Written Answers Nos. 160-177
160. Deputy Seán Conlan asked the Minister for Finance the average total benefit to the Exchequer of a construction worker going from the live register to paid employment, taking into account the social welfare savings and increased income tax generated; and if he will make a statement on the matter. [41986/13]
View answerIt is not possible to calculate an average benefit that would take account of all of the variables that apply in every case. However, I can put forward a specific example for the information of the Deputy. The calculations presented are based on a single individual who takes up employment at the average annual salary in the construction sector, i.e. €40,459 for 2013, based on the latest information available. Before taking up the employment, the individual was entitled to the full rate of Jobseekers Benefit/Allowance at €188 per week. No other secondary benefits, which the individual may have been entitled to, have been included for the purpose of these computations. Furthermore, it is assumed that the individual is not in receipt of a medical card and therefore does not benefit from the concessionary Universal Social Charge (USC) rate. The following tax credits have been included in the computation:
|
Tax Credit |
Amount |
|
PAYE tax credit |
€1,650 |
|
Personal tax credit: |
€1,650 |
|
Tax Liability 2013 |
- |
|
Earnings |
€40,459 |
|
USC |
(€2,151) |
|
PRSI |
(€1,618) |
|
Income Tax |
(€6,400) |
|
Total Deductions |
(€10,169) |
|
Net Pay |
€30,290 |
Additional tax revenues of €10,169 per annum (including Income Tax, USC and PRSI) would be generated over a full tax year in such a case. In addition, savings of €9,776 per annum would be achieved in relation to Jobseekers payments. Therefore, the total annual benefit to the Exchequer would be €19,945 in this specific example.
161. Deputy Maureen O'Sullivan asked the Minister for Finance further to Parliamentary Question No. 53 of 13 March 2013, if he will describe in detail the poverty traps mentioned in the programme for Government; and if he will make a statement on the matter. [41990/13]
View answer162. Deputy Maureen O'Sullivan asked the Minister for Finance in view of the fact that the universal social charge was introduced in budget 2011 to replace the income levy and health levy, the reason for both these levies and if this reason or purpose has changed with the amalgamation and change of name in budget 2011; and if he will make a statement on the matter. [41991/13]
View answerI propose to take Questions Nos. 161 and 162 together.
As I have stated previously in my reply to Parliamentary Question 53 (ref number 13227/13) of 5 March 2013, the Universal Social Charge (USC) was introduced in Budget 2011 to replace the Income Levy and Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and raise revenue to reduce the budget deficit. The Health Levy was introduced in the Health Contributions Act, 1979 and was payable on all reckonable income and subject to certain exemptions. The Health Levy was collected along with PRSI contributions by the Revenue Commissioners. Under the legislation, it was paid into the Social Insurance Fund and transferred from there to the Minister for Health, where it was appropriated to the Health Vote as an appropriation-in-aid.
The Income Levy was introduced along with a suite of revenue raising measures in Budget 2009 in response to the economic downturn and in order to assist in stabilising the Exchequer finances. Payment of the Health Levy and the Income Levy did not confer any entitlement or specific benefits to an individual. However, individuals in general do benefit from the services provided by the State. Likewise, individuals that are subject to the USC charge do not accumulate entitlements or specific benefits.
The poverty traps under the Income Levy and Health Levy systems were related to the annual exemption thresholds that applied of €15,028 and €26,000 respectively. These thresholds meant that if an individual’s income was below the relevant exemption threshold they were not subject to charge. However, as soon as an exemption threshold was exceeded, the charge was due on all income, not just the income in excess of the exemption threshold.
The Health Levy was payable at 4% on an individual’s entire income including the portion below the threshold. Thus, what is often described as a “step effect” was experienced at income levels bordering the threshold. It led to circumstances where an increase in gross pay for a person with an income just below the threshold, resulted in a reduction in net take home pay, thereby creating a poverty trap. The step effect in the Health Levy system was very severe. A €1 increase in annual pay could lead to a net reduction of €20 in net pay per week or about €1,040 per annum.
