Thursday, 18 Jul 2013

Written Answers Nos. 112-25

EU Directives

Questions (112)

Andrew Doyle

Question:

112. Deputy Andrew Doyle asked the Minister for Finance the progress made on implementing an EU regulation governing VAT rules for cross-border services and any agreements achieved on this tax file to ensure consistency in the application of the new VAT rules across member states in respect of telecommunications, broadcasting and e-services which are supplied cross-border; the implications for Ireland as a result of this measure; and if he will make a statement on the matter. [36163/13]

Written answers

Minister for Finance

From 1 January 2015, under Council Directive 2008/8/EC, new VAT rules governing cross-border supplies of telecommunications, broadcasting and e-Services to ordinary consumers are due to come into effect. Under the new rules, the place of taxation for these services will shift from the Member State of the supplier to the Member State of the consumer, thereby ensuring that local VAT rates apply irrespective of the location of the supplier and that taxation will accrue to the Member State of the consumer. The new rules will be transposed into Irish law in 2014. In December 2012, the European Commission published a proposal for an Implementing Regulation designed to ensure that the new rules are applied consistently across the Community. Having commenced discussions on the proposal, the Irish Presidency achieved political agreement on this dossier at the ECOFIN Council of 21 June 2013. In addition to achieving consistency in the application of the new rules, this agreement will minimise the scope for non-taxation and double taxation of the services involved. Achieving early agreement on the dossier was important in allowing businesses sufficient time to prepare their accounting and IT systems for the changeover to the new rules in 2015.

Tax Code

Questions (113)

Richard Boyd Barrett

Question:

113. Deputy Richard Boyd Barrett asked the Minister for Finance if he will provide a detailed list of expenses which were considered to have been incurred, wholly and inclusively, for the purposes of trade by banks in which the State has a shareholding, and as such were set-off against tax; and if he will make a statement on the matter. [36194/13]

Written answers

Minister for Finance

For reasons of taxpayer confidentiality, the detailed information requested by the Deputy cannot be provided in relation to such a small group of taxpayers. The general rule in relation to deductions applicable to all businesses taxable under Cases I and II of Schedule D is set out in section 81 of the Taxes Consolidation Act 1997. This specifies that tax shall be charged without any deduction from profits other than that which is allowed by the Tax Acts, and only expenses which are wholly and exclusively incurred for the purposes of the trade are allowable.

Section 76A of the Taxes Consolidation Act 1997 requires that the profits of a trade carried on by a company be computed in accordance with generally accepted accounting practices, subject to adjustments required by law. (Such adjustments would include for example the disallowance of depreciation and calculation of capital allowances; disallowance of certain entertainment expenses etc.)

I would also refer the Deputy to the Annual Report and Financial Statements of the Banks which are published on their websites. The Financial Statements of the Banks, including the disclosure notes regarding taxation contained therein, have been audited by the external auditors.

Question No. 114 answered with Question No. 72.

Tax Yield

Questions (115)

Kevin Humphreys

Question:

115. Deputy Kevin Humphreys asked the Minister for Finance the yield to the Exchequer if universal social charge applied at 7% to all income above €16,016 by removing the reduced rate, and if he will provide a breakdown of this by exemption; and if he will make a statement on the matter. [36279/13]

Written answers

Minister for Finance

The estimated full year yield, estimated by reference to 2013 incomes, of increasing the reduced USC rate, currently 4%, to 7% for income earners aged 70 or over and or medical cardholders with income liable to USC between €16,016 to €60,000 would be of the order of €75 million. While income earners aged 70 or over are identifiable on tax records the identity of medical cardholders is not as complete or clear-cut. However, using the existing data on those aged 70 or over, and by making certain assumptions about medical cardholders, it is tentatively estimated that the proportion of the estimated yield from the change would originate from each group on approximately a 1:2 basis.

The basic calculations are derived from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. They are, therefore, provisional and likely to be revised.

