Government Deficit

Questions (84)

Róisín Shortall

Question:

84. Deputy Róisín Shortall asked the Minister for Finance further to comments made at the recent Fine Gael national conference that the €2.5 billion adjustment will deliver a deficit of 4.8% in 2014 and a primary surplus also, which means our debt can start to reduce, the plans there are to begin paying down our national debt. [45534/13]

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Written answers (Question to Finance)

The achievement of a primary surplus in 2014 will be a welcome milestone in the correction of the public finances. It is a key metric in assessing the underlying sustainability of Ireland’s public finances and is a necessary first step towards lowering our debt levels. It shows that excluding interest expenditure, revenues are sufficient to meet the expenditure obligations of the State. As the deficit further improves and we achieve the targets under the excessive deficit procedure (EDP) the primary surplus is forecast to increase to 2.6% of GDP by 2016. General government debt is a measure of the total gross consolidated debt of the State and includes national debt, as well as the debt of central and local government bodies. For international comparisons, the standard metric is to express general government debt as a percentage of GDP. This ratio has increased substantially in recent years as a result of borrowing to fund a series of deficits and to provide support to the financial sector. In 2013, the ratio of general government debt to GDP is expected to peak at just over 124% before falling to under 115% in 2016. Adhering to the path of prudent budgetary management will allow the debt levels to decline while implementation of policies to encourage economic growth will further aid the reduction in the debt to GDP ratio.

The EDP targets a general government deficit of 3% or less of GDP in 2015. Three years from when Ireland exits the excessive deficit procedure, the “debt rule” as described by the Stability and Growth Pact and implemented by section 4 of the Fiscal Responsibility Act 2012, will fully apply. Under the debt rule, when the ratio of general government debt to GDP exceeds 60%, the difference must be reduced by 1/20th of the difference per year. It will be this rule that will anchor Government policy on Ireland’s debt into the future.

Property Taxation Administration

Questions (85)

Michael Healy-Rae

Question:

85. Deputy Michael Healy-Rae asked the Minister for Finance further to Parliamentary Questions Nos. 51 and 61 of 10 October 2013, the position regarding property tax in respect of a person (details supplied) in County Kerry; and if he will make a statement on the matter. [45536/13]

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Written answers (Question to Finance)

I am advised by Revenue that it is incorrect to state that the person in question only selected one payment option when completing her 2013 Local Property Tax (LPT) Return. Revenue has examined the return submitted and has confirmed to me that the person selected three different options, including direct debit, deduction at source from her Department of Social Protection payment and payment via a service provider. Every person completing an LPT Return has the full range of payment options available to choose from and is entitled to select the method that best suits individual circumstances. The person in question is no different in this regard. I commend Revenue for the wide range of payment options that it has made available to assist people in meeting their LPT obligations.

Revenue refutes the Deputy’s allegation of incompetence and states it has made every effort to assist the person in question in meeting her obligations. Revenue cannot be blamed for the incorrect completion of the payment option segment of the LPT Return. As I stated to the Deputy in reply to Questions Nos. 51 and 61 of 10 October, the information supplied to Revenue by liable persons for deduction at source from a Department of Social Protection pension is electronically transferred between both computer systems and Revenue cannot validate the accuracy of the data provided in advance of the data transfer.

Revenue has also informed me that the daughter of the person in question has been offered assistance on two separate occasions. On foot of the first conversation Revenue confirmed and activated the person’s preferred payment option of ‘payment service provider’ and considered the matter to be closed until the Deputy’s Parliamentary Questions on 10 October. On foot of those Questions, a member of the Revenue LPT team made direct contact with the person’s daughter and explained the various payment options. The official also outlined the eligibility criteria for deferral of LPT should the person wish to consider making such an application.

The Deputy also asked how the person in question should apply for deferral of LPT. I am informed that, from the information available to Revenue, it appears that the person qualifies for deferral based on her income. Should she wish to avail of that option, she or her daughter on her behalf should contact the LPT Helpline at 1890 200 255 and the LPT team will provide every assistance. The person can still pay her LPT on a phased basis between now and the end of the year should she choose to do so and again the LPT Branch will be glad to offer any advice in this regard.

