Written Answers Nos. 150-169
150. Deputy Pearse Doherty asked the Minister for Finance if he has considered linking qualification to the single person child carer tax credit for a separated, non-principal carer who would have formerly qualified for the one-parent family tax credit, to the payment of child maintenance. [45655/13]
View answerAs 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. 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 is unsustainable.
The Commission on Taxation acknowledged that the One-Parent Family Tax Credit 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 will achieve such an outcome.
Practical implementation issues are being considered as part of the Finance Bill process.
151. Deputy Jonathan O'Brien asked the Minister for Finance if he will identify both the cyclical element and structural element of the fiscal deficit. [45699/13]
View answer152. Deputy Jonathan O'Brien asked the Minister for Finance his plans to resolve the cyclical element of the fiscal deficit. [45700/13]
View answerI propose to take Questions Nos. 151 and 152 together.
At the outset it must be stressed that decomposing the fiscal deficit into its cyclical and structural elements is based on complex statistical techniques. As these techniques involve the estimation of unobserved phenomena they can be prone to large revisions. Whilst the estimates below provide an intuitive picture, the standard 'one size fits all' methodology employed by the European Commission has in the past produced counterintuitive results when applied to a small open economy characterized by nominal wage rigidities such as Ireland.
Specifically, decomposing the headline deficit into its cyclical (portion owing to the position of the economic cycle) and structural (underlying) components is done in line with standard European Commission-approved methodology. This approach relies on approximating the 'output gap' - the difference between observed real output levels and those (unobserved) levels that would prevail in the absence of price or wage pressures in the economy. Applying a measure of the link between the economic cycle and the budget (a semi-elasticity budgetary parameter) to the output gap produces the cyclical-component of the budget balance.
The structural balance is calculated as the headline general government deficit less the cyclical component, less the impact of one-off temporary measures impacting the deficit.
On the basis of Budget 2014 arithmetic, the table sets out the profile of the headline balance decomposed into its cyclical and structural components over the 2012-2016 period. Future data revisions or statistical changes render these estimates subject to change.
Decomposition of General Government Balance (% GDP) 2012-2016
|
- |
2012 |
2013 |
2014 |
2015 |
2016 |
|
1. Headline General Government Balance (% GDP) |
-8.2 |
-7.3 |
-4.8 |
-3.0 |
-2.4 |
|
2. Cyclical budgetary component (% potential GDP) |
-1.4 |
-1.6 |
-1.4 |
-1.4 |
-1.2 |
|
3. One-off temporary measures (% GDP) |
0.0 |
-0.4 |
0.2 |
-0.1 |
0.0 |
|
4. Interest Expenditure (% GDP) |
3.7 |
4.6 |
4.8 |
4.9 |
5.0 |
|
5. Cyclically adjusted primary balance (CAPB) % GDP [(1)-(2)+(4)] |
-3.1 |
-1.1 |
-1.4 |
3.3 |
3.8 |
|
Change in CAPB |
5.1 |
2.1 |
2.5 |
1.9 |
0.5 |
|
6. Structural Budget Balance (% GDP) [(1)-(2)-(3)] |
-6.9 |
-5.3 |
-3.6 |
-1.6 |
-1.1 |
|
7. Structural Primary Balance (% GDP) [(6)+(4)] |
-3.1 |
-0.7 |
+1.2 |
+3.4 |
+3.9 |
Source: Department of Finance estimates. Consistent with Budget 2014 arithmetic.
The cyclical component (item 2 above) is the part of the deficit that will improve naturally as the economy recovers. The structural deficit is the focus for policy and EU fiscal rules. The impact of discretionary fiscal policy can be proxied by the change in the cyclically-adjusted primary budget balance [change in item 5 in Table above]. This change reveals policy’s contribution to resolving the structural component of the deficit.
Given relatively good growth potential, it is important to highlight improvements in the structural budgetary position can be achieved without necessarily involving additional taxation increases or expenditure reductions. This can be achieved by maintaining expenditure growth below the nominal growth rate of the economy.