Tax Yield

Questions (116)

Kevin Humphreys

Question:

116. Deputy Kevin Humphreys asked the Minister for Finance the yield to the Exchequer if universal social charge applied to contributory payments from the Department of Social Protection for all, and for those earning €60,000 or more, and if he will provide a breakdown of this by payment; and if he will make a statement on the matter. [36280/13]

Written answers

Minister for Finance

To estimate the potential yield from applying the USC to non-means tested State Pensions i.e. the contributory State Pension and the State Pension (Transition) it would be necessary to identify certain details in respect of each recipient of social protection payments such as the individual amount of these payments received, the amount of any other income potentially liable to USC, the age of each individual and whether there was an entitlement to a medical card etc. This information would be essential to determine what rate of USC would apply at an individual level. It is possible that in many cases the rate would be low. I am informed by the Revenue Commissioners that as they do hold or have access to the required information set out above, there is no basis on which an estimate of the yield from the change mentioned in the question could be compiled. However, by way of illustration, if for example, a 1 per cent levy was imposed on social protection contributory State Pensions and the State Pension (Transition) the full year yield to the Exchequer would be €41 million on the basis that the estimated provision for such payments in 2013 is approximately €4.1 billion. The estimate of Exchequer yield assumes that there is no exemption threshold, allowance or personal reliefs that could be used to offset against the levy.

Tax Yield

Questions (117)

Kevin Humphreys

Question:

117. Deputy Kevin Humphreys asked the Minister for Finance the yield to the Exchequer if mortgage interest relief was capped up to an earnings limit of €80,000 or €100,000, respectively; and if he will make a statement on the matter. [36281/13]

Written answers

Minister for Finance

I assume that the Deputy is referring to those with incomes above €80,000, or €100,000, who would no longer qualify for mortgage interest relief under this proposal. I am advised by the Revenue Commissioners that based on associating incomes and mortgage interest data for 2010, and applying derived ratios to the estimated cost of mortgage interest for 2012, the full year yield to the Exchequer of restricting mortgage interest relief as suggested, regardless of whether the qualifying loans were taken out by single individuals or couples is tentatively estimated to be of the order of €60 million and €30 million respectively.

Tax Yield

Questions (118)

Kevin Humphreys

Question:

118. Deputy Kevin Humphreys asked the Minister for Finance the yield to the Exchequer if the first €500 of mortgage interest was disallowed for relief; and if he will make a statement on the matter. [36282/13]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that based on detailed data identifying individual claims for mortgage interest tax relief for 2011, the most recent year available in respect of such data, and extending the conclusions drawn from it into 2013 terms, the full year yield to the Exchequer if the first €500 of mortgage interest was disallowed for relief is tentatively estimated to be of the order of €50 million.

Tax Yield

Questions (119)

Kevin Humphreys

Question:

119. Deputy Kevin Humphreys asked the Minister for Finance the yield to the Exchequer if the first €200 of health expenses was disallowed for relief; and if he will make a statement on the matter. [36283/13]

Written answers

Minister for Finance

Unfortunately, it was not possible to collate the information required for this answer in the time allowed. I will provide the Deputy with the answer in writing shortly.

Property Taxation Data

Questions (120)

Kevin Humphreys

Question:

120. Deputy Kevin Humphreys asked the Minister for Finance the current compliance rate for the local property tax; and if he will make a statement on the matter. [36284/13]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that in excess of 1.56 million Local Property Tax (LPT) Returns were filed up to the end of June 2013 and approximately €126.5m had been transferred by Revenue to the Exchequer. I am further advised that returns are still being submitted by property owners and the number filed is now 1.57 million. In addition, arrangements are well progressed for local authorities and social housing bodies to file Returns for approximately 160,000 residential properties that they own.

Work on the LPT Register will continue for some time to determine the precise number of residential properties in the State. For that reason, it is not possible to provide an accurate compliance rate. However, Revenue’s working assumption is that approximately 1.95 million residential properties are liable for LPT and, on that basis, the compliance rate is almost 89%.