The deferred tax, including interest, will become a charge on the property until the tax is paid. If the property is sold or transferred, any outstanding LPT charges would have to be paid at that point. The interest will be charged on the deferred amounts from the due date of payment until such time as it is paid, at a daily rate of 0.011%, which equates to 4% per annum. Anyone who has been allowed a deferral may at any time make either a full or partial payment of the deferred amount. Revenue has provided detailed guidance on deferrals at www.revenue.ie should the Deputy require any further information.

In summary, Revenue has made every effort to date to assist the person in question in meeting her LPT obligations. I urge the Deputy to offer the person in question every assistance in understanding and concluding her 2013 LPT affairs as quickly as possible thereby removing any stress that the delay might be causing for her.

VAT Rate Application

Questions (86)

Martin Heydon

Question:

86. Deputy Martin Heydon asked the Minister for Finance his views on the European Court of Justice decision on the application of a lower VAT rate for supplies of horses and greyhounds and the way it can be addressed while being mindful of the potential negative impact on the sectors that any increase would have; and if he will make a statement on the matter. [45538/13]

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Written answers (Question to Finance)

European Court of Justice Case C108/2011 concerns the rate of VAT applying to (a) the supply of live horses and greyhounds, (b) the hire of horses and (c) the supply of ‘no foal, no fee’ insemination services. All of these activities, including livestock in general, are currently charged to VAT in Ireland at the super-reduced rate of 4.8% under Article 110 of the EU VAT Directive. On 14 March 2013 the Court found against Ireland, in that some of the conditions of Article 110 were not fulfilled in applying the 4.8% rate to the supply mentioned. The application of the 4.8% rate to the supply of livestock in general, however, was not in dispute. Ireland must comply with the ECJ Judgement, and Finance (No. 2) Bill 2013, which is published today, includes measures in this regard. However, while the Finance Bill changes comply with the Court decision, the measures introduced are also mindful of the possible impact of VAT increases on the sectors concerned.

Firstly, the VAT rate applying to (a) the supply of live horses, other than those intended for use as foodstuffs or for use in agricultural production, (b) the supply of greyhounds, and (c) the hire of horses, will be increased from 4.8% to 9%. However, the 4.8% rate will continue to apply to livestock in general, and to horses that are intended for use as foodstuffs or for use in agricultural production.

In addition, the VAT rate on ‘no foal, no fee’ insemination services will be increased from 4.8% to the 13.5% reduced rate, so that the same 13.5% rate applies to all insemination services, for all animals, including livestock, horses and greyhounds. The 13.5% rate also applies to the supply of livestock and horse semen.

I would point out that the application of the 9% and the 13.5% rates, respectively, are the minimum VAT rates allowable to these supplies under EU VAT law, given the current VAT rate structure in Ireland.

I would also point out that when these changes are introduced, Ireland will still apply one of the lowest VAT rates in the EU to these services. Most Member States apply the standard VAT rate to the supply of horses not intended as food or for agriculture; with France applying their 19.6% and the UK applying their 20% rate, for example.

In addition, the Finance Bill provides for the new arrangements to come into effect from 1 May 2014. This will allow additional time for the sector to transition to new VAT arrangements.

Furthermore, after the introduction of the legislation, the Revenue Commissioners will produce a leaflet which will provide clarification on how the new arrangements will apply particularly in respect of horses intended for use as foodstuffs and for use in agricultural production, to which the 4.8% VAT rate will continue to apply. The delayed introduction of the new VAT treatment to 1 May 2014 will facilitate a proper consultation between Revenue and the industry concerned in relation to this leaflet, to ensure that all relevant services and supplies that qualify, remain at the 4.8% rate.

With regard to the impact of the increase in the VAT rate of horses and greyhounds not qualifying for the 4.8% rate from 1 May 2014, it should be noted that horse breeding and minding will continue to qualify as agricultural services under the flat-rate farmer scheme. As such, the VAT rate increase should not impact on flat-rate farmers supplying horses. VAT registered farmers supplying horses to other registered persons or farmers will, as always, be entitled to reclaim VAT on business purchases and as such the rate of VAT does not impact on them.