153. Deputy Finian McGrath asked the Minister for Finance the position regarding the pension levy and the pension industry not keeping to their agreement regarding the levy; and if he will make a statement on the matter. [45725/13]
View answer154. Deputy Michael McGrath asked the Minister for Finance if he will provide further details on his claim that the reason he decided to extend the pension levy in 2015 was due to a failure on the part of the pension industry to adhere to the terms of a bargain he had reached with them; and if he will make a statement on the matter. [45738/13]
View answer173. Deputy Olivia Mitchell asked the Minister for Finance the way it is anticipated that the levy on individual private pension funds will convince the pensions industry to deliver on agreements made with him by the industry in view of the fact that the contributors have neither control over nor leverage with fund managers; and if he will make a statement on the matter. [46105/13]
View answerI propose to take Questions Nos. 153, 154 and 173 together.
In Budget 2013, I made a number of commitments in relation to the tax provisions affecting supplementary pension provision. I said that tax relief on pension contributions would continue at the marginal rate of tax. In addition, I gave an undertaking that the 0.6% pension fund levy would not be renewed after 2014.
I considered that I was in a position to make these significant commitments on foot, among other things, of proposals in late 2012 from the pensions sector for changes to the Standard Fund Threshold (SFT) regime, as an alternative to standard rating of pension tax relief, which it was claimed would yield savings and tax revenues in the region of €400 million. Pending further analysis of this claim, I included a much lower figure of €250 million in the Budget 2013 arithmetic. That analysis has since revealed significant downside risks to the achievement of even this lower level of yield or savings. The estimate of the yield from the changes to the SFT regime which I announced in last week’s Budget is €120 million. These changes differ in some respects from those proposed by the pensions sector and reflect, on legal advice, the requirement to protect pension rights at the date of change. In addition, valuation factors to place a value on Defined Benefit pensions for SFT purposes will vary with the age at which the pensions are drawn down thereby improving equity within the regime
I would not categorise my engagement with the pensions sector on this matter as an "agreement" or "bargain", in the manner suggested by the Deputies. However, the assessment that the changes to the SFT regime required to deliver on the Budget 2013 commitment to cap taxpayer subsidies to higher value pensions would have a considerably lower yield than originally put forward, meant that the achievement of the overall budgetary objectives (including the continuation of the reduced VAT rate for the tourism sector) necessitated the imposition of the additional 0.15% pension fund levy for 2014 and 2015.
155. Deputy Billy Kelleher asked the Minister for Finance the number of persons that will be affected by the removal of the one-parent family tax credit in budget 2014; the number of those cases that will be pushed into the higher tax band; the amount that will be raised by the Revenue Commissioners as a result of this decision; and if he will make a statement on the matter. [45744/13]
View answerAs 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. I am advised by the Revenue Commissioners that based on the most up to date data it is estimated that up to 15,400 individuals may be affected by the restriction of the restructured credit to the principal carer. In addition, it is tentatively estimated that about 5,550 of the estimated 15,400 individuals affected will now become liable to the higher rate of income tax i.e. 41% on a portion of their income as a result of this measure. However, ultimately it will depend on the circumstances of each individual carer.
Allocation of childcare responsibilities is primarily for parents to agree. Practical implementation issues are being considered as part of the Finance Bill process.
Finally, I am further advised by the Revenue Commissioners that 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.
156. Deputy Pearse Doherty asked the Minister for Finance the amount the State has foregone due to tax reliefs related to the construction of wind farms to date and by year from 2010 onwards. [45843/13]
View answerWith regard to VAT, under the VAT (Refund of Tax) (Flat-rate Farmers) Order 2012, flat-rate farmers, who are not registered for VAT, can claim a refund of tax borne on the purchase of a wind turbine for the purposes of micro-generation of electricity for use in a farm business, where that wind turbine was purchased on or after 1 January 2012. There are no statistics available as to the cost to the Exchequer of this measure since it was introduced in 2012. The scheme of accelerated capital allowances for expenditure on specified energy-efficient equipment allows companies to write-off the full cost of such equipment against their taxable income in the year the expenditure is incurred. The scheme came into operation in late 2008 and does not apply to expenditure by private individuals.