State Banking Sector Regulation

Questions (121, 166)

Catherine Murphy

Question:

121. Deputy Catherine Murphy asked the Minister for Finance when he will conduct comprehensive stress tests of covered institutions; and if he will make a statement on the matter. [36300/13]

Michael McGrath

Question:

166. Deputy Michael McGrath asked the Minister for Finance if he will provide details of the next stress tests to be undertaken in respect of the State supported banks; and if he will make a statement on the matter. [36674/13]

Written answers

Minister for Finance (Deputy Michael Noonan)

I propose to take Questions Nos. 121 and 166 together.

As stated in the programme documents that were published following the April 2013 Troika mission a stress test of the covered institutions will be conducted in accordance with the new EU methodology, ahead of and in close proximity to the upcoming Single Supervisory Mechanism (SSM) exercise.

The intention is to ensure that appropriate preparations are made early so that the Irish banks are in the strongest possible position to achieve the key goal for Ireland of a smooth entry into the SSM in 2014.

Consequently the Irish authorities have agreed with the Troika that detailed preparatory work required for the stress test will be completed in 2013. The Irish authorities, in consultation with the Troika, will conduct a series of diagnostics to provide greater clarity regarding the underlying quality of banks’ balance sheets. A key element will be a comprehensive Balance Sheet Assessment to be finalised by end-November 2013.

NAMA Loan Book

Questions (122)

Michael McGrath

Question:

122. Deputy Michael McGrath asked the Minister for Finance his views on the continuing fall in the proportion of National Asset Management Agency loans that are performing; and if he will make a statement on the matter. [36342/13]

Written answers

Minister for Finance

One of NAMA’s key objectives is to manage its assets so as to optimise, and capture for debt servicing, their income producing potential, for example, rental income. The capturing of such non-disposal income was not a common feature prior to NAMA’s acquisition of the loans and NAMA has undertaken significant steps to design and implement new structures so as to achieve this objective. NAMA measures its performance on the extent to which it captures such non-disposal income on an on-going basis and not wholly on the extent to which a debtor is in compliance with the terms of legacy loan facility arrangements which predated NAMA. Despite NAMA selling over €8 billion of assets to date it has maintained its weighted average cash flow loan performance at a stable level each quarter at over 30%. The Deputy may wish to refer to the NAMA Quarterly (Section 55) Report and Accounts for Quarter 1 2013, which were laid before the Houses of the Oireachtas yesterday and which contain further detail on the performance of loans. The Section 55 Report and Accounts show a weighted average cash flow loan performance of 32%. The Section 55 Report and Accounts show also that NAMA had generated cash receipts of €11.2bn since inception to end-March 2013, of which €7.2bn related to disposal activity and €4bn to non-disposal and other income, mainly rental income. These results are the most important measure of NAMA’s performance and show the significant progress that it has made in its just over three years in existence.

EU-IMF Programme of Support Drawdowns

Questions (123)

Michael McGrath

Question:

123. Deputy Michael McGrath asked the Minister for Finance the number of loans drawn down to date under Ireland's EU-IMF programme; and if he will make a statement on the matter. [36343/13]

Written answers

Minister for Finance

Ireland’s EU/IMF Programme will result in €67.5 billion in loans from official lenders as follows:

- EFSF (€17.7 billion)

- EFSM (€22.5 billion)

- IMF (€22.5 billion) and

- Bilateral loans of €4.8 billion (United Kingdom: €3.8 billion, Kingdom of Sweden: €0.6 billion and Kingdom of Denmark: €0.4 billion).

The IMF borrowings are provided under its Extended Fund Facility standard terms. Each of the loans from the EFSF, EFSM, United Kingdom, Kingdom of Sweden and Kingdom of Denmark are governed by agreements, which are amended and updated as required.

The following table, which has been provided by the National Treasury Management Agency (NTMA) and is available on its website, shows the portions of the loans drawn down by Ireland under the EU/IMF Programme as of end June 2013 and which remains current as of today. In total, across the six external sources of funding, 42 portions have been disbursed to date, counting two which were split as a result of EFSF maturity extensions.

