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Thursday, 19 Sep 2013

Written Answers Nos. 54-61

Bank Liquidation Issues

Questions (54)

Kevin Humphreys

Question:

54. Deputy Kevin Humphreys asked the Minister for Finance the amount of working capital the special liquidator of the Irish Bank Resolution Corporation has advanced to date to companies with outstanding loans; and if he will make a statement on the matter. [38900/13]

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Written answers

Decisions around the advance of working capital are a commercial matter for the Special Liquidators of IBRC and neither I nor my officials have any role in those decisions. I am advised by the Special Liquidators that they are unable to provide this information as they believe it to be commercially sensitive. However the Special Liquidators have confirmed that working capital is only advanced where it is necessary to protect, maintain or enhance the value of the loans and the related assets of IBRC.

VAT Rates Reductions

Questions (55)

Andrew Doyle

Question:

55. Deputy Andrew Doyle asked the Minister for Finance the cost and loss to the Exchequer to date as a result of lowering the rate to 9% on tourism related industries; the economic growth has been seen in this sector as a result of the VAT rate being reduced in 2011; if the lowered VAT rate has had the positive impact that his Department had expected; his views on whether there is merit to continuing on the 9% rate for this sector beyond its initial cut-off point in December 2013; and if he will make a statement on the matter. [38921/13]

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Written answers

The 9% reduced VAT rate for tourism related services was introduced in July 2011 as part of the Government Jobs Initiative. The measure was designed to boost tourism and create additional jobs in that sector. The measure was estimated to cost €120 million in 2011, €350 million in 2012, €350 million in 2013, and €60 million in 2014. As the rate was introduced for a defined period, failure to revert the 9% rate to 13.5% would give rise to an annual Budget shortfall of €350m from 2014. With regard to the economic impact on the tourism sector due to the introduction of the 9% VAT rate, the most recent data available from the CSO of economic growth broken down by sector relates to the year 2009 so I am unable to provide analysis in relation to 2011. Expenditure by overseas travellers to Ireland recorded an increase of 0.6% in 2012 compared with 2011. In addition, Q1 2013 recorded an increase in expenditure of 12% compared with the same period last year. There is a clear impact in terms of employment in the accommodation and food service sector which has increased by over 13% between the period Q2 2011 to Q2 2013 – an increase of 15,000 jobs in the sector. In terms of numbers of trips to Ireland, for the period May to July, the number of trips increased by 7.6% on the same period last year, while for the period January to July, the number of trips to Ireland increased by 6.0%.

In line with best international practice the 9% VAT rate was introduced as a temporary measure and is due to expire at end December 2013, at which point it will revert to 13.5%. Retaining the 9% rate would be very costly to the Exchequer and would require an increase in taxation or reduction in expenditure elsewhere. Any proposal to maintain the 9% VAT rate will be considered in the context of the Budget.

VAT Rates Reductions

Questions (56)

Andrew Doyle

Question:

56. Deputy Andrew Doyle asked the Minister for Finance his views on whether the reduction of VAT to 9% on tourism related industries could be extended to other sectors of the economy on a trial basis; his views on whether this would have a positive impact of Ireland's road to economic recovery; and if he will make a statement on the matter. [38922/13]

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Written answers

The 9% reduced VAT rate for tourism related services was introduced in July 2011 as part of the Government Jobs Initiative. The measure was designed to boost tourism and create additional jobs in that sector. In line with best international practice it was introduced as a temporary measure and is due to expire at end December 2013, at which point it will revert to 13.5%. Retaining the 9% rate, or extending the rate to other goods and services would be very costly to the Exchequer and would require an increase in taxation or reduction in expenditure elsewhere.

Any proposal to maintain or extend the 9% VAT rate will be considered in the context of the Budget.

VAT Rate Application

Questions (57)

Thomas P. Broughan

Question:

57. Deputy Thomas P. Broughan asked the Minister for Finance his plans to change the point at which VAT is charged on older investment properties which are purchased, renovated and resold in order that the vendor would be liable to charge VAT on profit generated from the sale of a refurbished property rather than on the total sales consideration received in order to encourage the renovation and redevelopment of old vacant properties, particularly in urban areas. [38928/13]

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Written answers

I am advised by the Revenue Commissioners that under the EU VAT Directive (Council Directive 2006/112/EC), VAT on taxable sales of property must be applied to the full consideration. Specifically, Article 73 of the Directive provides that the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply. Irish VAT legislation must comply with the EU VAT Directive and therefore there is no scope to reduce the taxable amount to which VAT applies in the circumstances described by the Deputy. Where the vendor of a refurbished property makes a taxable sale of the property, the VAT on input costs incurred in the refurbishment of the property is deductible. Where the vendor makes an exempt sale of the property, no input VAT is deductible and no VAT liability arises. The rules that govern whether a property sale is taxable or exempt are contained in Section 94 of the VAT Consolidation Act 2010 and are described in the VAT on Property and Construction section on the Revenue website.