The Income Levy was payable at 2% on an individual’s entire income including the portion below the threshold. Although, a less severe step effect than that experienced for the Health Levy, it still could result in cases where a €1 increase in annual pay could lead to a net reduction of just under €6 in net pay per week or about €300 per annum. The introduction of the USC has reduced the severity and number of step effects in the taxation system. Although, there is currently a step effect in the USC structure at €10,036 per annum, the income level at which one becomes liable for USC, the impact is lower. Furthermore, the Government increase to the exemption threshold for USC from €4,004 in 2011 to €10,036 per annum in 2012, acted to remove 330,000 from any liability to the USC.
163. Deputy Kevin Humphreys asked the Minister for Finance the yield in VAT for 2012 for each of the following products and services: graves 13.5%, coffins 23%, hearses 23%, mass cards 23%, wreaths from flower shop 23%, wreaths that are artificial 23%, headstone supply 23% and headstone supply and erection 23%; and if he will make a statement on the matter. [41995/13]
View answerI am informed by the Revenue Commissioners that it is not possible to furnish figures of the VAT take from the goods and services specified, as the information furnished on VAT returns does not require the yield from particular sectors of trade to be identified.
164. Deputy Patrick O'Donovan asked the Minister for Finance if he will confirm that pension entitlements for former employees of Permanent TSB will not be affected as part of the cost cutting measures aimed at reducing the costs by 10% at the bank; and if he will make a statement on the matter. [42010/13]
View answerAs the Deputy will appreciate the pension arrangements for staff and former staff of Permanent TSB are a matter for the management of that company and for the Trustees of the relevant pension schemes. The Deputy will be aware that Permanent TSB has chosen to cease contributions to its Defined Benefit pension schemes as part of measures to achieve 6-10% savings on remuneration costs. I have been informed by Permanent TSB that a wind-up of these schemes is underway. It would not be appropriate for me to comment on the implications for former employees of Permanent TSB arising from the wind-up of these Defined Benefit pension schemes. The Trustees of the schemes will inform all members (including former employees who are deferred members) of the schemes of their pension entitlements at the appropriate time.
165. Deputy Seán Conlan asked the Minister for Finance if he will provide in tabular form the total revenue generated on the rezoning of development land per year since the 80% tax rate was introduced; and if he will make a statement on the matter. [42024/13]
View answerI assume the Deputy is referring to the windfall gains provisions in sections 644AB and 649B Taxes Consolidation Act 1997, introduced by section 240 National Asset Management Agency Act 2009 and amended by section 25 Finance Act 2010, which apply an 80% rate of tax to the profits or gains from land disposals where those profits or gains are attributable to a relevant planning decision by a planning authority rather than to any value attributable to the work of the landowner. “Relevant planning decision” is defined in the provisions as meaning (i) a change in the zoning of land in a development plan or local area plan from non-development land-use, that is from agricultural, open space, recreational or amenity use or a mixture of such uses, to development land-use, that is to residential, commercial or industrial uses or a mixture of such uses, or from one development land-use to another, including a mixture of such uses, and (ii) a material contravention decision by a planning authority in relation to a development plan.
In the case of rezonings, the 80% rate applies where there is a disposal of land following its rezoning where that rezoning takes place on or after 30 October 2009 and in the case of material contravention decisions, the 80% rate applies where there is a disposal of land following a material contravention decision where that decision is made on or after 4 February 2010.
The 80% tax rate applies in respect of disposals by individuals or companies as part of their land dealing/developing trade or as the disposal of a capital item. It only applies to the part of the profits or gains that is attributable to the relevant planning decision. Any part of the profits or gains that is attributable to other factors, such as construction operations on the land or the expectation that the land would be rezoned, or benefit from a material contravention decision in the future (‘hope value’), continues to be taxed at the normal income tax, corporation tax or capital gains tax rates, as appropriate.