Data on the overall use of the scheme was requested from companies in the Corporate Tax return (CT1) for the first time in respect of accounting periods ending in 2009 but it does not require separate identification of claims in relation to wind farms under the scheme.
The data on wind farms is included in the data that is available in relation to relief for investment in renewable energy generation provided for under Section 486B, Taxes Consolidation Act, 1997. The total amount of corporation tax foregone as a result of this scheme is estimated at close on €17.1 million since inception to end 2012, the latest year for which figures are available.
Due to the relatively small number of claims arising in 2010, 2011 and 2012 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 those years.
157. Deputy Michael McGrath asked the Minister for Finance the timeline envisaged for the rapid progress towards achieving our medium-term budgetary objective referred to in the 2014 economic and fiscal outlook; and if he will make a statement on the matter. [45865/13]
View answerOnce Ireland reduces its deficit below 3% of GDP in 2015, the Excessive Deficit Procedure to which we have been subject since April 2009 will be abrogated (lifted) and we will no longer be subject to the corrective arm of the Stability and Growth Pact (SGP). Thereafter, however, we will be subject to the preventive arm of the SGP, which requires that we converge towards our country-specific medium-term objective (MTO). Article 3(1)b of the Treaty on Stability Coordination and Governance in EMU (TSCG or Fiscal Compact), stipulates we must 'ensure rapid convergence towards our MTO'. In line with Article 3(2) of the Treaty on Stability Coordination and Governance in EMU (TSCG or Fiscal Compact), the European Commission has prepared a 'calendar of convergence' towards Member States’ MTOs. On this basis, the Commission foresees that Ireland will reach its MTO of a balanced structural budgetary position (net of impact of the economic cycle and temporary one-off factors) by 2018.
Under the preventive arm, we are required to make structural correction of at least 0.5% of GDP per annum from 2016 onwards. On the basis of Budget 2014 arithmetic, Ireland is projected to comply with this, despite no further consolidation assumed in the fiscal arithmetic.
The European Commission will judge progress towards our MTO on the basis of making 'sufficient progress' in structural terms, including with an assessment of compliance with the so-called 'expenditure benchmark' as outlined in the 'Six Pack'. By constraining net expenditure growth below the medium-term reference rate of potential output, this can deliver an improvement in the structural balance without the need for recourse to further expenditure cuts or revenue increases.
158. Deputy Kevin Humphreys asked the Minister for Finance further to Parliamentary Question No.77 of 26 September 2013, the number of staff who were offered two day overnight retirement seminars; the staff grades who received this; if he will confirm that all grades receive this treatment; the costs associated with the seminar; if the bank picks up the cost of meals, entertainment and accommodation and if so, the amount per person spent; and if the bank is continuing this policy; and if he will make a statement on the matter. [45869/13]
View answerAs advised under Parliamentary Question No 77, a long standing, process exists where staff who are retiring at normal retirement date or earlier are provided with the option to attend a seminar to help plan for their retirement. This is provided by many companies in the public and private sector to retiring staff and is considered good practice to help staff adjust to retirement. This service has been provided by AIB to its staff going back over many years. These seminars, conducted over two days, involve a number of presentations from organisations such as the Retirement Planning Council of Ireland, the Department of Social Protection and medical practitioners etc.
As announced previously, the Bank's exit programme, which comprises early retirement and voluntary severance, is aimed in part at reducing costs by c. €350m by 2014. The process is ongoing, and the early retirement programme runs until the end of this year. As part of the Bank/IBOA mediation on the programme implementation, facilitated by Mr Kevin Foley, LRC, AIB committed to providing outplacement, retirement and redundancy support to all exiting employees, and the retirement seminars are provided as part of this deliverable. Further public disclosures in relation to the exit programme, including costs, are published on page 239 of AIB's 2012 Annual Financial Report, and page 75 of AIB's 2013 Half Yearly Report.
