Insurance Levy

Questions (165)

Jim Daly

Question:

165. Deputy Jim Daly asked the Minister for Finance if he will confirm the rationale for Government levies being applied to motor insurance policies; if he will further confirm where revenues raised by such levies are expended; and if he will make a statement on the matter. [20875/14]

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Written answers (Question to Finance)

The Insurance Compensation Fund (ICF) levy of 2%, applied to home, motor and commercial insurance, operates under the Insurance Act 1964 and came into effect from 1 January 2012 following the appointment of administrators to Quinn Insurance Ltd (QIL) by the High Court.

Under Section 6 of the Insurance Act 1964 the responsibility for deciding whether the ICF has sufficient funds available to it at any particular time is a matter for the Central Bank of Ireland (CBI). Where, in the opinion of the CBI, the state of the ICF is such that financial support should be provided for it, it determines an appropriate contribution to be paid to it by each insurer calculated as a percentage, not exceeding 2% of the aggregate of the gross premiums paid to that insurer in respect of policies issued in respect of risks in the State. Funds from the levy are collected from insurers by the Revenue Commissioners and these funds are transferred on a monthly basis to the ICF.

The ICF is mainly a consumer protection mechanism. When an insurance company gets into financial difficulties, such as in an administration or in an insolvency, the scheme provides funding which allows policyholders claims to be met, in circumstances where the terms of the scheme are met. Such compensation schemes exist in many other EU Member States to deal with insurance companies occasionally getting into financial trouble.

An ICF levy was previously introduced on 1 January 1984 following the collapse of PMPA in October 1893. The 2% levy was paid by all non-life insurers at this rate until 31 December 1991 and a reduced levy of 1% applied for the period 1 January 1992 to 31 December 1992, when it was discontinued as sufficient moneys had been collected to successfully complete the administration of the former PMPA.

The ICF levy should not be confused with a 3% stamp duty on non-life insurance premiums introduced in 1982, which is often referred to as an insurance levy.  This Stamp Duty forms a part of general stamp duty receipts and is paid into the Central Fund along with other tax receipts. 

Departmental Bodies Data

Questions (166)

Seán Fleming

Question:

166. Deputy Sean Fleming asked the Minister for Finance the number of commercial semi-State companies under the aegis of his Department; the current value of the pension fund assets held by each commercial semi-State company; the latest funding position of each; and if he will make a statement on the matter. [20905/14]

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Written answers (Question to Finance)

In response to the Deputy's question there are no commercial semi State Companies under the aegis of my Department.

Household Charge Collection

Questions (167)

Dan Neville

Question:

167. Deputy Dan Neville asked the Minister for Finance the position regarding payments for household charges and property tax in respect of a person (details supplied) in County Limerick. [20922/14]

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Written answers (Question to Finance)

I am advised by Revenue that with effect from 1 July 2013, Section 156 of the Finance (Local Property Tax) Act 2012 (as amended) converted arrears of Household Charge (HHC) to Local Property Tax (LPT), increased the liability from €100 to €200 per property and made Revenue responsible for its collection.

As part of Revenue's recent HHC compliance programme, property owners whose records indicated that the liability had not been paid were notified of the outstanding charge and advised to either pay within a specified period of time or confirm the reasons as to why the liability was not due.

In regard to the specific case to which the Deputy refers, Revenue has confirmed to me that a member of the LPT team has already made direct contact with the person in question and explained the background to the €200 HHC liability to him. The team member also outlined the various options available to him including, deferral, partial deferral and payment alternatives. The person confirmed that he did not want to avail of any deferral in regard to either LPT, which is fully paid for both 2013 and 2014, or HHC. On foot of the discussions arrangements have been put in place for the person to meet his HHC liability through a series of phased payments to one of the approved LPT Payment Service Providers.

IBRC Loans

Questions (168)

Clare Daly

Question:

168. Deputy Clare Daly asked the Minister for Finance the position regarding the Irish Bank Resolution Corporation loans that were not bought by the American companies; the way loans were selected for sale; and if they will transfer to the National Assets Management Agency. [20932/14]

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Written answers (Question to Finance)

The Special Liquidators confirm that 64% of the residential mortgage portfolio was sold to Shoreline Residential Limited, an indirect affiliate of Lone Star Fund VIII and to Mars Capital Ireland Limited funded through funds managed by Oaktree Capital Management LP. I have been advised by the Special Liquidators that they are unable to comment on how the loans were selected for sale as this is commercially sensitive information.