Where a flat-rate farming horse breeder purchases a horse from a VAT registered dealer, the VAT on this purchase will increase from 4.8% to 9%. However, the increase in the cost of purchasing horses due to the VAT increase will be accounted for under the flat-rate addition calculation in subsequent years. In addition, flat-rate farmers engaged in horse breeding will continue to have the option to become registered for VAT to claim VAT on their purchases.

Illicit Trade in Tobacco

Questions (87)

Caoimhghín Ó Caoláin

Question:

87. Deputy Caoimhghín Ó Caoláin asked the Minister for Finance the way in which the Revenue Commissioners estimate the tobacco smuggling rate, which shows a reduction of 2% in the past year; and if he will make a statement on the matter. [45554/13]

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Written answers (Question to Finance)

I am advised by the Revenue Commissioners that the incidence of illicit cigarette consumption in the State is estimated on the basis of a survey of smokers carried out by IPSOS MRBI on behalf of Revenue and the National Tobacco Control Office of the HSE. The survey for 2012 indicated that 13% of all smokers were classified as having an illegal cigarette pack. The comparable figure from a similar survey carried out in 2011 was 15%. I am aware that there are other estimates of the incidence of illicit tobacco products in the Irish market. However, Revenue considers the figures from the IPSOS MRBI survey to be the most reliable, on the basis of the methodologies used, the consistent manner in which the surveys have been undertaken over a number of years and because the survey distinguishes between legal personal imports and contraband cigarettes. The surveys are geographically representative and also take social class, age, gender and nationality into account.

I am advised that a similar survey will be carried out in respect of the current year and it is anticipated that the results will be available in the first quarter of next year.

Crime Prevention

Questions (88)

Caoimhghín Ó Caoláin

Question:

88. Deputy Caoimhghín Ó Caoláin asked the Minister for Finance if it is the case that the Revenue Commissioners purchased new smuggling detection equipment, including a van scanner, recently; the funding stream used for the purchase of this equipment; if funding was provided by a group (details provided); and if he will make a statement on the matter. [45555/13]

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Written answers (Question to Finance)

I am informed by the Revenue Commissioners, who are responsible for the collection of taxes and duties and for tackling the smuggling of dutiable and prohibited goods that, following a tender process, a Scan Van was acquired by Revenue in July 2012. The Scan Van is a specialist vehicle incorporating an x-ray facility, radiation detection facilities and ionscan technology. It is used for monitoring baggage and cargo at airports and ports for narcotics, cigarettes, radioactive materials and other contraband. It also allows Revenue enforcement officers to perform controls at locations, such as warehouses and courier depots, where X-ray technology was not previously available.

I am advised also that three modern replacement baggage x-ray scanners have also been purchased in recent months for use at Dublin Airport, Shannon Airport and Rosslare Ferryport respectively.

The acquisition of the Scan Van and other new baggage scanners was funded by Revenue with assistance from the European Union Hercules Programmes. The additional and replacement equipment will complement the two Revenue mobile X-ray container scanning systems, which are based at Dublin Port and Rosslare Ferry Port, both of which are available for deployment on a risk assessment basis, at various locations throughout the country.

Tax Credits

Questions (89)

Róisín Shortall

Question:

89. Deputy Róisín Shortall asked the Minister for Finance if he will explain his decision to abolish the one parent family tax credit; the projected saving generated from this cut; if a regulatory impact analysis was carried out; if so, the conclusions of same; the consultation that was carried out with affected groups; if his attention has been drawn to the disproportionate impact on those affected by it; and if he will make a statement on the matter. [45557/13]

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Written answers (Question to Finance)

As the Deputy is aware, the One-Parent Family Tax Credit (OPFTC) 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 OPFTC 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 OPFTC. Given the difficult fiscal environment it is essential to review all tax reliefs, credits and incentives in order to ensure that they are properly targeted and if necessary re-focused in order that they can achieve the socio-economic objectives that are set for them. A system that allows multiple claims in respect of the same child, as can happen with the OPFTC, is unsustainable.

