Written Answers Nos. 90 - 114
90. Deputy Clare Daly asked the Minister for Finance if he will ensure that the banks pass on ECB interest rate cuts to their variable mortgage holders, as they never have a problem in passing on the increases. [19360/14]
View answer120. Deputy Eoghan Murphy asked the Minister for Finance if there has been any progress by his Department or by the office of the Financial Regulator or by the Central Bank of Ireland in dealing with the banks on the issue of variable rate mortgages, the cost of which has risen disproportionately in recent years and contrary to market forces. [19661/14]
View answerI propose to take Questions Nos. 90 and 120 together.
Firstly, I must confirm to the Deputy that the lending institutions in Ireland - including those in which the State has a significant shareholding - are independent commercial entities. I have no statutory role in relation to regulated financial institutions passing on the European Central Bank interest rate change or to the mortgage interest rates charged. It is a commercial matter for each institution concerned. It is not appropriate for me, as Minister for Finance, to comment on or become involved in the detailed mortgage position of mortgage holders.
The Central Bank has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations. The Central Bank has no statutory role in the setting of interest rates by financial institutions, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act, 1997. The mortgage interest rates that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned. This interest rate is determined taking into account a broad range of factors, including European Central Bank base rates, deposit rates, market funding costs, the competitive environment and an institution's overall funding. However, as part of the Central Bank's work on mortgage arrears, lenders were asked to consider all avenues to help customers in arrears, including interest rate reductions.
91. Deputy Clare Daly asked the Minister for Finance the reason there are no flat rate expenses for special needs assistants even though this rate exists for many other workers. [19372/14]
View answerIn relation to flat rate expenses, the position is that tax law provides that employees and office holders may claim a tax deduction in respect of:
(a) the cost of travelling expenses necessarily incurred in the performance of the duties of their employment or office; and
(b) the cost of other expenses incurred wholly, exclusively and necessarily in the performance of the duties of their employment or office.
As regards an expenses claim under (b) above, I understand from the Revenue Commissioners that, in strictness, each employee or office holder should submit his or her individual expenses claim to Revenue. However, by way of long standing practice stretching back over 40 years, the expenses deduction due for certain categories of employee are, for administrative ease, agreed between Revenue and the relevant representative bodies. These agreed rates of expenses are granted to individuals in their determination of tax credits for PAYE purposes and have become known as "flat rate expenses".
Therefore, some employees obtain their statutory tax deduction in respect of expenses via the administrative "flat rate expenses" regime whilst others may obtain their tax deduction on foot of an individual claim submitted to the Revenue Commissioners in accordance with the relevant tax legislation. In order to apply for the flat rate expenses regime, the relevant representative body should contact the Revenue Commissioners.
92. Deputy Michael McGrath asked the Minister for Finance in circumstances where the owner has not occupied the property for the past 12 months but previously did occupy it for a long period of time, if the exemption to capital gains tax on the sale of the person's principal private residence applies even if the property has been rented out at market value during that 12 month period. [19391/14]
View answerI am informed by the Revenue Commissioners that full exemption from capital gains tax applies to the sale of an individual's only or main residence where the property has been occupied as such throughout the individual's entire period of ownership. Full exemption is also applicable where the property has been occupied as the individual's only or main residence throughout the entire period of ownership apart from the last twelve month period of ownership, even if the property is let during that twelve month period.
93. Deputy Pearse Doherty asked the Minister for Finance if he will use his influence at State owned banks to encourage them to institute procedures on cash handling and fees payable more suitable to small community groups. [19396/14]
View answer96. Deputy Pearse Doherty asked the Minister for Finance if he will consider a scheme for State owned banks whereby registered charities and small community groups can avail of free banking. [19399/14]
View answerI propose to take Questions Nos. 93 and 96 together.
As the Deputy will be aware under the Relationship Framework the State does not intervene in the day to day operations of the banks or their management decisions regarding commercial matters. Bank fees and charges are commercial matters for the banks and are subject to regulation under Section 149 of the Consumer Credit Act 1995, as amended. Section 149 came into effect in 1996 and currently requires that credit institutions, prescribed credit institutions and bureaux de change operations must make an application to the Central Bank if they wish to introduce a new customer charge or increase any existing customer charge in respect of certain services. Section 149 does not apply to interest rates; it applies to fees, charges and commissions only.
