Question No. 45 answered with Question No. 43.

Insurance Costs

Questions (46)

Anthony Lawlor

Question:

46. Deputy Anthony Lawlor asked the Minister for Finance if his attention has been drawn to the fact that some residents along our canals are being quoted exorbitant prices for house insurance due to their proximity to the canal and the risk of flooding; his views on whether this appears very unreasonable in view of the fact that the incidences of flooding by canals is minimal; and if he will make a statement on the matter. [14265/14]

View answer

Written answers (Question to Finance)

The issue of flood cover, its availability and its cost, is one with which I am familiar. I am also very conscious of the difficulties that the absence of such cover can cause to householders and businesses.  However, it should be noted that the decision to provide any specific form of insurance cover and the price at which it is offered is a commercial matter based on the assessment an insurer will make of the risks involved.  Neither I, as Minister for Finance, nor the Central Bank of Ireland, can require a company to change its rates or prohibit a company from doing so.

An insurance company's commercial decision to provide new or renewed flood cover is based on a proper assessment of the risks it is accepting and the making of adequate provisioning to meet these risks.  It is a matter for the industry to set its premiums and make provisions at the appropriate level to ensure that it can cope with flooding issues. Furthermore, as a matter of course, insurance companies carry out reviews of the risks they are prepared to insure against and sometimes make decisions to discontinue certain types of cover which they consider high risk.

Government policy in relation to flooding aims to address the underlying problem through appropriate remedial works where this is economically feasible. The Office of Public Works is committed to alleviating the impact of flooding through the provision of defences based on a comprehensive assessment of flood risk throughout the country and development of flood risk management plans for the areas most at risk under the National Catchment Flood Risk Assessment & Management (CFRAM) Programme.

This commitment is underpinned by a very significant capital works investment programme which will see up to €225 million being spent on flood relief measures over a five year period from 2012 to 2016. Works are completed on a prioritised basis. Because of the cost and scale of these types of flood defence works, this approach will see benefits over the medium and long term.  Once these works are completed the availability of flood insurance in affected areas would be expected to increase.

The OPW and Insurance Ireland agreed earlier this week on a sustainable system of information sharing in relation to completed flood alleviation schemes and this is expected to allow the insurance industry a much greater understanding of the extent of the protection provided by flood defence works and will allow them to reflect this in the provision of flood insurance to householders in areas where works have been completed.

My Department is also undertaking a review of measures to address the availability of flood insurance cover, including the experience and proposals in other countries. In assessing these, care has to be taken that the proposed solutions do not put in place arrangements which, over time, would weaken the provision of insurance cover by the market with possible negative long-term consequences for the economy.

Property Tax Assessments

Questions (47, 49)

Pearse Doherty

Question:

47. Deputy Pearse Doherty asked the Minister for Finance if the legislation on the household charge/local property tax is being challenged in the courts as to the legality or constitutionality of same; and if anybody taking the case is treated any differently for the purpose of LPT during the case. [14281/14]

View answer

Billy Kelleher

Question:

49. Deputy Billy Kelleher asked the Minister for Finance if the Revenue Commissioners are entitled to garnish the income of a person or persons to pay the household charge and local property tax who is either appealing a Revenue debt or legally challenging the HC-LPT; and if he will make a statement on the matter. [14287/14]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 47 and 49 together.

In my reply to Question number 92 on 26 June 2013, I informed the House that a High Court challenge to the Local Property Tax (LPT) had been lodged. The House was also informed that the Chief State Solicitor was the solicitor on record acting for all State defendants and that the case was being vigorously defended by the Chief State Solicitor. I am advised that the High Court, on the application of the State defendants, made an Order in July 2013 dismissing the Plaintiff s claim on the grounds that it was frivolous and vexatious and disclosed no cause of action against the Defendants. This decision is under appeal to the Supreme Court.

I am also advised that another person is challenging the constitutionality of the Local Property Tax. This challenge is at an early stage and has not yet been set down for hearing in the High Court.

I am informed by the Revenue Commissioners that the LPT obligations of a liable person are not impacted by whether the person is in the process of challenging the legality or the constitutionality of LPT in the courts. Accordingly, the person is still obliged to file an LPT Return and make arrangements to pay the tax due, including any household charge arrears. Where liable persons file their returns and pay their LPT liability, including household charge arrears, on or before 31 March 2014, they will not incur interest or penalties. If by that date a person has not met his or her obligations, any outstanding LPT liabilities, including household charge arrears will be pursued, where necessary, using the range of collection/enforcement powers at Revenue s disposal which include, mandatory deduction at source from salary, various occupational pensions or from certain Government payments.

With regard to Question No. 49, I assume that the Deputy is referring to payment of LPT or the household charge when talking about a person appealing a revenue debt . I am advised by the Revenue Commissioners that as LPT is a self-assessed tax, it is a matter for the liable person to determine the amount of LPT due based on his or her valuation of the residential property, and to make arrangements to file their LPT Return and pay the tax on the basis of their self-assessment.