Liabilities outstanding at end June 2013 under the EU/IMF Financial Assistance Programme

Lender	Nominal Loan Amount¹	Date of Draw Down	Maturity Date	Term from Date of Drawdown
European Financial Stabilisation Mechanism (EFSM)4	EUR 5.00 billion	12-Jan-11	04-Dec-15	4.9 yrs
	EUR 3.40 billion	24-Mar-11	04-Apr-18	7.0 yrs
	EUR 3.00 billion	31-May-11	04-Jun-21	10.0 yrs
	EUR 2.00 billion	29-Sep-11	04-Sep-26	14.9 yrs
	EUR 0.50 billion	06-Oct-11	04-Oct-18	7.0 yrs
	EUR 1.50 billion	16-Jan-12	04-Apr-42	30.2 yrs
	EUR 3.00 billion	05-Mar-12	04-Apr-32	20.1 yrs
	EUR 2.30 billion	03-Jul-12	04-Apr-28	15.8 yrs
	EUR 1.00 billion	30-Oct-12	04-Nov-27	15.0 yrs
EFSM EUR Equivalent Total	€21.70 billion			12.4 yrs weighted average life
European Financial Stability Facility (EFSF)³	EUR 2.19 billion	01-Feb-11	01-Aug-32	21.5 yrs
	EUR 2.00 billion	01-Feb-11	01-Feb-33	22.0 yrs
	EUR 2.10 billion	14-Nov-11	25-Jul-31	19.7 yrs
	EUR 0.90 billion	14-Nov-11	01-Aug-30	18.7 yrs
	EUR 1.27 billion	12-Jan-12	01-Aug-29	17.6 yrs
	EUR 2.80 billion	03-Apr-12	01-Aug-31	19.3 yrs
	EUR 0.48 billion	19-Jul-12	01-Jul-34	22.0 yrs
	EUR 1.00 billion	23-Aug-12	01-Aug-30	18.0 yrs
	EUR 0.80 billion	02-May-13	01-Aug-29	16.3 yrs
	EUR 1.60 billion	18-Jun-13	15-Nov-42	29.4 yrs
EFSF EUR Equivalent Total	€15.14 billion			20.8 yrs weighted average life
United Kingdom Bilateral Loan	GBP 0.40 billion	14-Oct-11	15-Apr-19	7.5 yrs
	GBP 0.40 billion	30-Jan-12	30-Jul-19	7.5 yrs
	GBP 0.40 billion	28-Mar-12	28-Sep-19	7.5 yrs
	GBP 0.40 billion	01-Aug-12	03-Feb-20	7.5 yrs
	GBP 0.40 billion	19-Oct-12	19-Apr-20	7.5 yrs
	GBP 0.40 billion	06-Mar-13	07-Sep-20	7.5 yrs
	GBP 0.40 billion	06-Jun-13	06-Dec-20	7.5 yrs
UK GBP Total	GBP 2.82 billion
UK EUR Equivalent Total	€3.39 billion			7.5 yrs weighted average life
Sweden Bilateral Loan	EUR 0.15 billion	15-Jun-12	15-Dec-19	7.5 yrs
	EUR 0.15 billion	01-Nov-12	01-May-20	7.5 yrs
	EUR 0.15 billion	07-Jun-13	07-Dec-20	7.5 yrs
Sweden EUR Equivalent Total	€0.45 billion			7.5 yrs weighted average life
Denmark Bilateral Loan	EUR 0.10 billion	30-Mar-12	30-Sep-19	7.5 yrs
	EUR 0.10 billion	01-Nov-12	01-May-20	7.5 yrs
	EUR 0.10 billion	04-Jun-13	04-Dec-20	7.5 yrs
Denmark EUR Equivalent Total	€0.30 billion			7.5 yrs weighted average life
International Monetary Fund			Amortising:	4.5 -10 yrs
	SDR 5.01 billion	18-Jan-11	18 Jul 2015 - 18 Jan 2021
	SDR 1.41 billion	18-May-11	18 Nov 2015 - 18 May 2021
	SDR 1.32 billion	07-Sep-11	07 Mar 2016 - 07 Sep 2021
	SDR 3.31 billion	16-Dec-11	16 Jun 2016 - 16 Dec 2021
	SDR 2.79 billion	29-Feb-12	31 Aug 2016 - 28 Feb 2022
	SDR 1.19 billion	15-Jun-12	15 Dec 2016 - 15 Jun 2022
	SDR 0.76 billion	28-Sep-12	28 Mar 2017 - 28 Sep 2022
	SDR 0.76 billion	20-Dec-12	20 Jun 2017 - 20 Dec 2022
	SDR 0.83 billion	27-Mar-13	27 Sep 2017 - 27 Mar 2023
	SDR 0.83 billion	27-Jun-13	27 Dec 2017 - 27 Jun 2023
IMF SDR Total²	SDR 18.21 billion
IMF EUR Equivalent Total	€21.11 billion			7.5 yrs weighted average life
Overall EUR Equivalent Total	€62.09 billion			12.44 yrs weighted average life