I am informed by the Revenue Commissioners that on the basis of the available details from corporation tax and income tax returns for 2009, 2010 and 2011, the latest year for which the necessary details are available, there is no record of any such profits or gains having been returned. However, the Commissioners have indicated that the existing database does not include details of capital gains returned via the CG1 tax return because these are not captured in electronic format and, consequently, that if windfall profits have been returned using this medium, it is not possible to centrally identify the relevant details.
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]
View answerThe 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.
170. Deputy Brendan Griffin asked the Minister for Finance his plans to change the eligibility criteria for retirement relief; and if he will make a statement on the matter. [42113/13]
View answerI assume that the Deputy’s question relates to Capital Gains Tax (CGT) retirement 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.
171. Deputy Catherine Murphy asked the Minister for Finance if any sum has been repaid from the Central Fund into the local government fund equivalent to moneys raised by Revenue through the local property tax to date in 2013; the amount of money; the date or dates on which it was paid; and if he will make a statement on the matter. [42120/13]
View answerThe Local Government Fund (LGF) is a special central fund which was established in 1999 under the Local Government Act 1998. It is financed by the full proceeds of motor tax and an Exchequer contribution. The Fund provides local authorities with the finance for general discretionary funding of their day-to-day activities and for non-national roads, and funding for certain local government initiatives. Receipts from the Local Property Tax received in 2013, which already total almost €200 million in the period to end-September, will remain in the Exchequer and will be used to meet the many expenditure obligations faced by the State.
However, Section 157 of the Finance (Local Property Tax) Act 2012, as amended, provides that, in each financial year commencing with 2014, the Minister shall pay from the Central Fund or the growing produce thereof into the Local Government Fund an amount equivalent to the Local Property Tax, including any interest paid thereon, paid into the Central Fund during that year. The budgeted funding of Local Government in 2013 took account of the projected amount available in the Local Government Fund excluding Local Property Tax receipts.
172. Deputy Michael McCarthy asked the Minister for Finance his views on introducing a new scrappage scheme to stimulate business in the motor industry; his view on the proposal of a group (details supplied) that such a scheme be based on a rebate on vehicle registration tax payable on a new car of €2,000 to encourage owners of cars six years old and older to trade in and trade up; his views on whether such a scheme would generate increased tax revenues and help to preserve jobs in the motor trade; and if he will make a statement on the matter. [42123/13]
View answerMy Department has received a pre-Budget submission from SIMI which includes, among other things, a proposal for a swappage scheme. All such proposals will be considered in the context of the forthcoming Budget.
173. Deputy Noel Grealish asked the Minister for Finance in regard to section 97(2) of the Taxes Consolidation Act 1997, if the stated deductible expense against rental income called payment of local authority rates covers local property tax in the case of rental properties; and if he will make a statement on the matter. [42170/13]
View answerI am advised by the Revenue Commissioners that Local Property Tax is not a deductible expense for income tax or corporation tax purposes. The Thornhill Group, the inter-departmental group chaired by Dr Don Thornhill established to consider the structures and modalities of a property tax, recommended that Local Property Tax (LPT) paid by the owner in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates. The Government has agreed in principle to accept this recommendation but has not considered the manner or the timing in which this will happen.
174. Deputy Noel Grealish asked the Minister for Finance if the general age limit for reaching the end of sustainable insolvency arrangements for a person is pegged at 70 years; if that is the case, his view regarding mortgages issued to persons which do not expire until their mid-70s or later, but which have fallen into arrears; and if he will make a statement on the matter. [42171/13]
View answerAs outlined in the Central Bank of Ireland’s Sustainable Mortgage Arrears Solution Guidelines; “An overall ceiling of 70 years of age will apply for the Central Bank to consider a term extension sustainable unless there is firm evidence that an older age limit can apply”. The Central Bank has informed me that this requirement does not prevent solutions being offered where it can be demonstrated that there is a clear rationale to extend payments beyond age 70. In general, however most borrowers can expect income levels to drop at retirement. In determining whether a proposal constitutes a sustainable solution, the Central Bank has informed me that the lender will need to evaluate both actual and prospective affordability for the distressed borrower, as well as the capital implications for the credit institutions in terms of their prudential responsibility to minimise losses.
