Budget Measures

Questions (78)

Colm Keaveney

Question:

78. Deputy Colm Keaveney asked the Minister for Finance in relation to the statement on page C 14 of budget 2014, €600 million of the budgetary adjustment comes from additional resources and savings elsewhere, adding all of these to the €1.85 billion in new policy measures outlined gives a total adjustment package of €3.1 billion in 2014; if he will clarify what the total budgetary adjustment is for 2014 and if different from the statement quoted, if he will provide an explanation for that difference; and if he will make a statement on the matter. [44910/13]

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Written answers (Question to Finance)

As I outlined in my budget day speech, in order to achieve a deficit of 4.8% of GDP, a total adjustment package of the region €3.1 billion was necessary. This comprised €2.5 billion in expenditure cuts and tax increases complemented with additional resources - other savings of €0.6 billion. A summary table of the adjustment package is outlined below.

Adjustment Package

€bn

Expenditure measures

1.6

Current expenditure measures

1.4

Increase in savings from Prior Year Measures

0.1

Capital expenditure measures

0.1

Taxation measures

0.9

Net new measures

0.4

Revenue carryover

0.5

Other

0.6

Total Adjustment Package

3.1

Additional detail on what encompasses the other elements of the adjustment package may also be useful. Firstly, the NTMA Budget debt service estimate for 2014 is lower than the corresponding April SPU estimate, of the order €0.2bn, due to an improvement in the interest rate environment generally and lower than previously planned bond issuance. Turning to the Central Bank income, during the summer, the Central Bank provided an estimate of the 2013 surplus income to be paid to the Central Fund in 2014 based on results to that date and projections for the remainder of the year. The Central Bank revised this estimate upwards by €0.1bn in September, in light of actual results for the first nine months and the consequent revisions of projections for the remaining three months of 2013.

In terms of savings from the Live Register, the numbers in work rose by 33,800 in the year to the second quarter of 2013 and the Live Register at the end of quarter 3 2013 was down by just over 20,000 when compared to the same period last year. On foot of this recovering labour market, live register savings have exceeded those previously expected of the order of €0.15bn. Finally, the remaining €0.15bn arises from a number of other factors mainly connected with state asset transactions.

Complementing tax and expenditure measures with additional resources and other savings, some of which may be once off, is consistent with the composition of previous adjustments published in the National Recovery Plan - Budget 2011 and the contribution of additional dividends outlined in Budget 2013.

Tax Credits

Questions (79)

Michael Creed

Question:

79. Deputy Michael Creed asked the Minister for Finance the numbers of persons currently in receipt of the one-parent family tax credit; if he proposes to make provision when introducing the new single-person child care tax credit from 1 January 2014 to apportion this tax credit proportionately and by agreement between both parents; and if he will make a statement on the matter. [44937/13]

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Written answers (Question to Finance)

I am advised by the Revenue Commissioners that for 2013, it is currently estimated that 76,800 individuals are in receipt of the One-Parent Family Tax Credit i.e. in a position to utilise some or all of tax credit. As the Deputy is aware, the One-Parent Family Tax Credit is being replaced with a new Single Person Child Carer Tax Credit from 1 January 2014. The Single Person Child Carer Tax Credit will be of the same value, i.e. €1,650, as the existing One-Parent Family Tax Credit and will also carry the same entitlement to the extended standard rate tax band of €36,800 per annum. The new credit will be targeted such that it is available only to the primary carer of the child. A maximum of one credit will be available per single carer/claimant, regardless of whether he or she cares for more than one child. This is the same condition that applies to the current One-Parent Family Tax Credit.

Allocation of child care responsibilities is primarily for parents to agree. Practical implementation issues are being considered as part of the Finance Bill process.

Budget Measures

Questions (80)

Pearse Doherty

Question:

80. Deputy Pearse Doherty asked the Minister for Finance the measures announced in budget 2014 or in any previous budgets pending EU approval under state aid regulations, and their value individually and in total. [45000/13]

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Written answers (Question to Finance)

I assume the Deputy is referring to measures where such approval has yet to be obtained. In my Budget 2013 speech I announced a scheme of accelerated capital allowances entitled "Incentives for certain aviation services facilities". This was provided for in section 31 of Finance Act 2013. This scheme provides accelerated capital allowances for the construction and refurbishment of certain specialist buildings and structures for use in the maintenance, repair, overhaul or dismantling of commercial aircraft. This is subject to approval from the European Commission. When this approval is received, the section will be commenced. The estimated cost: is €26 million over 6 years. The extension of the Employment and Investment Incentive from 2013 to 2020 was also announced in Budget 2013, pending the receipt of the necessary approval from the European Commission. The estimated cost is €135 million over 7 years.