My Department recently published a review of the regulation of bank fees and charges which is available on the website www.finance.gov.ie. The review concluded that it would not be appropriate to repeal Section 149 at this time. The lack of competition in the banking sector means that the repeal of section 149 would give unfettered price setting power to the incumbent banks. The report recommends that this issue should be revisited when competition in the banking sector has improved significantly.
94. Deputy Pearse Doherty asked the Minister for Finance if his attention has been drawn to concerns raised by community groups such as active aging groups that the fees system operated by banks are causing great hindrance to their activities and can even threaten their sustainability; and if he will make a statement on the matter. [19397/14]
View answer95. Deputy Pearse Doherty asked the Minister for Finance the banking options available to small community groups who are facing great difficulty accessing banking services due to the fees structure employed by Irish banks; and if he will make a statement on the matter. [19398/14]
View answer97. Deputy Pearse Doherty asked the Minister for Finance the charities or community groups that can avail of free banking; and if he will make a statement on the matter. [19400/14]
View answerI propose to take Questions Nos. 94, 95 and 97 together.
I, as Minister for Finance, have no role in the regulation of bank charges. As the Deputy is aware, bank fees, charges and commissions are subject to regulation under Section 149 of the Consumer Credit Act 1995, as amended. Section 149 came into effect in 1996. Section 149 does not apply to interest rates; it applies to fees, charges and commissions only. Section 149 requires that credit institutions, prescribed credit institutions and bureaux de change must make a submission to the Central Bank if they wish to introduce any new customer charges or increase any existing customer charges in respect of certain services, such as:
- making and receiving payments,
- providing and granting credit, and
- maintaining and administrating transaction accounts
- providing foreign exchange.
The Central Bank may direct the institution not to impose the new or increased charge or it may approve the charge, or approve it at a lower level than requested by the institution. The Central Bank may exempt a credit institution from the obligation to make a notification for charges that are legitimately individually negotiated between the institution and the customer. Letters of Exemption are granted by the Central Bank, where certain requirements are met, which outline the qualifying conditions.
My Department recently published a review of the regulation of bank fees and charges which is available on the website www.finance.gov.ie. The review concluded that it would not be appropriate to repeal Section 149 at this time. The lack of competition in the banking sector means that the repeal of section 149 would give unfettered price setting power to the incumbent banks. The report recommends that this issue should be revisited when competition in the banking sector has improved significantly. It is my view that the current regulatory regime offers appropriate protection to consumers against unjustified increases in bank fees and commissions.
More generally, banks have adopted and implemented a variety of corporate social responsibility strategies and policies, which can include interaction withn community, sporting and charitable causes. However, I am not aware of individual banks' arrangements or policies in this area. It is advisable that all consumers shop around for banking products that best meet their needs. A Financial Product Comparison tool is available on the National Consumer Agency's website, www.nca.ie, which consumers may consult to compare current fees imposed by credit institutions for various financial services products. Individuals may also consult information leaflets available in bank branches.
All banks providing current accounts in Ireland are subject to the Central Bank's Current Account Switching Code, which is designed to make the process of switching current accounts easier and quicker and to offer protection and support for consumers when switching bank account. The Switching Code places obligations and time limits on both the old and the new bank when completing the switching process. Where accounts include credit facilities, such credit facilities will be subject to the credit assessment process applicable at the receiving bank.
98. Deputy Jack Wall asked the Minister for Finance if a person (details supplied) in County Kildare is paying the correct taxation; and if he will make a statement on the matter. [19414/14]
View answerI have been advised by the Revenue Commissioners that USC is payable on gross income as follows:
- On the first €10,036 @ 2%,
- On the next €5,980 @ 4%,
- On the balance @ 7%.