NAMA will not now be obliged to purchase unsold IBRC assets at their independent valuation as previously envisaged. The Special Liquidators will now devise and manage a further sales process in respect of these unsold assets in a manner that maximises the return to all remaining creditors of IBRC, including the State.

Motor Insurance Regulation

Questions (169, 194)

Shane Ross

Question:

169. Deputy Shane Ross asked the Minister for Finance his plans to protect policy holders with the now collapsed Setanta Insurance; the way he will ensure the smooth transition for all the innocent policy holders to another insurer or assist in brokering the deal for another insurer to take over; and if he will make a statement on the matter. [20952/14]

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Willie Penrose

Question:

194. Deputy Willie Penrose asked the Minister for Finance in the context of the situation that has arisen for policy holders here as a result of the recent collapse of Setanta Insurance, if the compensation fund is being made available to these policy holders who have been left out of pocket and have to secure alternative policies of indemnity so as to fulfil their legal obligations; and if he will make a statement on the matter. [21188/14]

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Written answers (Question to Finance)

I propose to take Questions Nos. 169 and 194 together.

Under 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.  The Central Bank is in contact with the MFSA in relation to Setanta Insurance Company Limited, the impact on policyholders and the provision for relevant and appropriate information, particularly in relation to claims.

On 16 April, 2014, 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. Setanta was formally placed into liquidation by the MFSA following a meeting of the creditors which took place on the 30 April, 2014 where a liquidator, Mr Paul Mercieca, was appointed.

Officials from my Department together with officials from the Central Bank met with the Liquidator and his representatives in Ireland on 7 May 2014. At that meeting, the Liquidator confirmed that Setanta will not be in a position to pay the full amount of claims. It is also unlikely that a pro-rata portion of premiums will be refunded upon completion of the Setanta liquidation.

On Friday the 9th of May the Liquidator placed notices in national newspapers which advised policyholders that all Setanta policies of insurance will be cancelled by way of 7 days' notice or 10 days' notice to policyholders in accordance with their policy documents. The notice further urged Setanta policyholders to make alternative motor insurance arrangements, as soon as possible, as previously advised by the Central Bank. The position on each policy is for the Liquidator to decide in due course. 

The Motor Insurance Bureau of Ireland (MIBI) is a non-profit-making organisation which was established by Agreement between the Government and those companies underwriting motor insurance in Ireland. The principal role of MIBI is to compensate innocent victims of accidents caused by uninsured and unidentified vehicles. If, for legal reasons, MIBI is not in a position to accept a claim, these third party claims will be eligible to proceed for consideration by the High Court for compensation from the Insurance Compensation Fund (ICF).

Claims on personal insurance policies will be payable from the ICF.  All ICF payments are subject to the limit of 65% of the amount due or €825,000, whichever is the lesser. Under Section 3.6 of the Insurance Amendment Act 1964 (as amended) first party claims by a body corporate or unincorporated body are not covered by the ICF. The refund of premiums for either commercial and personal insurance policies is not covered by the ICF or MIBI.

The Liquidator advised that arrangements are in hand for policyholders to obtain their "no claims bonus" certificates from Setanta. Insurance Ireland have informed me that these certificates will be honoured by other insurers. 

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 provision of motor insurance cover remains 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.

Until otherwise advised those policyholders which have been affected by the collapse of Setanta should continue to contact Setanta Insurance Services Limited at 0818 255 255 (if calling from outside Ireland +353 1 897 6300 or on support@setantainsurance.com .

Motor Insurance Regulation

Questions (170, 171, 172)

Pearse Doherty

Question:

170. Deputy Pearse Doherty asked the Minister for Finance the reason, if the Financial Regulator was aware of issues at Setanta Insurance in November 2013, customers were not informed of these issues. [20966/14]

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Pearse Doherty

Question:

171. Deputy Pearse Doherty asked the Minister for Finance the reason, if he was aware of issues at Setanta Insurance in January, customers were not informed of these issues. [20967/14]

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Pearse Doherty

Question:

172. Deputy Pearse Doherty asked the Minister for Finance when Setanta Insurance was obliged to stop the sale and renewal of insurance; if his attention has been drawn to the fact that it continued to do so until at least March; and if he will make a statement on the matter. [20968/14]

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Written answers (Question to Finance)

I propose to take Questions Nos. 170 to 172, inclusive, together.

Setanta 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 and immediately referred the matter to the MFSA for further investigation. 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 16th 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 further renewals 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.   The details and operation of this run off process is a prudential matter overseen by the home regulator, the MFSA.   