In the last suite of seminars which were completed in the period October 2012 to April 2013, employees across every organisational grade attended the seminar. This included employees scheduled to retire out to the end of 2013 under both the early retirement programme and normal retirement.
On the basis of very reduced numbers exiting on normal retirement in 2014 and 2015, AIB is currently reviewing the format for the seminars and we expect to have a revised approach for any future participants.
159. Deputy Kevin Humphreys asked the Minister for Finance the expected costs of making the new Central Bank building fit for use, the amount expected to be spent to ensure the concrete superstructure is safe after several years of being exposed to environmental degradation and corrosion from frost and salt air; the person who will conduct the work to clad the building; if the cladding that was previously ordered is be installed; and if he will make a statement on the matter. [45870/13]
View answerUnder section 6B of the Central Bank Act 1942, the Central Bank Commission is responsible for administering the provision of accommodation and office and other equipment with a view to enabling the Central Bank to perform and exercise its functions and powers. I have no function in the matter of accommodation arrangements at the Central Bank. However, I have been informed by the Central Bank that the public procurement process will be used to support the development of the new Central Bank building, including public tendering for contractors, services, etc., and in this context the cost of developing the building is commercially sensitive information. Accordingly at this time it is not appropriate to discuss matters related to cost estimates.
In relation to the existing structure, I have been informed by the Central Bank that as part of due diligence on the purchase of the site, the Central Bank has satisfied itself on the structural aspects of the building.
I have been further informed by the Central Bank that the design of the building and by association the cladding design (or façade) is progressing. As part of this process the Central Bank expects to appoint a specialist façade contractor to the design team. This appointment, like other appointments, will be subject to the public procurement process. This procurement process is underway.
160. Deputy Kevin Humphreys asked the Minister for Finance the projected additional yield or loss of revenue to the Exchequer for the remainder of 2013 for the measures announced in budget 2014 that will come into force on the night; if he will provide a breakdown of the yield by measure; and if he will make a statement on the matter. [45871/13]
View answerOn the night of Budget 2014 I brought before the House a series of financial resolutions to bring into effect measures contained in Budget 2014 from midnight on 15th October last. Excise duty on a packet of 20 cigarettes was increased by 10 cent with a pro rata increase for other tobacco products. This is expected to yield around €2.5 million in 2013. There were also increases of 10 cent on a pint of beer or cider, 10 cent on a standard measure of spirits and the duty payable on a 75cl bottle of wine was increased by 50 cent. Collectively, these changes to excise duties due on alcohol are expected to yield around €35 million in 2013.
On the night of 15th October I also introduced three other resolutions, none of which are expected to have a material yield or cost in 2013.
161. Deputy Pearse Doherty asked the Minister for Finance the safeguards that are in place to prevent the National Asset Management Agency from selling property to defaulting debtors and, in particular, to third parties who may have been provided with funds by the defaulting debtor to buy the property and place the property in the third party's name, but ultimately for the benefit of the defaulting debtor. [45886/13]
View answerAs the Deputy may be aware, Section 172 of the NAMA Act precludes NAMA from selling loans or property to a defaulting debtor or to parties connected to a defaulting debtor. In accordance with Section 172 of the Act, purchasers of NAMA loans or secured property are required to sign a statutory declaration that they are not connected to the debtor or other obligors. In addition, NAMA Board guidelines require that sales agents prepare a final report and recommendation, which includes, inter alia, confirmation that the sales agent has reviewed the purchaser’s declaration relating to connected party sales and a statement disclosing any commercial relationship between the agent, debtor, purchaser or purchaser’s ultimate beneficial owners in the past five years. If the Deputy has a query surrounding a specific sale he can contact NAMA directly through the email address oir@nama.ie.
