Tax Collection Forecasts

Questions (124)

Michael McGrath

Question:

124. Deputy Michael McGrath asked the Minister for Finance the yield that would be achieved from abolishing rent relief from 1 January 2014; and if he will make a statement on the matter. [41363/13]

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Written answers (Question to Finance)

Section 473 of the Taxes Consolidation Act 1997 provides tax relief at the standard rate to individuals who pay for private rented accommodation that is used as their sole or main residence. The level of rent qualifying for rent relief depends on an individual’s marital status and age. In Budget 2011, it was announced that rent relief was being withdrawn on a phased basis. No new claimants were allowed from 7 December 2010 but existing claimants will continue to receive the relief, on a reducing basis, with a complete cessation of the relief from 2018. This is in line with the schedule proposed for the withdrawal of mortgage interest relief. The scheduled withdrawal of rent relief is set out in the following table:

Tax Year

Reduction %

2011

20%

2012

20%

2013

10%

2014

10%

2015

10%

2016

10%

2017

10%

2018

10% to 0%

It is assumed that the deputy has in mind the abolition of the remaining 50% of the relief with immediate effect from 1 January 2014. On that basis a residual saving to the Exchequer of €42 million would arise in respect of 2014, based on the 2011 costs of the scheme, the latest year for which historical data are available. That amount would represent an estimated increase of €34m over the saving expected for 2014 under the original plan for phased reduction.

Tax Collection Forecasts

Questions (125)

Michael McGrath

Question:

125. Deputy Michael McGrath asked the Minister for Finance the yield that would be achieved from applying a 20% levy to the profits in Ireland of tobacco companies in order to fund smoking related health measures; and if he will make a statement on the matter. [41364/13]

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Written answers (Question to Finance)

I assume the Deputy is referring to the proposal to introduce a price cap on the pre-tax price of tobacco as proposed by the Irish Cancer Society and the Irish Heart Foundation in their pre-Budget submission. Preliminary advice on this suggests that any proposal to interfere with the ability of manufacturers to set the maximum price level for tobacco is a breach of Council Directive 2011/64/EU on the structure and rates of excise duty applied to manufactured tobacco.

VAT Rate Reductions

Questions (126)

Tom Fleming

Question:

126. Deputy Tom Fleming asked the Minister for Finance in view of the decision to reduce the VAT rate from 13% to 9% and the significance of this reduction to the tourism sector in County Kerry and throughout the country and the very positive implications it has had on the industry in creating and maintaining jobs and giving value for money, if he will support the calls to keep the VAT rate at 9% and ensure that Ireland has a strong and competitive tourism industry going forward; and if he will make a statement on the matter. [41372/13]

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Written answers (Question to Finance)

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 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.

Tax Collection Forecasts

Questions (127)

Michael McGrath

Question:

127. Deputy Michael McGrath asked the Minister for Finance the yield from increasing betting duty to 1.25% and 1.5%, respectively, while also extending it to online bets; and if he will make a statement on the matter. [41373/13]

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Written answers (Question to Finance)

Based on a yield in 2012 of €27 million under the current betting duty regime, an increase in betting duty as set out by the Deputy would yield €33 million and €40 million respectively. With regard to the extension of betting duty to online bets, it was announced in Budget 2011 that the necessary arrangements are being made to ensure that bets placed on the internet by domestic punters are subject to the same level of betting duty as applies to high street betting shops. This will serve to broaden the tax base and increase betting duty receipts.

The Finance Act 2011 provides for the taxation of bets that remote bookmakers enter into with persons in the State. This means, for example, that a business which engages in online bookmaking and which accepts bets from people in this country will be liable for betting duty on those bets, irrespective of where that business is based. The existing betting duty (1%) will be applied to such bets. The Finance Act also provides for the taxation of Betting Exchanges under the new arrangements; however the calculation of the tax will take account of their particular business model, in other words a 15% tax on the commission charged. In addition, excise duties are being applied to the granting and renewal of remote bookmakers’ and remote betting intermediaries’ licences.

The Betting (Amendment) Bill, which was published in July, will establish the regulatory framework for these licences. The tax changes provided for in the Finance Act can only be implemented once the Betting (Amendment) Bill is enacted. It is estimated that the full year yield from the taxation of remote betting would be around €20 million at the current rate of 1%. An increase as set out by the Deputy would increase this to €25 million and €30 million respectively.

Social Insurance Rates

Questions (128)

Tom Fleming

Question:

128. Deputy Tom Fleming asked the Minister for Finance if he will provide favourable consideration to reducing employer PRSI as it will greatly assist in maintaining existing jobs and in creating thousands of new jobs throughout the country; and if he will make a statement on the matter. [41377/13]

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Written answers (Question to Finance)

It is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.

Budget 2014

Questions (129)

Stephen Donnelly

Question:

129. Deputy Stephen S. Donnelly asked the Minister for Finance the current working estimate of the quantum of new net budgetary measures that would be required in budget 2014 to meet the troika target of 5.1% of GDP for 2014, and to provide the workings of that calculation, for example, GDP of €174 billion, then 5.1% implies general Government deficit of no more than €8.9 billion, 2013 estimated GGD is €12.5 billion, so minimum correction of €3.6bn required; before any new budgetary measures, a reduction in general Government deficit of €2.8 billion is estimated €1.9 billion economic effects, €0.6 billion carryover from budget 2013, €0.4 billion due to Haddington Road, implying a minimum additional correction requirement of €0.8 billion from new budgetary changes in budget 2014; and if he will make a statement on the matter. [41491/13]

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Written answers (Question to Finance)

The budgetary and economic forecasts which will underpin the Budget are still a work in progress. I will not speculate on those figures at this stage. Budgetary forecasts will incorporate the impacts of the recently published Q2 Quarterly National Accounts and the September Exchequer returns. I would say to the Deputy that his nominal GDP forecast of €174.0bn and headline general government deficit of c. €8.9bn correspond with a deficit of 5.1% of GDP. These figures are consistent with those contained in April’s Stability Programme Update. However, I would stress that there has been quite a degree of data flow over recent months and these figures are quite dated.

