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Pensions Levy Issues

Dáil Éireann Debate, Tuesday - 8 October 2013

Tuesday, 8 October 2013

Questions (169)

Terence Flanagan

Question:

169. Deputy Terence Flanagan asked the Minister for Finance if he will address concerns raised by a person (details supplied) in Dublin 13 regarding pension levy funds; and if he will make a statement on the matter. [42109/13]

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Written answers

The Jobs Initiative announced in 2011 included a range of revenue and expenditure measures to support the protection of existing jobs and the creation of new ones. The key measures, as announced, are set out in the following table.

-

2011 (€m)

2012 (€m)

2013 (€m)

2014 (€m)

Total

Revenue

Air Travel Tax

-15

-90

-105

-105

-315

VAT

-120

-350

-350

-60

-880

PRSI

-95

-208

-201

-33

-536

Pension Funds Levy

+470

+470

+470

+470

+1,880

Expenditure (Additional)

-40

-30

-30

-30

-130

Net Benefit (+) / Loss (-)

+201

-208

-216

+242

+19

Rounding may affect totals

It should be noted that the proposed suspension of the Air Travel Tax, at an estimated cost of €15 million in 2011, €90 million in 2012 and €105 million in a full year, was conditional on the airlines increasing passenger numbers by restoring previously cancelled routes and by creating new routes. Negotiations with the airlines were not successful and the Minister for Transport Tourism and Sport, Mr Leo Varadkar T.D., advised against reducing the Air Travel Tax to zero.

The impact of the Jobs initiative can be seen by the increase in employment levels, particularly in the accommodation and food services sector. A policy paper, published with the November 2012 Medium Term Fiscal Statement, found that the 9% reduced VAT rate appeared to have the desired impact both in terms of price pass through and by contributing to employment gains, with an additional 3,000 jobs in quarter 1 2012 relative to quarter 2 2011 in the labour intensive food and accommodations services sector of the economy. Further to this, the CSO website shows a 13% increase in employment from June 2011 to June 2013 in the food and accommodations services sector.

The Jobs Initiative also included a number of current and capital expenditure measures, among which there are a number of measures aimed at retraining the workforce. While the details of the expenditure on these measures are a matter for my colleague the Minister for Public Expenditure and Reform, Brendan Howlin T.D., I would ask the Deputy to note that, my colleague the Minister for Social Protection, Joan Burton T.D., with responsibility for JobBridge, the National Internship scheme, recently announced that the number of internships, originally planned at 5,000 has now exceeded 20,000. Indecon Economic Consultants undertook an evaluation of the JobBridge scheme in 2012 (published in April 2013) and their report found that 61.4% of the JobBridge survey respondents were in employment within 5 months of finishing their internships.

Under education measures, the Springboard scheme as announced in the Jobs Initiative had initially provided for 5,900 places. During 2011 and 2012, over 10,000 people enrolled on programmes under the Springboard scheme. The scheme has been extended further with my colleague, the Minister for Education and Skills, Ruairí Quinn T.D. announcing in June this year, another 6,000 places under the third Springboard allocation. Further rollouts of the springboard scheme will be considered in the context of the findings of an on-going evaluation.

A temporary 0.6% stamp duty levy on pension fund assets was introduced in the Finance (No. 2) Act 2011 as a measure to fund the Jobs Initiative. This was estimated to yield €470 million a year for 4 years. The Revenue Commissioners have advised me that receipts amounted to €463 million in 2011 and €483 million in 2012. This is broadly in line with the amounts anticipated to be collected in those years. €517 million was collected in 2013 to date, due to an increase in the capital value of pension funds. The forecast for 2014 will be set out in the Budget next week.

Finally, with regard to concerns that the monies raised from the Pension Levy will be used for other purposes, I wish to advise the Deputy that it will only be when the levy has ended and the accompanying expenditure and revenue measures have also ceased that it will be possible to analyse the situation. At any given point before then, it would not be surprising if the income and expenditure did not match.

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