In common with other self-assessed taxes, the LPT Return as filed by the taxpayer is generally accepted by Revenue in the first instance.  If, subsequently, Revenue is dissatisfied with any of the details in the LPT Return such that the LPT liability of the property owner has been understated, Revenue may raise a formal notice of assessment to address any of the issues in question.  In these circumstances, provided the tax declared by the property owner in their LPT return has been paid in full, the LPT legislation allows a right of appeal by the owner to the Appeal Commissioners.  Revenue will suspend all enforcement action against any disputed amount, including mandatory deduction at source from wages and other income sources, until the appeal has been determined. Once the appeal is determined, if the case is found in Revenue s favour, the property owner will be liable to pay the additional tax due plus any interest that may have accrued.

VAT Rate Application

Question No. 49 answered with Question No. 47.

Questions (48)

Pearse Doherty

Question:

48. Deputy Pearse Doherty asked the Minister for Finance the reason, under the VAT Consolidation Act of 2010, section 34(l), VAT arises here when the supply of electronically supplied services to a non-taxable person in the State by taxable persons whose business is outside the European Community, online bookies operating from Gibraltar do not pay VAT here under current rules. [14282/14]

View answer

Written answers (Question to Finance)

I am advised by the Revenue Commissioners that the VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply.

Article 135(1)(i) of VAT Directive 2006/112/EC provides a VAT exemption for "betting, lotteries and other forms of gambling, subject to the conditions and limitations laid down by each Member State". The European Court of Justice (ECJ) has ruled that Member States have discretionary power to fix conditions and limitations on the exemption from VAT for certain forms of gambling.  However, these conditions and limitations are constrained by ECJ jurisprudence such as the Rank case (C-259/10) which found that the principle of fiscal neutrality was breached by UK VAT law when it treated differently for VAT purposes certain types of gambling (being mechanised cash bingo and slot machines), where the services were identical or similar from the perspective of the consumer, and met the same needs of the consumer.

Sports bets placed in bookie shops or online fall within the distinction in the Rank case. It is not possible to charge VAT on a bet on the outcome of a race or the outcome of a match depending on the medium through which the bet was waged.  The Betting (Amendment) Bill 2013, once enacted, will introduce a new licensing and taxation regime for remote (online) bookmakers and betting intermediaries (betting exchanges) who enter into bets with persons in the State and provide, among other things, certainty in relation to the VAT treatment of such services.

Electronically supplied services are taxable at the standard rate in each EU Member State, unless a specific exemption applies. For example, if gambling is exempt in an EU Member State, it would also be exempt in that EU Member State if it is supplied as an electronically supplied service. Accordingly, although the place of supply of services to non-taxable persons from online bookies operating from Gibraltar is Ireland, VAT is not charged on the supply as such supplies are primarily exempt from VAT in Ireland.

The Betting (Amendment) Bill, once enacted, should ensure that all comparable bookmakers activities offered in the State are subject to betting tax and exempt from VAT.

Question No. 49 answered with Question No. 47.

Economic Data

Questions (50)

Colm Keaveney

Question:

50. Deputy Colm Keaveney asked the Minister for Finance his Department's most recent estimate for the size of the economy's output gap; the implications of this for the Government’s taxation and spending plans; and if he will make a statement on the matter. [14308/14]

View answer

Written answers (Question to Finance)

The methodology for calculating the output gap has been the subject of considerable technical discussions at EU level. Changes to the approach by which the output gap is estimated were endorsed by a high-level committee (the Economic Policy Committee) on March 19th 2014. This new methodology will form the revised harmonised approach which the European Commission will apply in their forthcoming Spring 2014 forecasts. It will also form the basis for their subsequent assessment of Member States Stability Programme Updates.

The endorsed changes are technical in nature. Essentially they involve a shift in how labour market slack is estimated. The change alters how structural unemployment is calculated with implications for potential labour supply and the measurement of the output gap. Ireland is one of the Member States for whom this change significantly impacts the estimated level of structural unemployment. It produces a significantly lower estimate of the so called 'natural' unemployment rate for a number of countries (Spain, Ireland and Portugal in particular).

In light of these significant methodological revisions, previous estimates of the output gap now need to be revised. My Department will publish an updated assessment of the output gap path in the forthcoming Stability Programme Update. Fiscal policy was last set out at Budget time and will be re-articulated in the context of the forthcoming Stability Programme Update (SPU).

My Department intends to detail the main methodological features of these output gap changes and will set out the implications for the structural budget balance in the SPU.

Tax Collection

Questions (51)

Sandra McLellan

Question:

51. Deputy Sandra McLellan asked the Minister for Finance the reason a person (details supplied) is liable for more tax after already paying €4,964 from a €20,000 life assurance policy; and if he will make a statement on the matter. [14316/14]

View answer

Written answers (Question to Finance)

I am informed by the Revenue Commissioners that the additional tax due is based on  information supplied to date by the person's tax agent.  Revenue have however contacted the tax agent, and it appears there may be some confusion to be resolved.  Revenue is now seeking to clarify the issues involved, and will directly notify the taxpayer of the outcome.