In terms of carryover into 2014, I would refer the Deputy to a parliamentary question I answered on this during the summer, 36346/13, which stated that taxation provisions included in the Finance Act 2013 and the Finance (Local Property Tax) Act 2012 in relation to measures set out in Budget 2013 will result in an estimated carryover of around €300 million in 2014. There was also carryover from changes to PRSI in Budget 2013. Measures in relation to the maximum allowable pension fund at retirement to be introduced in 2014 were also announced in Budget 2013. A cross-Departmental Working Group of officials has been established to examine, among other things, the changes required to the existing arrangements governing the maximum allowable pension fund at retirement (the Standard Fund Threshold) and other potential alternative approaches for achieving the commitment. The Working Group has also sought views from various interested parties as part of the examination of options for delivering on the Budget commitment. This Working Group is also developing estimates of the likely yield from the changes. With regard to the impact of Haddington Road, this is a matter for the Minister for Public Expenditure & Reform.

As with previous Budgets, I will endeavour to strike a balance between bringing sustainability to the public finances while protecting to the greatest extent possible, both the economic recovery and the most vulnerable in society.

Consultancy Contracts Expenditure

Questions (130)

Billy Timmins

Question:

130. Deputy Billy Timmins asked the Minister for Finance the consultants, if any, he has contracted since 1 January 2013 to advise on the possible sale of any assets; the current situation; the advice given and the terms and cost of the contract; and if he will make a statement on the matter. [41544/13]

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Written answers (Question to Finance)

Where requested by Government, NewERA (a business unit in the National Treasury Management Agency (NTMA) is carrying out advisory and oversight roles in relation to the possible restructuring or disposal of commercial State company assets. NewERA’s role in these disposal processes is to assist and advise the relevant Government Departments in representing the Government’s financial interests in the context of asset disposals and to ensure that Government-agreed timelines and financial objectives are clearly communicated to the relevant parties. It is also the responsibility of NewERA to ensure that the Government Steering Group overseeing the transactions is kept fully informed of progress and developments with the goal of ensuring that the financial objectives of the process are achieved. In order to assist NewERA in its role, the NTMA (acting through its NewERA unit) have engaged three external consultants to provide advice in respect of various technical aspects of the proposed disposals of State assets, as set out in the following table:

Consultant

Possible Asset Sale

Nature of Advice

Details of Contract

Barclays Bank

Bord Gáis Energy

Financial advice - ongoing

Contract is between the NTMA and Barclays and was signed in October 2012. No payments have been made under this contract to date.

A & L Goodbody

Bord Gáis Energy

Legal advice - ongoing

Contract is between the NTMA and A&L Goodbody and was signed in January 2013. No payments have been made under this contract to date.

Lane Clark and Peacock (LCP)

Lottery Licence

Pensions advice - complete

Contract is between NTMA and LCP and was signed in August 2013. The cost of this advice was €3,750 plus VAT.

European Council Meetings

Questions (131)

Richard Boyd Barrett

Question:

131. Deputy Richard Boyd Barrett asked the Minister for Finance if he will be raising the issue of Ireland's debt burden at the October meeting of the European Council; and if he will make a statement on the matter. [40921/13]

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Written answers (Question to Finance)

The Taoiseach will represent Ireland at the European Council on 24/25 October 2013. The Council agenda includes the following subjects: digital economy, innovation and services; growth, competitiveness and jobs; and the economic and monetary union. These issues are of great importance to Ireland’s and Europe’s future growth prospects. While I will not be attending the Council, I can assure the Deputy that every suitable opportunity is taken to present Ireland’s case by all Ministers at the many international fora they attend while representing this country.

In this context I would point to a number of positive developments during the lifetime of this Government to date that will serve to alleviate our debt burden including the reduction of the interest rates on our EU programme borrowings, the extension of the maturities of our EFSF and EFSM loans and the replacement of the Promissory Notes issued to the Irish Bank Resolution Corporation (IBRC) with a series of longer term, non-amortising floating rate Government bonds. In addition, as you are aware the Euro-Area Heads of State or Government agreed on 29th June 2012 to break the vicious circle between banks and sovereigns, and that when a Single Supervisory Mechanism is in place involving the ECB, the European Stability Mechanism (ESM) could recapitalize banks directly. The Euro-Area Heads of State or Government confirmed this position and mandated EU Finance Ministers to prepare an operational framework by mid-2013.

A considerable amount of work has been undertaken at technical, senior official and Ministerial level on the ESM’s Direct Bank Recapitalisation Instrument (DBR). This work culminated in agreement on the main features of the operational framework for the ESM’s DBR Instrument at the June 20th Eurogroup meeting of Euro-Area Finance Ministers in Luxembourg.

We have succeeded in having specific provision for retrospective recapitalisation included in the framework, which states that “The potential retroactive application of the instrument should be decided on a case-by-case basis and by mutual agreement.” There is still a lot of negotiation to be done on this but the agreement now in place keeps the possibility to apply to the ESM for a retrospective direct recapitalisation of the Irish banks open for us, should we wish to avail of it.