162. Deputy Pearse Doherty asked the Minister for Finance if he will list the total unsecured creditors at 30 June 2012 of the Irish Bank Resolution Corporation. [45887/13]
View answerThe details of individual creditors in IBRC at 30 June 2012 are commercially sensitive and cannot be published however extensive details of the creditors of IBRC at that date are set out in the IBRC Interim Report dated 30 June 2012 available at http://www.ibrc.ie/About_us/Financial_information/Latest_interim_report/Interim_Report_2012.pdf. A list of unsecured creditors of IBRC at the date of liquidation, with the exception of depositors, was included as part of the Statement of Affairs prepared by the directors of IBRC as required under Section 224 of the Companies Act.
163. Deputy Lucinda Creighton asked the Minister for Finance the measures in place to ensure that legitimate tradespeople in the construction industry are protected against those who have started their new business and will be paying no income tax for two years; and his views that the margins of the non-income tax paying trader will be able to generate will mean that they can undercut pre-existing traders. [45937/13]
View answerAs the Deputy is aware, I announced the Start Your Own Business incentive in the recent Budget. This incentive is an exemption from Income Tax for individuals who have been long-term unemployed and start a new, un-incorporated business. The individual must have been continuously unemployed for a period of at least 15 months prior to setting up the business. Time spent on certain courses such as FÁS courses will qualify as periods of unemployment for the purposes of this scheme.
An exemption from Income Tax will be provided on profits up to a maximum of €40,000 for the first two years of trading. However, USC and PRSI will continue to be payable. If a loss is incurred then loss relief will be available in the normal manner.
The business must be un-incorporated i.e., the individual must be a sole trader. In order to claim this relief, the individual must file a tax return notwithstanding that there may be no liability to tax.
This incentive is an employment activation measure that provides a much-needed incentive for people to start their own business and to reduce their dependence on welfare payments. Any measure that will reduce unemployment and encourage entrepreneurship is to be welcomed.
164. Deputy Lucinda Creighton asked the Minister for Finance further to Parliamentary Question No. 98 of 27 June 2013, where he stated I made a point of confirming that the pension fund levy introduced as part of the jobs initiative will not be renewed after 2014, the reason the levy has been renewed after 2014; if he will confirm what happened between June and October to cause him to make this change; and if he will make a statement on the matter. [45938/13]
View answer165. Deputy Lucinda Creighton asked the Minister for Finance the reason it is the case that all private sector workers' pensions are subject to a pension levy but it is only the very high earners of public pensions which are subjected to a levy; if he will detail the exact number of pension arrangements that have been subjected to the pension levy for 2011, 2012 and to date in 2013; and if he will make a statement on the matter. [45940/13]
View answerI propose to take Questions Nos. 164 and 165 together.
I announced in my recent Budget speech that the 0.6% Pension Fund Levy introduced to fund the Jobs Initiative in 2011 will be abolished from the 31st of December 2014. I also indicated, however, that I would be introducing an additional levy on pension funds at 0.15%. I am doing this to continue to help fund the Jobs Initiative , including the continuation of the reduced 9% VAT rate for the tourism sector which was due to end this year and to make provision for potential State liabilities which may emerge from pre-existing or future pension fund difficulties. The additional levy, within the existing legal framework, will apply to pension fund assets in 2014 and 2015.
In Budget 2013, I made a number of commitments in relation to the tax provisions affecting supplementary pension provision. I said that tax relief on pension contributions would continue at the marginal rate of tax. In addition, I gave an undertaking that the 0.6% pension fund levy would not be renewed after 2014 (and this remains the case).