Notes :

Rounding can affect totals.

¹ Euro equivalents are translated at the reporting date exchange rates, taking account of the effect of currency hedging transactions. The net euro amount received by the Exchequer was €61.4 billion after adjustment for below par issuance, deduction of a prepaid margin, and the effect of foreign exchange transactions.

² IMF loans are denominated in Special Drawing Rights (SDRs), an international reserve asset which is composed of a basket of currencies consisting of the euro, Japanese yen, pound sterling and U.S. dollar.

³ The EFSF loans reflect the maturity extensions finalised in June 2013.

4 EFSM loans are subject to a seven year extension that will bring their weighted average maturity from 12.5 years to 19.5  years.  It is not expected that Ireland will have to re-finance any of its EFSM loans before 2027. However the revised maturity dates of individual EFSM loans will only be determined as they approach their original maturity dates. Accordingly the EFSM loan maturity extensions are not reflected in the table above. It is possible that individual EFSM loans will be extended more than once in order to achieve the objective of increasing the weighted average maturity to 19.5 years.

National Treasury Management Agency Issues

Questions (124)

Michael McGrath

Question:

124. Deputy Michael McGrath asked the Minister for Finance the amount of cash on hand held by the National Treasury Management Agency; and if he will make a statement on the matter. [36344/13]

Written answers

Minister for Finance

I am informed by the National Treasury Management Agency (NTMA) that the Exchequer had €26.2 billion on hand in cash and deposits at end-June 2013. It is important that the Exchequer should maintain a sufficiently strong cash position when the EU/IMF Programme comes to a conclusion at the end of the year, for reasons of prudence and to assure investors that they will be repaid upon redemption. The State is now well positioned to have 12 to 15 months of advance funding in place by that time.

Departmental Correspondence

Questions (125)

Michael McGrath

Question:

125. Deputy Michael McGrath asked the Minister for Finance if he has any plans to publish correspondence in the autumn of 2010, between his Department and the ECB, that dealt with the question of the then Irish Government's efforts to impose losses on senior bondholders; and if he will make a statement on the matter. [36345/13]

Written answers

Minister for Finance

The position on this remains that which I outlined to the Deputy in my reply to his similar Question (No 155) of 28th June 2011.

While the immediate crisis that this Government inherited when it took office has been averted, it remains important for relationships between institutions to be developed and sustained, in order to allow for confidential negotiations to take place, especially on particularly sensitive issues. This is particularly the case in relation to the Irish authorities dealing with the ECB. It is normal practice for states to protect the confidentiality of these discussions, and in fact is usually enshrined in the rules of association of institutions.

Indeed, this is reflected in the Freedom of Information Act, which provides for exemptions for records relating to, for example, information received in confidence, commercially sensitive information and the financial and economic interests of the state in sections 24, 26 and 31. These factors counterbalance the public interest, protecting the ability of the Government when negotiating or deliberating on matters of national importance. It is considered that release of the correspondence sought would impact on the integrity and viability of the decision-making process to a significant degree without a countervailing benefit to the public, and would prejudice our relationship with the ECB.