I am advised by the Revenue Commissioners that based on the most up to date data it is estimated that the expected yield from replacing the One-Parent Family Tax Credit with the Single Person Child Carer Tax Credit from 1 January 2014 will be €18 million in 2014 and €25 million in a full year.

This measure will be implemented via the Finance Bill and thus a Regulatory Impact Assessment (RIA) is not compulsory. In addition, paragraph 2.21 of the RIA guidelines states that ‘the publication of an RIA may not be appropriate in the case of tax law/regulations or the imposition of charges because of their sensitivity and the need to guard against potential evasion or avoidance.’

Furthermore, it is not customary to consult particular groups that may be affected by Budget measures. However, a review of all tax expenditures and reliefs takes place in the run up to annual Budget.

As the Deputy may be aware, the OPFTC was examined by the Commission on Taxation. That Commission accepted submissions as an important source of views in fulfilling their mandate. In addition, it consulted widely with a large number of interested parties in both the private and public sectors, to help in its deliberations. It its 2009 report it acknowledged that the OPFTC plays a role in supporting and incentivising the labour market participation of single and widowed parents. However, in its recommendations it concluded that the credit should be retained but that it should be allocated to the principal carer only. The restructuring of the credit as announced in the Budget will achieve such an outcome.

Qualification for the new credit will depend on whether the individual concerned is the primary carer for the relevant child. Allocation of childcare responsibilities is primarily for parents to agree. Practical implementation issues are being considered as part of the Finance Bill process.

Government Deficit

Questions (90)

Róisín Shortall

Question:

90. Deputy Róisín Shortall asked the Minister for Finance further to a newspaper article (details supplied), if he will provide a detailed explanation on the level of budget adjustment for 2014 and the way this adjustment will be achieved in terms of carry forward, tax adjustments, expenditure adjustments, new savings and so on; and if he will make a statement on the matter. [45560/13]

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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 €3.1bn was necessary. This comprised €2.5bn in expenditure cuts and tax increases complemented with additional resources/other savings of €0.6bn. A summary table of the adjustment package is outlined as follows.

-

€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 €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.

VAT Rate Application

Questions (91)

Seán Ó Fearghaíl

Question:

91. Deputy Seán Ó Fearghaíl asked the Minister for Finance if he will give consideration to the points raised in correspondence (details supplied) from the Irish Thoroughbred Breeders' Association; and if he will make a statement on the matter. [45562/13]

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Written answers (Question to Finance)

With regard to the VAT point raised in the correspondence, regarding proposed changes to the current 4.8% bloodstock VAT rate, I would point out that European Court of Justice Case C108/2011 concerns the rate of VAT applying to (a) the supply of live horses and greyhounds, (b) the hire of horses and (c) the supply of ‘no foal, no fee’ insemination services. All of these activities, including livestock in general, are currently charged to VAT in Ireland at the super-reduced rate of 4.8% under Article 110 of the EU VAT Directive. On 14 March 2013 the Court found against Ireland, in that some of the conditions of Article 110 were not fulfilled in applying the 4.8% rate to the supply mentioned. The application of the 4.8% rate to the supply of livestock in general, however, was not in dispute. Ireland must comply with the ECJ Judgement, and Finance (No. 2) Bill 2013, which is published today, includes measures in this regard. However, while the Finance Bill changes comply with the Court decision, the measures introduced are also mindful of the possible impact of VAT increases on the sectors concerned.

Firstly, the VAT rate applying to (a) the supply of live horses, other than those intended for use as foodstuffs or for use in agricultural production, (b) the supply of greyhounds, and (c) the hire of horses, will be increased from 4.8% to 9%. However, the 4.8% rate will continue to apply to livestock in general, and to horses that are intended for use as foodstuffs or for use in agricultural production.

In addition, the VAT rate on ‘no foal, no fee’ insemination services will be increased from 4.8% to the 13.5% reduced rate, so that the same 13.5% rate applies to all insemination services, for all animals, including livestock, horses and greyhounds. The 13.5% rate also applies to the supply of livestock and horse semen.

I would point out that the application of the 9% and the 13.5% rates, respectively, are the minimum VAT rates allowable to these supplies under EU VAT law, given the current VAT rate structure in Ireland.