I considered that I was in a position to make these significant commitments, on foot of, among other things, proposals in late 2012 from the pensions sector for changes to the Standard Fund Threshold (SFT) regime, as an alternative to standard rating of pension tax relief, which it was claimed would yield savings and tax revenues in the region of €400 million. Pending further analysis of this claim, I included a much lower figure of €250 million in the Budget 2013 arithmetic. That analysis has since revealed significant downside risks to the achievement of even this lower level of yield or savings. The estimate of the yield from the changes to the SFT regime which I announced in the recent Budget is €120 million. These changes differ in some respects from those proposed by the pensions sector and reflect, on legal advice, the requirement to protect pension rights at the date of change. In addition, valuation factors to place a value on Defined Benefit pensions for SFT purposes will vary with the age at which the pensions are drawn down thereby improving equity within the regime.
The assessment that the changes to the SFT regime required to deliver on the Budget 2013 commitment to cap taxpayer subsidies to higher value pensions would have a considerably lower yield than originally put forward, meant that the achievement of the overall budgetary objectives (including the continuation of the reduced VAT rate for the tourism sector) necessitated the imposition of the additional 0.15% pension fund levy for 2014 and 2015.
As regards the pension fund levy itself, it applies to the market value, on the valuation date (generally 30 June each year), of assets under management in pension funds and pension plans approved under Irish tax legislation. It is not a charge on all supplementary private sector pensions in payment. I am advised by the Revenue Commissioners that the person responsible for payment of the levy is the "chargeable person", as defined in the legislation, rather than the pension scheme itself. The chargeable person, as respects pension scheme assets held under contracts of assurance, is the insurer, and as respects other pension scheme assets is the administrator of the pension scheme. The administrator is defined in the relevant legislation as meaning the trustees or other persons having the management of the assets of the scheme.
In light of the fact that it is the chargeable person that is liable for payment of the pension fund levy in respect of the pension schemes for which they are responsible, I am further advised by the Commissioners that it is not possible to state the exact number of pension arrangements that have been subjected to the levy in each of the years 2011, 2012 and 2013.
The payment of the levy is treated as a necessary expense of a pension scheme and the trustees or insurer, as appropriate, are entitled, where they decide to do so, to adjust current or prospective benefits payable under a scheme to take account of the levy. It is up to the trustees to decide whether and how the levy should be passed on and who should be impacted and to what extent, given the particular circumstances of the pension schemes for which they are responsible.
Finally, the Deputy makes reference to a levy on public service pensions. I assume the Deputy is referring to the Public Service Pension Reduction (PSPR). The PSPR was introduced on 1 January 2011 under the Financial Emergency Measures in the Public Interest Act 2010. The PSPR is not a levy. It is a pension cut affecting certain public service pensions.
At the time of its introduction, the PSPR was designed to cut all public service pensions above €12,000 in payment or awarded up to the end of a "grace period", which ultimately expired at the end of February 2012. The PSPR did not originally apply to any pensions of post-grace period retirees, on the basis that their pension awards had otherwise been reduced by being based on actual reduced pay rates reflective of the 2010 pay cuts, not "pre-cut" pay rates as applied to retirees during the grace period. On introduction, the PSPR was estimated as reducing public service pensions by 4% on average, with more severe effects experienced at higher pension levels due to the progressive multi-band structure of the reduction.
A change to PSPR was made on 1 January 2012, when a 20% reduction rate (previously 12%) was imposed on pension amounts above €100,000. With effect from 1 July 2013, more changes were made to the PSPR to deliver on the Government's commitment to further reducing those public service pensions above €32,500 by between 2% and 5% in certain circumstances, including the pensions above that level of individuals who retired after end- February 2012.
166. Deputy Lucinda Creighton asked the Minister for Finance if he will detail the consultation he had with the Department of Health concerning the removal of the tax relief restriction on private health insurance for the 577,000 policy holders which the Revenue estimate will be affected by this removal; if he will explain the reason the Revenue Commissioners estimates that the relief change will impact 577,000 policy holders but the industry estimates it will affect 90% of the 1.09 million policy holders availing of the relief; if he will consider reversing this decision and not include the measure in the new finance Bill 2013 thus allowing the resolution to expire; and if he will make a statement on the matter. [45941/13]
View answerFirstly, decisions regarding tax matters are primarily a matter for my Department and the Office of the Revenue Commissioners. However, the Budget was agreed by the Government before its announcement on Budget day. As I stated in my Budget day speech, from 16 October 2013, tax relief for medical insurance premiums will be restricted to the first €1,000 per adult and the first €500 per child insured. Any portion of premium paid in excess of these ceilings will no longer qualify for tax relief.
