Written Answers Nos. 91-104
91. Deputy Kevin Humphreys asked the Minister for Finance if the investment of the Irish State in Bank of Ireland preference shares were sourced from the National Pensions Reserve Fund; and if he will make a statement on the matter. [54887/13]
View answer92. Deputy Kevin Humphreys asked the Minister for Finance if the proceeds from the sale of State-owned Bank of Ireland preference shares will be returned to the National Pensions Reserve Fund; if not, the purpose they will be put to; and if he will make a statement on the matter. [54888/13]
View answerI propose to answer Questions Nos. 91 and 92 together.
The Preference Shares, which date back to early 2009, formed part of the €4.7 billion total investment made by the State in Bank of Ireland. The shares were a directed investment held by the National Pension Reserve Fund.
I can confirm to the Deputy that I have given instructions that the proceeds arising from the Bank of Ireland preference shares transaction should remain with the National Pensions Reserve Fund for the time being. Further consideration will be given as to how best to utilise the proceeds having regard to the NTMA’s debt management plan and the future profile of our cash balances.
93. Deputy Dan Neville asked the Minister for Finance if he will send out the appropriate documentation to a person (details supplied) in County Limerick who wishes to register to pay the local property tax. [54894/13]
View answerI am advised by the Revenue Commissioners that, in the case raised by the Deputy, the 2013 LPT Return was issued to an address previously used by Revenue to contact the person in question in respect of other taxes. The person in question subsequently received the paper Return but duplicated the filing process by firstly filing online, paying the ‘Valuation Band 3’ estimated amount, and then returning the paper LPT 1 form indicating ‘Valuation Band 1’
Revenue has confirmed that it has contacted the person in question and is satisfied that the ‘Band 3’ declaration arose through genuine error. The person’s details have been amended on the Property Register to reflect ‘Band 1’. The correction resulted in an overpayment of the person’s 2013 liability, which has been partly offset to her 2014 liability. The remaining balance will be refunded to her in the coming days.
94. Deputy Heather Humphreys asked the Minister for Finance if his attention has been drawn to the fact that some accountancy firms are selling their services to credit unions on the basis that they are the preferred providers of accountancy services of the Central Bank and as a consequence of employing them the credit union will receive a more favoured outcome in their dealings with the Central Bank; and if he will make a statement on the matter. [54921/13]
View answerI have been advised by the Central Bank that there is no Central Bank list of preferred providers of accountancy services for credit unions, nor is it aware of the practice described in the Question.
I have been further informed by the Central Bank that, where it identifies issues which require action, it may require the credit union to appoint an independent third party firm to carry out certain work in accordance with specified terms of reference. In such cases the Central Bank would expect the firm to have the necessary skills, expertise and resources to carry out the required work in accordance with the terms of reference.
Question No. 95 answered with Question No. 81.
96. Deputy Terence Flanagan asked the Minister for Finance his views on the number of households in mortgage arrears; his further views on bank targets to restructure mortgage books; and if he will make a statement on the matter. [54953/13]
View answerThe Government is very aware of the significant difficulties some homeowners are facing in meeting their mortgage obligations and it is committed to advancing appropriate measures to assist those mortgage holders who are experiencing real and genuine difficulty.
The Deputy will be aware that the Central Bank recently published mortgage arrears and restructure statistics for the quarter ending September 2013 (http://www.centralbank.ie). This publication shows an overall decline in the stock of principal dwelling houses (PDH) in arrears of one per cent relative to the end of June 2013 statistics. This is the first decrease in the outstanding balance since the Central Bank series began in September 2009. In addition, early arrears have declined significantly during the reporting period with a quarter-on-quarter fall of six per cent. This would appear to demonstrate some success by the lenders in addressing the accounts in early arrears and putting in place appropriate measures to prevent borrowers from going into arrears.
Separately from the Central Bank quarterly reports, a monthly reporting regime on mortgage restructures has been in place by my Department for the last three months (http://www.finance.gov.ie/viewdoc.asp?DocID=7943 ) This data, which represents approximately 90% of the mortgage market, shows a continuing decline in PDH mortgage arrears and an increase in the number of permanent restructures to address mortgages in difficulty. The recently published data by my Department, which is for the end of October, shows that the number of PDH mortgage accounts in arrears of greater than 90 days fell from 82,624 accounts in August to 80,854 at the end of October, a drop of 1,770 accounts in arrears.
The Deputy will also be aware that Central Bank’s Mortgage Arrears Resolution Targets (MART) announced last March, set time bound and measurable targets for the main banks, requiring them to systematically address their arrears book. This is a very important step to resolve the impasse in arrears. The Central Bank required the main mortgage lenders to propose by end-June 2013 sustainable solutions to 20% of mortgages in arrears (over 90 days) and to 30% by the end of September, The target rises to 50% by the end of December 2013, 70% by end of March 2014 and to 75% by the end of June 2014. The Central Bank is now also requiring banks to conclude sustainable solutions with 15% of their customers by the end of this year, with 25% by end March 2014 and 35% by end of June 2014.
