BRRD, in line with the conclusions of the European Council which set out a time frame and series of steps for achieving this.

Property Taxation Administration

Questions (107, 111)

Andrew Doyle

Question:

107. Deputy Andrew Doyle asked the Minister for Finance the fraud prevention measures that are in place at the local property tax call centre in view of the alleged debit and credit card fraud allegations; and if he will make a statement on the matter. [23548/13]

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Michael McGrath

Question:

111. Deputy Michael McGrath asked the Minister for Finance the steps that have been taken to establish the events which led to attempted unauthorised use of data belonging to customers who contacted Revenue's local property tax helpline; and if he will make a statement on the matter. [23569/13]

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Written answers

I propose to take Questions Nos. 107 and 111 together.

I am advised by Revenue that the issue to which the Deputies refer was first brought to its attention late on Thursday night, 9 May 2013. The issue concerned people who filed and paid via telephone through the LPT Helpline and who used credit or debit cards as the payment method. In total, the details of 11 credit/debit cards were improperly obtained by an unauthorised employee of the company that operates the LPT Helpline on behalf of Revenue, and attempts were then made to use some of them for personal benefit. The incident did not impact on anybody who filed and paid via computer, nor did it affect any of the other available payment options for Local Property Tax (LPT).

I know that Revenue is extremely concerned about the incident and has, and continues to be, in contact with the company concerned. I fully support the strong response and prompt action taken by the Commissioners. I am informed that the matter is now in the hands of the Gardai and in the circumstances it would not be appropriate to comment further on that aspect of the matter.

In regard to security, the company that operates the Helpline was able to very quickly identify the person responsible for the inappropriate access because it has very sophisticated call management and recording systems available to log all calls. On concluding its investigation the company, which is both ISO and PCI accredited, assured Revenue that the incident was an isolated matter relating to a single individual. It was not related to any technology or systems breach and was not related to the secure on-line payments system for LPT.

When Revenue extended the facility to file and pay on-line, via the LPT Helpline, special arrangements were put in place with the company in line with best practice, including setting up a filing team which is located in a “clean” and secure environment, with additional monitoring features, who do not have access to mobile phones or any other facility to record personal or payment details. The person in question was not a member of this team, and had no authority to request any payment details from customers.

Since the incident also constituted a data protection breach, Revenue reported it to the Data Protection Commissioner on Friday, and is continuing to liaise with that Office.

Revenue has asked me to reassure the public that payment of tax by either credit or debit card is completely secure, and that in the unlikely event of any illegal access, the card owner will not suffer any loss.

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