Banks Recapitalisation

Questions (58)

Patrick Nulty

Question:

58. Deputy Patrick Nulty asked the Minister for Finance the amount of funding each Irish bank, which received taxpayer support, has received for the specific purpose of dealing with distressed family home mortgages; the amount of that allocated funding that has been used to help distressed family home mortgage holders; and if he will make a statement on the matter. [38950/13]

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Written answers

In early 2011, as part of the agreement with the External Partners, the Central Bank commissioned a detailed and data-driven evaluation of the possible loan losses that would be incurred by the banks in a severe, but not utterly implausible, stress scenario. All the loan books were examined, including the residential mortgage books in Ireland and the UK, taking into account projections in arrears, house prices etc. The results of this work were key inputs into the capital requirements identified in PCAR 2011, which totalled €24bn. Total losses modelled under the stress scenario on Irish mortgages were €9bn. This comprised €2bn at BOI, €4.4bn at AIB/EBS and €2.6bn at ptsb. However, in the analysis, there was never any specific provision made for the purpose of providing debt relief for distressed family home mortgages. Further details can be found at

http://www.centralbank.ie/regulation/industry-sectors/credit-institutions/Documents/The%20Financial%20Measures%20Programme%20Report.pdf

Tax Reliefs Availability

Questions (59)

Michael Healy-Rae

Question:

59. Deputy Michael Healy-Rae asked the Minister for Finance if he will ensure that the present 90% agriculture relief to inheritance tax is retained; and if he will make a statement on the matter. [38955/13]

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Written answers

I assume that the Deputy’s question relates to Capital Acquisitions Tax (CAT) agricultural relief. Preparations for Budget 2014 and the consequent Finance Bill are ongoing. It would not be appropriate for me to comment on what changes, if any, are being considered in this relief or any other tax relief. I will, however, bear in mind the Deputy’s concerns in this matter.

Carbon Tax Collection

Questions (60)

Brendan Smith

Question:

60. Deputy Brendan Smith asked the Minister for Finance the arrangements in place for the collection of carbon tax on solid fuel products; if his attention has been drawn to widespread concern among traders, particularly in the Border counties, about the need for traders to pay the carbon tax at the time of purchasing the product rather than at the time of sale; if his attention has been drawn to the fact that such an arrangement is placing additional financial pressures on such traders; the proposals he has to change the method of collection of this tax; and if he will make a statement on the matter. [38971/13]

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Written answers

Under the Finance Act 2010, solid fuel carbon tax is charged on all solid fuels supplied in the State, regardless of whether the fuel products are Irish made or imported. The tax is an excise duty and, as with most other excise duties, the liability arises at the earliest point in the supply chain following importation or manufacture in the State. Suppliers, whether importers or manufacturers, become liable for the tax at the time they make the first supply of the solid fuel to traders, or directly to the public, and are obliged to make a return and pay the solid fuel carbon tax to Revenue within one month of the end of each two-month accounting period. This arrangement reduces the number of traders obliged to make returns and accordingly, limits the overall administrative burden of the tax on the fuel trade and on Revenue. Northern Ireland based suppliers of solid fuels who are selling direct to households in the State, are obliged to register as suppliers with Revenue for solid fuel carbon tax purposes and comply with the same regulatory requirements as suppliers based in the State. Where a Northern Ireland based supplier sells solid fuel to a supplier based in the State, the State-based supplier is liable for the tax when he/she supplies the solid fuel to his/her customers.

All supplies of solid fuels must comply with the Air Pollution Act, (Marketing, Sale, Distribution and Burning of Specified Fuels) Regulations 2012 (S.I. No. 326 of 2012), made by the Minister for the Environment, Community and Local Government. These regulations specify the standards for coal placed on the market and the obligations on suppliers in relation to the distribution and sale of coal in the State, including registration with the Environmental Protection Agency and compliance with fuel quality and packaging standards. These Regulations are enforced by the Local Authorities.

I am satisfied that the present arrangements for collecting the solid fuel carbon tax are reasonable and I have no plans to change them.

Tax Exemptions

Questions (61)

Maureen O'Sullivan

Question:

61. Deputy Maureen O'Sullivan asked the Minister for Finance the reason tax exemption continues to be granted to fox/hare hunting groups and shooting clubs; the way they are classified under section 235 of the Taxes and Consolidation Act 1997 as bodies established for promotion of athletic or amateur games or sports; and if he will make a statement on the matter. [39031/13]

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Written answers

Section 235 of the Taxes Consolidation Act 1997 provides an exemption from tax for sporting bodies. Two categories of sporting bodies are covered by the exemption:

- Bodies established, and existing for, the sole purpose of promoting an athletic game or an athletic sport, and

- Bodies established, and existing for, the sole purpose of promoting an amateur game or an amateur sport.

As the legislation does not define what is meant by the term “sport”, it has to be given its ordinary meaning. In that context, it has been regarded as including pastimes collectively undertaken for recreation purposes provided such activities are legal and considered by convention and custom to be sporting activities. These include field sports such as hunting, shooting and fishing.

In the circumstances, bodies engaged in the promotion of such activities are entitled to a tax exemption under the legislation provided they meet all the other relevant criteria.

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