Where an individual is aged 70 years or over and their aggregate income for the year is €60,000 or less a reduced rate applies. This reduced rate limits the charge to 4% on all income over the first €10,036. I have been advised by the Revenue Commissioners that a tax credit certificate issued to the person concerned on 28 January 2014. Based on that certificate and the details supplied by the Deputy, the person concerned is paying the correct amount of USC. I have further been advised by the Revenue Commissioners that the Pension Levy deduction referred to in the details supplied by the Deputy is not a tax deduction. This may be a levy imposed by the relevant occupational Pension Scheme of which the taxpayer is a beneficiary.
100. Deputy Pearse Doherty asked the Minister for Finance the steps he will take to ensure a smooth transition for customers of Setanta Insurance and all the other policy holders to another insurer or to assist in brokering the deal for another insurer to take over. [19417/14]
View answerUnder EU law which governs non-life insurance, an insurer is required to inform the regulator in its home Member State (its home regulator) that it intends to pursue business in another Member State. The home regulator must then provide the host regulator with a certificate attesting that the insurer covers the EU Solvency Capital Requirement, as well as the nature of the business which the insurer intends to undertake. The insurer may start to pursue business from the date that the certificate is communicated to the host regulator, in this case the Central Bank of Ireland.
Setanta Insurance Company Limited ("Setanta") is a Maltese incorporated company which was both authorised and prudentially supervised by the Malta Financial Services Authority (MFSA). While its financial position is not supervised by the Central Bank of Ireland as the Central Bank has no role in that regard, the firm is supervised by the Central Bank for conduct of business rules, i.e. consumer protection obligations. I understand that the Central Bank has been in ongoing contact with the MFSA in relation to Setanta in recent times.
On Wednesday 16 April, 2014, Setanta Insurance Company Ltd ("Setanta") determined that the company was insolvent. This means that Setanta does not have sufficient funds to be able to honour its full obligations towards claimants, policyholders and other creditors. It is expected that Setanta will be formally placed into liquidation by the Malta Financial Services Authority in the coming days. Policyholders can expect to be given two months cancellation notification (in accordance with the Central Bank of Ireland's Consumer Protection Code 2012) during which period cover will remain in force. While policies will remain valid until the required notice period has been served, it is important to be clear that the amounts due under any claims may not be fully recoverable in all circumstances. In this light, it is important to note that the Central Bank of Ireland has advised all Setanta policyholders to arrange for alternative cover without delay.
The Central Bank is in ongoing contact with the Malta Financial Services Authority in relation to Setanta Insurance Company Limited, the impact on policyholders and the provision for relevant and appropriate information, particularly in relation to claims. The Central Bank is also engaging with the brokers who sold the policies to ensure they assist policyholders and keep them informed.
The provision of motor insurance cover is a commercial matter for insurance companies, which is based on a proper assessment of the risks they are accepting and the making of adequate provisioning to meet these risks. In my role as the Minister for Finance I have responsibility for the development of the legal framework governing financial regulation.
I am infromed that Insurance Ireland made arrangements for their member insurance companies to be open over the Easter period to assist Setanta policyholders in arranging cover. In addition, the Insurance Ireland 'Declined Cases Agreement' was available to policyholders of Setanta. The current Declined Cases Agreement was drawn up in 1981 and is adhered to by all motor insurers in Ireland. I am informed that under the agreement, the insurance market will not refuse to provide insurance to an individual seeking insurance, if he/she has approached at least three insurers and has not been able to obtain cover from them. I understand that Insurance Ireland is also making information available to those who have queries, complaints or difficulties in relation to this matter through their service at (01) 676 1914 or by email at info@insuranceireland.eu. The Central Bank has written to all brokers to instruct them to write to all policyholders that hold a current Setanta motor insurance policy and inform them of the urgency of making alternative motor insurance arrangements.
103. Deputy Pearse Doherty asked the Minister for Finance the date on which he became aware of difficulties at Setanta Insurance; the date on which the Financial Regulator became aware of difficulties at the company; and if he will make a statement on the matter. [19420/14]
View answerSetanta Insurance Company Limited (Setanta) is a Maltese incorporated company subject to prudential supervision in Malta by the Malta Financial Services Authority (MFSA). Its financial position is not supervised by the Central Bank of Ireland and the Central Bank has no role in that regard. The Central Bank have informed me that they have been in discussions with the MFSA in relation to Setanta since November 2013 when the Central Bank identified issues during a consumer protection themed inspection. The Central Bank have also informed me that there was regular contact in the following months which led to the announcement in January, 2014 that the firm would cease writing new business and issuing further renewals.