I would also point out that when these changes are introduced, Ireland will still apply one of the lowest VAT rates in the EU to these services. Most Member States apply the standard VAT rate to the supply of horses not intended as food or for agriculture; with France applying their 19.6% and the UK applying their 20% rate, for example.

In addition, the Finance Bill provides for the new arrangements to come into effect from 1 May 2014. This will allow additional time for the sector to transition to new VAT arrangements.

Furthermore, after the introduction of the legislation, the Revenue Commissioners will produce a leaflet which will provide clarification on how the new arrangements will apply particularly in respect of horses intended for use as foodstuffs and for use in agricultural production, to which the 4.8% VAT rate will continue to apply. The delayed introduction of the new VAT treatment to 1 May 2014 will facilitate a proper consultation between Revenue and the industry concerned in relation to this leaflet, to ensure that all relevant services and supplies that qualify, remain at the 4.8% rate.

With regard to the impact of the increase in the VAT rate of horses and greyhounds not qualifying for the 4.8% rate from 1 May 2014, it should be noted that horse breeding and minding will continue to qualify as agricultural services under the flat-rate farmer scheme. As such, the VAT rate increase should not impact on flat-rate farmers supplying horses. VAT registered farmers supplying horses to other registered persons or farmers will, as always, be entitled to reclaim VAT on business purchases and as such the rate of VAT does not impact on them.

Where a flat-rate farming horse breeder purchases a horse from a VAT registered dealer, the VAT on this purchase will increase from 4.8% to 9%. However, the increase in the cost of purchasing horses due to the VAT increase will be accounted for under the flat-rate addition calculation in subsequent years. In addition, flat-rate farmers engaged in horse breeding will continue to have the option to become registered for VAT to claim VAT on their purchases.

State Bodies Expenditure

Questions (92)

Eric J. Byrne

Question:

92. Deputy Eric Byrne asked the Minister for Finance his views on the multiple independent procurement of research grant management software by agencies under the control of his Department and the total cost to the taxpayer of these systems; if his attention has been drawn to the fact that the same supplier has supplied all but one of these systems and that all are compliant with European Commission standards on the exchange of research information and are all capable of being integrated into one grant management system, as has been done in the US and the UK with the consequent savings that produces; the reason, despite the existence of a national research platform report, no progress has been made on the implementation of an integrated national research platform; and if his attention has been drawn to the consequent diversion of resources in research bodies HEs and others to the management of these multiple systems and away from the proper good governance of public resources spent on research. [45566/13]

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Written answers (Question to Finance)

In response to the Deputy’s question I am not aware of the procurement of research grant management software by any agency under the remit of my Department.

Tax Yield

Questions (93)

Michael McGrath

Question:

93. Deputy Michael McGrath asked the Minister for Finance the amount of deposit interest retention tax that is expected to be collected in 2014; the way this compares to the projected outcome for 2013; and if he will make a statement on the matter. [45571/13]

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Written answers (Question to Finance)

Deposit Interest Retention Tax (DIRT) is contained in the income tax estimate for 2013 and 2014 shown in Table 8 on page C.15 of the recently published Budget 2014. The income tax forecast includes €500 million of DIRT in 2013. As the Deputy will be aware, the DIRT rate was increased to 41 per cent in Budget 2014 as set out in the Summary of Budget Measures. This is expected to yield €105 million in 2014 and €140 million in a full year. Taking this and the expected prevailing economic environment into account, the yield from DIRT in 2014 is estimated to be of the order of €625 million.

It should be pointed out that these figures are subject to revision as emerging fiscal and economic data are taken on board.

Tax Yield

Questions (94)

Michael McGrath

Question:

94. Deputy Michael McGrath asked the Minister for Finance the amount of deposit interest retention tax collected in 2011; if he will provide in tabular form the amount of DIRT collected by each financial institution liable for collection of the tax in 2011; and if he will make a statement on the matter. [45572/13]

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Written answers (Question to Finance)

I can inform the Deputy that €473 million was collected in respect of DIRT in 2011. However, I am informed by the Revenue Commissioners that their obligation to observe confidentiality for taxpayers and small groups of taxpayers precludes them from providing the information requested in respect of each financial institution.