The new ceilings will ensure some continuing support via the tax system for those who purchase medical insurance policies, while reducing Exchequer exposure to more expensive policies.
I am advised by the Revenue Commissioners that based on 2012 data, the most up to date data available, it is estimated that up to 577,000 policy holders, which equates to just under 53% of all policies, may be affected by this measure. The Revenue estimate is based on an analysis carried out on the annual returns and the gross premium prices (i.e. before tax relief at source is applied) submitted by the Health Insurers in respect of the 2012 tax year. The basis for the industry estimate is not known.
I should point out that many will only be affected marginally, depending on the cost of the policies that individuals purchase. In addition, individuals can of course opt for less expensive policies and therefore avoid the impact of this measure entirely.
The legislation underpinning the new ceilings has been included in Section 8 of Finance (No.2) Bill 2013.
167. Deputy Lucinda Creighton asked the Minister for Finance if he or his officials have met with any pharmaceutical companies located here in advance of budget 2014 to see if there are any measures which he could take to improve their exports and offset some of the losses experienced from drugs coming off patent; if he is concerned that the 3% drop in exports year on year, according to the latest statistics, is largely attributable to a fall-off in pharmaceutical exports; and if he will make a statement on the matter. [45942/13]
View answerIrish merchandise exports were down by 5.5 per cent in the first half of 2012 on an annual basis, largely because of reduced output from the pharmaceutical and chemical sector, owing to the impact of patent expiry which is occurring globally, including in key export markets. Given the large weight of the sector in Irish output, this has weighed on GDP in 2012 and is likely to do the same in 2013 as well. Given the weight of the sector in Irish GDP, developments in the sector are something that my officials monitor closely to best understand the prospects for aggregate economic growth in the near term. In the course of this monitoring my officials met with relevant stakeholders including a pharmaceutical industry representative group. In the context of Budget 2014, my officials also met with a large variety of organisations, representative groups and individual companies, including pharmaceutical companies.
168. Deputy Lucinda Creighton asked the Minister for Finance the total number of meetings he or his officials in the Department of Finance held with ADC Therapeutics since 2011; if he will detail the number of meetings the National Treasury Management Agency or the National Development Finance Agency held with ADC Therapeutics since 2011; if he will detail the total investment that ADC Therapeutics sought from the State in order to invest and create 300 jobs here; and if he will make a statement on the matter. [45943/13]
View answerThe Department of Finance does not comment on discussions or negotiations with commercial counterparties. The National Treasury Management Agency (NTMA) has advised that it is their policy not to comment on discussions or negotiations with commercial counterparties in respect of investments.
169. Deputy Olivia Mitchell asked the Minister for Finance the percentage of policy holders who will be affected by the capping of tax relief on private health insurance; and if he will make a statement on the matter. [46020/13]
View answerThe position is that from 16 October 2013, tax relief for medical insurance premiums will be restricted to the first €1,000 per adult and the first €500 per child insured. Any portion of premium paid in excess of these ceilings will no longer qualify for tax relief. The new ceilings will ensure some continuing support via the tax system for those who purchase medical insurance policies, while reducing Exchequer exposure to more expensive policies. I am advised by the Revenue Commissioners that based on 2012 data, it is estimated that up to 577,000 policy holders, which equates to just under 53% of all policies, may be affected by this measure. However, I should point out that many will only be affected marginally, depending on the cost of the policies that individuals purchase. In addition, individuals can of course opt for less expensive policies and therefore avoid the impact of this measure entirely.