While the Central Bank is not mandating any particular model of restructuring and while sustainable solutions will be arrived at on a case-by-case basis, there are some fundamental principles that must be respected. These include: An affordability assessment of the borrower based on both their current and prospective future servicing capacity for all borrowings; A realistic valuation of the borrower’s assets, in particular their property, and the use of an appropriate interest rate when discounting future income flows, which should take account of the lender’s cost of funds. The Central Bank has advised that its supervisory audit of compliance with these principles, to be completed in November, will assess compliance with these principles, including through analysis of a sample of modifications.
175. Deputy Noel Grealish asked the Minister for Finance if a code similar to the code of conduct on mortgage arrears should be part and parcel of addressing mortgage arrears in the buy-to-let sector which is responsible for housing one quarter of consumers; and if he will make a statement on the matter. [42172/13]
View answerAs the Deputy is aware, the buy-to-let sector encapsulates a wide range of property owners, from private investors with single properties, to those with multiple properties operating on a more professional basis. The Central Bank’s statutory Code of Conduct on Mortgage Arrears (CCMA) protects borrowers experiencing arrears in relation to their primary residence. The focus by Government is primarily on formulating and implementing appropriate measures to assist those homeowners who are experiencing genuine difficulty with the mortgage repayments on their principal home. In that regard, the ‘Keane Report’ made a number of key recommendations and the Government is now actively progressing the implementation of those recommendations. However, some of these initiatives will also be of assistance in addressing significant ‘buy to let’ mortgage arrears and over indebtedness. For example, the Central Bank’s performance targets for the main mortgage banks apply to the buy-to-let sector as well as principal dwelling homes.
The Mortgage Arrears Resolution Strategy process, overseen by the Central Bank, requires lenders to develop and implement appropriate resolution strategies and implementation plans for ‘buy to let’ mortgages as well as mortgages on the debtor’s primary home. The Central Bank has advised me that the Consumer Protection Code 2012 (the Code) contains protections for personal consumers who are experiencing arrears on loans, other than loans secured on a primary residence, including buy-to-let mortgages (a consumer being defined as a natural person acting outside his or her business, trade or profession). Such protections require lenders, inter alia, to provide information to borrowers and to seek to agree an approach that will assist borrowers in resolving their arrears situation. The Code also requires that the level of contact and communications from lenders, or any third party acting on its behalf, is proportionate and not excessive and imposes limits on the number of unsolicited communications which a lender can make in any month.
176. Deputy Paudie Coffey asked the Minister for Finance if he will provide the total number of pre-budget submissions, proposals or policies that have been received by his Department for costing by political parties, interest groups and individuals to date; and if he will make a statement on the matter. [42282/13]
View answerTo date I have received one request for costings from a political party and these have been completed and forwarded, I have also recently received one request from an individual Deputy and this is being examined by my officials. My Department provides this facility for political parties and I am prepared to extend it also to individual TDs also, however, we do not provide costings for interest groups or other individuals. So far I have received in excess of 500 Pre-Budget Submissions from a wide range of sources, these are recorded and distributed to the relevant officials for consideration in the context of Budget and Finance Bill preparation.
177. Deputy Kevin Humphreys asked the Minister for Finance the projected additional yield in a full year if capital acquisitions tax was increased from 33% to 35%, taking into account 2013 returns to date; and if he will make a statement on the matter. [42290/13]
View answerI am advised by the Revenue Commissioners that the estimated full year yield to the Exchequer from increasing the Capital Acquisitions Tax rate from 33% to 35 %, based on the expected outturn in 2014, could be in the region of €22 million, assuming no change in the existing thresholds. This estimate is provisional and subject to revision. It should be noted that this estimate is based upon an assumption that there would be no behavioural impact of this change, which could lead to a less than expected impact on Exchequer yield. In addition, the realization of any estimated yield from an increase in taxation on assets relating to property is subject to movements in the value of such assets, which are currently occurring in the economy.