The Central Bank wrote on the 21st January 2014 to advise my Department of their concerns with Setanta's solvency margin and I was subsequently informed of this. A widely reported press release was issued by Setanta Insurance on January 27th 2014 which stated that the insurer had resolved to cease carrying on the business of insurance, including the renewal of existing business, with effect from close of business of 24 January 2014. Setanta then appointed Heritage Insurance Management (Malta) Limited to undertake the run-off process and the insurer advised the MFSA accordingly.
Contact continued between the Central Bank and the MFSA and, on 11 April 2014, the MFSA advised the Central Bank that the directors of Setanta were considering the potential liquidation of the company. There was ongoing contact on the following days. Setanta announced that the shareholders had recommended the appointment of a liquidator on 16 April 2014 subject to approval of the MFSA. On April 16th I was advised that the shareholders of Setanta had resolved to wind up the company and a liquidator had been provisionally appointed.
104. Deputy Róisín Shortall asked the Minister for Finance further to Parliamentary Question No. 49 of 27 November 2013, if he will request the Revenue Commissioners to contact the person in question to confirm that the register has been amended and that their details are now correct. [19431/14]
View answerRevenue has confirmed to me that the person's records were correctly amended on the LPT Register in November 2013 on foot of the Deputy's previous Question. Revenue also confirmed to me that a member of the LPT team has made telephone contact with the person and assured her that her details are correctly recorded and that her affairs are fully in order. The person requested Revenue to confirm to her in writing that her affairs are fully in order and a letter in this regard has now issued to her.
105. Deputy Willie Penrose asked the Minister for Finance if he will set out in detail the taxation treatment of lump sum payments due to public servants, semi-State employees and other employees, who retire in 2014; and if he will make a statement on the matter. [19443/14]
View answerThe following arrangements currently apply to retirement lump sums paid under pension arrangements approved by the Revenue Commissioners, and also to retirement lump sums paid from public service occupational pension schemes.
- Lump sum amounts up to €200,000 are paid free of tax. They are also paid free of USC.
- The portion of a lump sum between €200,001 and 25% of the Standard Fund Threshold (currently €500,000) is taxed on a ring-fenced basis at the standard rate (currently 20%). This means that no tax credits or other tax reliefs can be set against this portion of the lump sum. No USC is chargeable.
- Any amount of a lump sum in excess of €500,000 is taxed at the individual's marginal rate of tax (credits and other tax reliefs are available). In this instance, USC is chargeable on the excess.
I would also point out that the €200,000 tax-free amount is a lifetime limit and applies to a single lump sum or, where an individual is in receipt of lump sums from more than one pension product, to the aggregate of those lump sums. In addition, retirement lump sums taken on or after 7 December 2005 and before 1 January 2011 (the date the current regime was introduced) must be taken into account in determining the tax-free amount (if any) and the portion taxable at the standard rate (if any) appropriate to a retirement lump sum paid on or after 1 January 2011.
106. Deputy Joan Collins asked the Minister for Finance further to the assurance given, if he will confirm that he has the authority to determine the amount of bonds, which at present total €25 billion and are solely vested in the Central Bank of Ireland, that will be offered for sale to the open market in 2014 and subsequent years; if he does have that authority, if he will commit to not exceeding the minimum bond disposals outlined at the time of the special liquidation of the Irish Bank Resolution Corporation in February 2013; if he will not provide any such commitment, if he will commit to not exceed the minimum disposal unless there is a net financial benefit of so doing to the State; and if he will state what the financial benefit is. [19445/14]
View answerThe Central Bank of Ireland is independent in the exercise of its functions and the management of its investment holdings are a matter for the bank themselves; neither I nor the Department of Finance have any role in the matter. I have been advised by the Central Bank that the portfolio of Government bonds now held by the Central Bank following the liquidation of IBRC will be sold in accordance with the schedule listed below, taking conditions of financial stability into account.