As part of this process, the Central Bank conducted an audit of the banks’ Quarter 2 proposed solutions which examined the banks’ processes of determining and proposing sustainable solutions against the Central Bank’s sustainability guidelines. The Central Bank has informed me that a number of issues were identified in this audit and which will need to be addressed by the banks to ensure that the solutions being proposed are sustainable in the long term. However, it also concluded that the issues arising did not result in any bank failing to reach the Quarter 2, 2013 target. Lenders have also reported that they have met and exceeded the Q3 target. The Central Bank has advised me that audits will be on-going in 2014.
The remaining key elements of the mortgage arrears resolution strategy are also now in place. For example, the new insolvency options provided for in the Personal Insolvency Act are now fully available to debtors; the mortgage advisory function is fully operational, and, following a recent review may be enhanced; the mortgage to rent scheme is also operational.
Therefore the overall elements of the framework for dealing with mortgage distress are now in place. Banks should continue to deal with this issue in a structured and proactive manner through engagement with their borrowers and in alignment with the Mortgage Arrears Resolution Targets set by the Central Bank.
97. Deputy Terence Flanagan asked the Minister for Finance his views on EU rules on bank resolutions; if he has any proposals for the EU in this area; and if he will make a statement on the matter. [54954/13]
View answer99. Deputy Terence Flanagan asked the Minister for Finance his views on the new European bail-in; and if he will make a statement on the matter. [54957/13]
View answerI propose to take Questions Nos. 97 and 99 together.
Last week the Presidency of the EU Council reached agreement with the European Parliament on the Bank Recovery and Resolution Directive (BRRD). The BRRD proposal provides a common framework of rules and powers to help EU countries manage arrangements to deal with failing banks at national level as well as cross-border banks, whilst preserving essential bank operations and minimising taxpayers' exposure to losses.
There are three pillars to the BRRD framework to facilitate a range of appropriate actions by authorities:
- Preparatory and preventative measures including reinforced supervision and robust recovery and resolution planning for major institutions;
- Early intervention which would include supervisory powers and implementing recovery plans;
- Resolution tools including appointing a special manager, sale of business, bridge bank and asset separation tools and also the use of bail-in mechanisms.
I welcome the introduction of this important piece of legislation which is designed to safeguard financial stability and to protect taxpayers’ funds. The rules will be transposed into national law over the course of 2014.
The bail-in tool that the Deputy specifically refers to is, in my view, an essential part of this new resolution framework and an important means of protecting taxpayers’ money from any future bank crisis. Bail-in will enable resolution authorities to write down or convert into equity the claims of shareholders and creditors of institutions that are failing or likely to fail. This is an important means of ensuring that a bank’s losses are absorbed by those who fund its activities and not taxpayers.
The introduction of clear EU wide bail-in rules should assist in creating a level playing field for banks and should force market discipline, so that investors’ decisions to lend to banks and the premiums they charge for such lending are based on the financial health and soundness of the particular bank rather than its geographical location. This should constrain banks from engaging in the excessive risk taking that was at the heart of many bank failures of recent years.
Where excessive application of bail-in might lead to significant financial instability, other measures in the BRRD can be considered. This could for example include using the resolution fund to absorb some of the losses. The resolution fund will be funded by the wider banking industry and in a banking union context this will be set up at a European level, thereby increasing the amount of funding available.
I am of the view that this new EU framework will reduce both the likelihood and the impact of future problems in the banking system, while also enabling authorities to manage bank crises in a coordinated manner minimising contagion to the wider economy. This represents significant progress in enhancing financial stability within the European banking system.
98. Deputy Terence Flanagan asked the Minister for Finance his views on the Industrial Development Agency CEO's remarks on our tax policy; his plans to cut income tax; and if he will make a statement on the matter. [54956/13]
View answerThis Government is very much aware that from an international perspective, Ireland is already considered to have a high top marginal rate of tax on income. When compared with other OECD members with a similar marginal tax rate, the Irish marginal tax rate for PAYE income takes effect when the standard rate band is exceed which is €32,800 for a single individual.
Marginal tax rates are important because they influence individual decisions to work more or indeed to work at all. The OECD working paper Tax and Economic Growth indicates that “there is also the possibility that high top marginal rates will increase the average tax rates paid by high-skilled and high-income earners so much that they will migrate to countries with lower rates resulting in a brain drain which may lower innovative activity and productivity” . Higher marginal tax rates for earners may also incentivise a greater level of tax evasion and contribute to the development of a shadow economy. This is why the Programme for Government contains a very specific commitment that “as part of the Government’s fiscal strategy we will maintain the current rates of income tax together with bands and credits. We will not increase the top marginal rates of taxes on income”.
As the Deputy will be aware all tax expenditures and reliefs are reviewed in the run up to annual Budget.
Question No. 99 answered with Question No. 97.