The living city initiative, announced in Finance Bill 2013, is a pilot project which provides certain tax incentives to make it more attractive for people live in historic and culturally significant city centre houses. The initiative also offers incentives for retailers and small businesses in those areas. Budget 2014 extended the living city initiative to include residential properties constructed up to the end of 1914 in designated areas, and extended it to other cities – Cork, Galway, Kilkenny and Dublin. This initiative is subject to EU State aid approval and a commencement order. The estimated value is €20 million per year.

The Finance Act 2013 introduced new provisions to ensure that Film Relief tax reliefs will accrue to the producers rather than investors and result in tax savings for the Exchequer. Budget 2014 extended the definition of 'eligible individual' to include non-EU talent, in conjunction with the introduction of a withholding tax. It is intended to commence this provision once EU State Aid approval has been given. The estimated value is €15 million per year.

A CGT incentive is being introduced by Budget 2014 and Finance (No 2) Bill 2013 to encourage entrepreneurs (in particular "serial" entrepreneurs) to invest and re-invest in assets used in new productive trading activities. Commencement of this measure is subject to receipt of EU State Aid approval. The estimated cost is €20 million by 2018. The stamp duty exemption for transfers of shares in companies listed on the Enterprise Securities Market (ESM) of the Irish Stock Exchange, announced in Budget 2014, may require EU State Aid approval. The estimated cost of this measure is €5 million in a full year.

Living City Initiative

Questions (81, 83)

Paudie Coffey

Question:

81. Deputy Paudie Coffey asked the Minister for Finance the number of applications that have been made under the Living City initiative in counties Limerick and Waterford since its introduction in budget 2013; and if he will make a statement on the matter. [45052/13]

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Pearse Doherty

Question:

83. Deputy Pearse Doherty asked the Minister for Finance if the European Commission has approved the Living City initiative announced in budget 2013 and extended in budget 2014. [45087/13]

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Written answers (Question to Finance)

I propose to take Questions Nos. 81 and 83 together.

The living city Initiative was announced as part of Finance Bill 2013. I stated at the time that the proposed scheme would be subject to a full ex-ante cost benefit analysis and would require State aid approval from the European Commission. The cost benefit analysis was recently presented to my Department and has been published on the Department's website. On foot of the recommendations contained in this independent report, I made an announcement in my 2014 Budget Statement that I was proposing to extend the Initiative to include designated areas of four other cities. Certain other technical amendments would also be proposed in the forthcoming Finance Bill.

Following the receipt of the report, an application for EU State Aid approval will be submitted shortly to the European Commission and the evidence presented in the cost benefit analysis will form part of this application. The Initiative can not be commenced until EU State Aid approval is received and so no applications have yet been received.

Tax Reliefs Eligibility

Questions (82)

Michael P. Kitt

Question:

82. Deputy Michael P. Kitt asked the Minister for Finance if he will clarify the issue of entitlement to tax relief on dental and-or medical expenses on services fully carried out outside the State; if he will confirm this is so; the reason it is allowed, as, in the case of dental services available here, it is putting Irish dentists at risk in their employment; if he will consider changes to same and make a distinction between medical dental treatments available in the State and others only available abroad; and if he will make a statement on the matter. [45080/13]

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Written answers (Question to Finance)

Relief in respect of health expenses is allowed in accordance with the provisions of section 469 of the Taxes Consolidation Act 1997. In order to qualify for relief an individual must show that he or she has incurred “health expenses” for the provision of "health care". It is not the case that all expenses incurred on health care qualify for relief. For the purposes of section 469 "health care" is the prevention, diagnosis, alleviation or treatment of an ailment, injury, infirmity, defect or disability. Health expenses include the cost of treatment necessarily incurred in connection with the services of a medical practitioner.

Relief is allowed where a practitioner is either –

(a) registered in the register established under section 43 of the Medical Practitioners Act 2007,

(b) registered in the register established under section 26 of the Dentists Act 1985, or

(c) in relation to health care provided outside the State, entitled under the laws of the country in which the care is provided to practice medicine or dentistry there.

The treaties governing the European Union guarantee the free movement of goods, capital, services and citizens within the EU's 28 member states and it is therefore not possible to place restrictions as to where individuals seek or avail of services. All claims for tax relief must be treated on a similar basis and relief granted regardless of where the services are provided. Relief for health expenses has been granted in respect of the services of a practitioner, entitled under the laws of the country in which the care is provided, to practise medicine or dentistry there, since the introduction of the tax relief in section 12 of the Finance Act 1967.

Question No. 83 answered with Question No. 81.