The Central Bank has undertaken that a minimum amount of bonds will be sold in accordance with the following schedule: to end 2014 (€0.5bn), 2015-2018 (€0.5bn p.a.), 2019-2023 (€1bn p.a.), 2024 and after (€2bn p.a.). The Central Bank normally reports in detail on its balance sheet only at annual intervals although it also publishes a more aggregate balance sheet on a monthly basis. While the latter does not contain details of its investment holdings, it is my understanding that, in its Annual Report for 2013, the Central Bank will report on any progress towards the €0.5 billion minimum sales by end-2014.
107. Deputy Jerry Buttimer asked the Minister for Finance the reason a person (details supplied) in County Cork was sent a claim form No. 54 by the Revenue Commissioners; and if he will make a statement on the matter. [19495/14]
View answer108. Deputy Jerry Buttimer asked the Minister for Finance the reason a person (details supplied) in County Kerry received a claim form No. 54 from the Revenue Commissioners; and if he will make a statement on the matter. [19497/14]
View answerI propose to take Questions Nos. 107 and 108 together.
The Form 54 Claims form is a general issue tax return form that incorporates the Form 54D Claim for Repayment of Deposit Interest Retention Tax. As part of their customer service, the Revenue Commissioners issue the claims form 54 to persons who are on Revenue's records as having submitted such a form previously.
109. Deputy Thomas P. Broughan asked the Minister for Finance if he will consider reducing the rates of excise duty or VAT charged on home heating oil due to the continued increases in the price of this product which are causing financial hardship for many families. [19524/14]
View answerI 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. The reduced VAT rate of 13.5% applies to the supply of home heating oil, and gas and electricity in Ireland. The majority of EU Member States apply a much higher VAT rate to the supply of home heating oil as EU VAT law provides that the standard VAT rate should apply to these services. However, as part of a derogation to EU VAT law, Ireland is entitled to retain a reduced rate to the supply of home heating oil on the basis that we applied a reduced rate to the supply of domestic fuels on 1 January 1991. However, under this derogation the VAT rate may not be reduced below 12%. While it is possible, therefore, to reduce the VAT rate on home heating oil to 12%, under EU VAT law this would have to apply to all activity currently applying at the 13.5% rate and as a result would be very costly to the Exchequer.
With regard to excise rates on home heating oil the rates currently applicable for diesel and kerosene used for home heating are €102.28 per 1,000 litres and €50.73 per 1,000 litres, respectively.
Ireland, as with other countries, has experienced an increase in fuel prices. This increase is an international phenomenon. Fuel prices are driven by a number of factors including the price of oil on international markets, exchange rates, production costs and refining costs. The rise in oil prices over recent periods reflected additional factors such as geopolitical uncertainty in Northern Africa and the Middle East with potential supply disruptions. The Exchequer yield from excise, as excise is set at a nominal amount, does not increase as the price of fuels increase. I have no plans, therefore, to reduce the rates of VAT or excise duty on home heating oil.
110. Deputy Clare Daly asked the Minister for Finance the reason that pre-1995 public service occupational pensions are not exempt from the USC, but those post-April 1995 are; his views on whether exempting an amount equivalent to the State pension for those pre-1995 would be a more equitable solution. [19558/14]
View answerThe USC was introduced in Budget 2011 to replace the Income Levy and Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and raise revenue to reduce the budget deficit. It is a more sustainable charge than those it replaced. It is applied at a low rate on a wide base.
The USC, like the Income Levy before it, does not apply to social welfare payments or payments of a similar nature. However, all occupational pensions are liable to the USC, if the payment is greater than the exemption limit, which from 1 January 2012 is €10,036 per annum. This is true of both pre and post 1995 public service and all private sector occupational pensions. However, in practice, post 1995 public service occupational pensions comprise of the relevant social protection pension rate and a top up occupational pension amount where applicable.