100. Deputy Terence Flanagan asked the Minister for Finance the amount of under-claimed tax reliefs and tax rebates due to taxpayers that have not been claimed over the past five years and estimated for 2013; and if he will make a statement on the matter. [54964/13]
View answerI am advised by the Revenue Commissioners that claims for tax refunds and tax relief’s can be made in respect of the previous four tax years. Currently, taxpayers can make claims for tax years 2009 onwards although all claims for 2009 must be received by Revenue by 31 December 2013.
It is not possible to quantify tax credits or tax reliefs that are unclaimed because, by their nature, Revenue has not received a claim and therefore has no supporting data on which to base an estimate.
By way of information I am advised that in 2012, Revenue carried out almost 1.1m PAYE employee reviews and refunded about €408m in tax. However the Deputy should also note that the general trend in the past number of years is a decrease in personal tax refunds as the underlying reason for repayments, which is unclaimed tax credits, is reducing in line with the reduction in the number of available tax credits.
101. Deputy Terence Flanagan asked the Minister for Finance his plans to provide tax credits and supports for owners of car garages providing repairs for second hand cars as there is a shortage of such garages; and if he will make a statement on the matter. [54971/13]
View answerThere are no specific measures in the area of corporation tax targeted at this particular sector. The full range of corporation tax reliefs are however open to all corporate tax payers regardless of the sector they operate in.
The Deputy may also be aware that car repair garages are supported under the VAT code by the application of the reduced VAT rate of 13.5% to the supply of car maintenance and repair services.
I have no plans for any specific measures in relation to this sector at this time.
102. Deputy Sean Fleming asked the Minister for Finance the number of freedom of information requests received by his Department in 2012 and to date in 2013; the number of requests for which a search and retrieval fee was sought; the maximum fee sought by his Department in respect of a request received; the number of requests not proceeded following the non-payment of the search and retrieval fee sought; and if he will make a statement on the matter. [55001/13]
View answerMy Department received 216 FOI requests up to 17 December, 2013 and 265 FOI requests in 2012.
Search and retrieval fees are not sought in respect of every FOI request and where applied, are requested only in respect of non-personal information. The processing of FOI in the department is decentralised to individual officers and the decision to seek a search and retrieval fee is a matter for the individual officer who is managing the FOI request, in line with FOI legislation. Records are maintained in respect of FOI requests where the requester agrees to the payment of search and retrieval fees and pays a deposit or the full fee. Therefore in respect of those FOI requests the maximum search and retrieval fee received in 2012 was €251.40 and in 2013 (to date) was €412.25.
103. Deputy Terence Flanagan asked the Minister for Finance the monetary amount and number of legal claims being taken in view of the liquidation of Irish Bank Resolution Corporation; the amount of contingent liability on the State's books; and if he will make a statement on the matter. [55009/13]
View answerI am advised that due to commercial confidentiality and sensitivities the Special Liquidators are unable to provide the information requested. All relevant disclosures in respect of legal cases involving IBRC are publically available through the Courts Services website.
I have been advised by the Special Liquidators that there were 120 cases being taken against IBRC at the date of liquidation. Furthermore, there were 720 cases being taken by IBRC against a variety of defendants but primarily against borrowers, former staff and former professional advisors.
104. Deputy Terence Flanagan asked the Minister for Finance his views on overcharging of customers by Ulster Bank; and if he will make a statement on the matter. [55012/13]
View answerI assume that the Deputy is referring to recent media reports on allegations of overcharging of Ulster Bank business customers in Ireland. I understand that RBS, the parent of Ulster Bank, has appointed Clifford Chance to independently review the treatment of distressed customers by the Global Restructuring Group and report early in the New Year. I also understand that the findings will be applied across the RBS Group.
I would refer the Deputy to the revised Code of Conduct for Business Lending to SMEs, which came into effect on 1 January 2012. A specific focus of the Code is the treatment of borrowers in financial difficulties. Lenders are required to provide information to SMEs in relation to the importance of engaging with the lender to address their financial difficulties, the procedures for dealing with SMEs in financial difficulties including timeframes, details of fees which may apply, the type of information they require in assessing cases and information on their right of appeal. Lenders must assess whether an alternative repayment arrangement can be put in place and allow the SME appeal that decision and offer meetings to SMEs which approach them with concerns about meeting repayments.
The banks are required to comply with the Code as a matter of law. The Code makes it clear that anybody acting for or on behalf of a bank is subject to its provisions. The Central Bank can invoke its statutory powers to require compliance with the Code. A breach of the Code is a breach of a regulatory requirement and may be the subject of enforcement action by the Central Bank.
Additionally, as the Deputy is aware, the two main banks are subject to oversight by the Credit Review Office and the CRO has been active in overturning rejections by the banks of credit applications from the SME sector.
It is the customer’s decision to take legal action against their bank. However, I would state that should any customer of a bank operating in Ireland be unable to resolve a complaint about the operation of his or her accounts they may refer the matter to the Financial Services Ombudsman.
The Deputy can be assured that this is an area that I will keep under review given the importance of the SME sector to fostering and supporting economic recovery.