Banking Sector Issues

Questions (84)

Arthur Spring

Question:

84. Deputy Arthur Spring asked the Minister for Finance the measures in place to ensure that Ireland will not be vulnerable to a repeat banking crisis and to prevent a repeat of the banking practices which led to the recent financial crisis; the further regulations that will be put in place to ensure that the banking industry plays a constructive role in the economy; and if he will make a statement on the matter. [45176/13]

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Written answers (Question to Finance)

The reports of Governor Patrick Honohan, Messrs. Regling and Watson and the Nyberg Commission pointed out the problems to be addressed in our system of financial regulation. Acting on the recommendations contained in those reports, this Government has undertaken a number of significant reforms towards building a strengthened regulatory framework for the financial services sector and to respond to the shortcomings identified in those reports. The Central Bank Reform Act 2010 created a single fully-integrated Central Bank of Ireland with a unitary board – the Central Bank Commission – chaired by the Governor of the Central Bank. The unitary Central Bank structure gives the Commission members a more complete remit over prudential regulation and financial stability issues. In 2011 the new Fitness and Probity regime was rolled out by the Central Bank in accordance with the provisions of the Central Bank Reform Act 2010. The regime provides for new powers to be exercised by the Central Bank to ensure the fitness and probity of nominees to key positions within financial service providers and of key office-holders within those providers.

The Central Bank and Credit Institutions (Resolution) Act was also introduced in 2011. It provides the necessary mechanisms to enable the Central Bank to intervene where a credit institution gets into serious difficulty and is in danger of becoming destabilised or otherwise failing. The Central Bank (Supervision and Enforcement) Act 2013 was passed this year which enhances the Central Bank's regulatory powers, drawing on the lessons of the recent past. It strengthens the ability of the Central Bank to impose and supervise compliance with regulatory requirements and to undertake timely prudential interventions. The Act also provides the Central Bank with greater access to information and analysis and underpins the credible enforcement of Irish financial services legislation in line with international best practice.

The reforms introduced under the Central Bank (Supervision and Enforcement) Act 2013 are complemented by a number of strategically important reforms at EU level in financial services. Under our presidency, agreement was reached on the single supervisory mechanism, one of the main cornerstones of Banking Union which will provide for the European Central Bank to act as supervisor for systemic important banks throughout the Union. Agreement was also reached on the Capital Requirements package which will ensure that European banks hold enough good quality capital to withstand future economic and financial shocks. Member States have also agreed in principle the Markets in Financial Instruments Regulation and Directive and agreement with the European Parliament was secured on the Market Abuse Regulation.

These legislative reforms have been supplemented by a significant increase in regulatory activity by the Central Bank with a corresponding increase in staff numbers and skill levels. The Central Bank of Ireland's Enforcement Priorities for 2013 highlight the importance of enforcement within its risk-based regulatory framework (PRISM). PRISM represents a challenging and proportionate risk-based system of supervision for all financial institutions operating in Ireland. The Central Bank's Strategic Plan 2013 – 2015 also sets out a strategy of assertive risk-based supervision underpinned by a credible threat of enforcement.

This Government has also implemented a series of measures which reflect the important role that the banking sector has to play in supplying credit and in doing so to support economic growth in the economy. As shareholders in the main banks, the Government's objective is twofold; to ensure that they are managed commercially so as to create and protect value for the taxpayer but also to ensure that they supply the credit lines necessary to sustain and grow the economy. In that respect the Government has imposed SME lending targets on AIB and Bank of Ireland for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion in 2012 and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks have reported that they achieved their 2011 and 2012 targets and the recent Credit Review Office quarterly report commented "both banks are on track to achieve their €4bn loan sanction targets, assuming the pattern of previous years of a strong Q4 performance is repeated".

The Credit Review Office is available to assist businesses which have been refused credit. The most recent CRO report shows that the CRO upheld the credit appeal in 150 cases or 55% of cases decided. The upheld appeals have resulted in €18.5M credit being made available to SMEs and farms, protecting 1,521 jobs. In Budget 2013 I recognised the important role played by the CRO in assisting borrowers who had been refused credit by the banks by increasing the number of reviewers in order to ensure that all appeals are dealt with in a timely and efficient manner. In Budget 2014 I announced an increase in the limit for loan applications that can be reviewed by the CRO from €500,000 to €3m. This increase will assist those borrowers currently banking with non-trading banks and banks which are strategically exiting the Irish SME lending market, whose refinancing requests are larger than €500,000.

We have also put in place a comprehensive suite of measures to assist personal borrowers including mortgage holders. The personal insolvency regime has been overhauled and the insolvency service is now up and running. The Code of Conduct on Mortgage Arrears and new statutory personal insolvency frameworks protect and assist people in genuine mortgage arrears difficulty and, more generally, to resolve unsustainable debt positions. Co-operating borrowers now have more protections available to them and more effective options to deal with their over indebtedness than was the case previously. These measures will also require creditors to deal with their customers who are experiencing genuine debt difficulty in a more holistic and customer friendly manner. Taken together, these factors should make a useful contribution to the future development and application of more responsible lending decisions and practices.