The Deputy may be aware that delivering on a commitment in the Programme for Government, the USC was reviewed by my Department in the lead up to Budget 2012. The report is available at www.finance.gov.ie. The issue of USC applying to occupational pensions of retired public servants who entered the public service before April 1995 was examined. However, the Government decided not to exempt the occupational pensions of these individuals from the USC charge as it would be very costly and difficult to achieve, as it would involve all income earners with the equivalent income benefiting from the exemption. In addition, it would also undermine the principle of the USC being applied to income with few exemptions. However, as a result of the review of the USC, the Government decided in Budget 2012 to increase the entry point to the Universal Social Charge from €4,004 to €10,036 per annum. It is estimated that this removed almost 330,000 individuals from the charge, some of whom may be retired public servants who entered the public service before April 1995.
As you will appreciate, as Minister for Finance, I receive numerous requests for exemptions from taxation. You will also appreciate that I must be mindful of the public finances and the many demands on the Exchequer given the significant current budgetary constraints. Tax exemptions, no matter how worthwhile in themselves, reduce the tax base and make general reform of the tax system that much more difficult.
111. Deputy Michael McGrath asked the Minister for Finance if the Revenue Commissioners have any discretion on the application of the four year limit on persons claiming tax credits; and if he will make a statement on the matter. [19561/14]
View answerFinance Act 2003 introduced a 4 year time limit as regards claims for repayment of tax made on or after 1 January 2005. In addition, the right of the Revenue Commissioners to raise assessments was also reduced to a four-year period except where, for example, a taxable source of income was not declared. The scheme of 4 year time limits is designed to achieve the necessary balance between establishing a fair and uniform system for taxpayers, while at the same time, providing the necessary protection for the Exchequer from exposure to claims going back many years. As the 4 year time limit is set out in statute, the Revenue Commissioners have no discretion in the matter.
112. Deputy Pearse Doherty asked the Minister for Finance if he will list by county and local authority area the number of properties valued at over €1 million for the purpose of the local property tax. [19600/14]
View answerAs the Deputy will be aware, the Revenue Commissioners have incrementally published data in relation to Local Property Tax and the most recent data published by them shows that about 0.2% of residential properties nationally have been valued for Local Property Tax (LPT) purposes in excess of €1m on a self assessment basis, which equates to approximately 3,500 properties.
I am advised by the Commissioners that they will publish further data over time. One of the factors to be considered in preparing and publishing granular data relating to any tax, and this is relevant to the Deputy's question, is Revenue's obligations under section 851A Taxes Consolidation Act 1997 regarding the confidentiality of taxpayers' information. Publishing certain LPT data on a county or local authority basis presents a risk that the identity of individual property owners could be inferred. Revenue will consider in due course whether there are ways to mitigate this risk with a view, as they have done up to now, to putting as much information as possible into the public domain. In the meantime, I am informed that compliance data in relation to the LPT is available broken down by city and county councils nationally and the most up to date figures were published in April 2014 on the Commissioners website at: http://www.revenue.ie/en/tax/lpt/lpt-stats-0414.pdf.
113. Deputy Jonathan O'Brien asked the Minister for Finance the number of licensed betting offices here during each of the past five years. [19632/14]
View answerI am advised by the Revenue Commissioners that the number of betting offices in the State licensed in each of the last five licensing years is - 1263 in 2009; 1240 in 2010; 1175 in 2011; 1101 in 2012; 1017 in 2013. I am further advised that the licensing year runs from the 1st December to the 30th November.
114. Deputy Arthur Spring asked the Minister for Finance under the tax agreements with the United Kingdom, the obligation an Irish citizen residing in Ireland has to pay the USC to the Irish Revenue Commissioners on income from a UK pension. [19635/14]
View answerA UK pension that is similar to a social welfare pension in this State is not liable to USC. Other than such pensions, however, Irish resident individuals are liable to pay tax, including universal social charge, (USC) on income arising from Irish and foreign sources. In general, therefore, where an Irish resident citizen is in receipt of a pension (other than a social welfare type pension) from the UK, he/she is liable to pay income tax and USC on that income in Ireland. The individual is required to comply with the standard self-assessing requirements including the obligation to file a tax return and pay the tax due.
However, the UK and Ireland have a convention in place to eliminate double taxation on income arising in one State where the individual is resident in the other State. Irish tax, under the terms of the convention, includes income tax and USC. If the individual has paid UK tax on the income, a credit is allowed in computing the Irish income tax and USC liabilities to ensure that the income is not subject to double taxation.