I am advised that 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 over 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. The Central Bank is in ongoing contact with the Malta Financial Services Authority (MFSA) in relation to Setanta Insurance Company Limited.

The Central Bank has also been engaging with the brokers who sold the policies to ensure they assist policyholders and keep them informed. 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.  The Central Bank as well as the Department of Finance have also liaised with the relevant industry representative bodies.

My Department and the Central Bank will be reviewing the circumstances relating to Setanta and will be reporting to me on what lessons can be learnt and how the framework can be strengthened. The European Commission has also indicated that it will review whether any issues raised relating to the regulatory framework require action.

Universal Social Charge Application

Questions (173)

Clare Daly

Question:

173. Deputy Clare Daly asked the Minister for Finance the basis upon which the universal social charge is levied; and the purpose for which the revenue collected is used. [20988/14]

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Written answers (Question to Finance)

The Universal Social Charge (USC) was introduced in Budget 2011 to replace the Income Levy and the 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 revenues collected play a vital part in meeting the many expenditure demands placed on the Exchequer.

Those on incomes below €10,036 are exempt from paying USC. Otherwise the standard rates are:

- 2% on the first €10,036

- 4% on the next €5,980

- 7% on the balance

In addition individuals aged 70 years or over whose aggregate income for the year is €60,000 or less, and individuals who hold a full medical card whose aggregate income for the year is €60,000 or less, are only subject to a rate of 4% on all of their income above €10,036.

Furthermore, there is a surcharge of 3% on individuals on non-PAYE income exceeding €100,000 in a year.

USC is a tax payable on gross income, including notional pay, after any relief for certain trading losses and capital allowances, but before pension contributions. It is not charged on social welfare and similar type payments, or on income which was already subjected to DIRT.

Property Tax Administration

Questions (174, 175)

Michael McCarthy

Question:

174. Deputy Michael McCarthy asked the Minister for Finance if he will arrange for the Revenue Commissioners' records to be amended in respect of a local property tax liability in respect of a person (details supplied) in County Cork. [21024/14]

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Michael McCarthy

Question:

175. Deputy Michael McCarthy asked the Minister for Finance if he will arrange for the Revenue Commissioners' records to be amended in respect of a local property tax liability in respect of a person (details supplied) in County Cork. [21025/14]

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Written answers (Question to Finance)

I propose to take Questions Nos. 174 and 175 together.

I have previously dealt with these issues under Questions Nos. 43 and 44, 19783-14 and 19784-14 of 1 May 2014.

Revenue has advised me that Section 10 of the Finance (Local Property Tax) Act 2012 (as amended) made provision for a number of exemptions from Local Property Tax (LPT). The exemptions include certain unfinished housing estates, which are prescribed (as unfinished) by the Minister for the Environment, Community and Local Government in Statutory Instrument (SI) No. 91 of 2013. The 'prescribed list' was published in March 2013 and can be viewed at www.environ.ie. It is important to be aware that, in line with Government policy, only properties appearing on the 'prescribed list' are entitled to exemption from LPT and Revenue has no discretion in this regard.

Revenue has confirmed to me that contacts were recently made with LPT Branch by the Deputy's office in respect of the two properties to which his Questions refer. The contacts arose from the owners receiving HHC arrears letters, which issued in both cases because the data, which Revenue received from the Local Government Management Agency (LGMA), gave no indication of exemptions being in place. As a result of the Deputy's contact, the properties were subsequently confirmed as being entitled to exemptions (from HHC) and the records were amended to reflect that status.

As a general comment on exemptions, the Deputy should be aware that it does not follow that properties, which are exempt from the Household Charge (HHC) are automatically included in the 'prescribed list' for LPT, as the qualifying criteria in respect of both exemptions are not the same. For example, certain properties and estates that were listed as exempt from HHC on the basis of being 'unfinished' and which were subsequently further developed in the period up to March 2013 were excluded from the LPT 'prescribed list'. This had the effect of very significantly reducing the number of exemptions in respect of LPT in comparison to HHC.

For the Deputy's information, with effect from 1 July 2013, Section 156 of the Finance (Local Property Tax) Act 2012 (as amended) converted HHC to LPT, increased all outstanding liabilities from €100 to €200 and made Revenue responsible for the collection of those outstanding amounts. 

In regard to the LPT status (as distinct from HHC) of the properties, Revenue has informed me that it has confirmed that parts of the two estates mentioned by the Deputy in his Questions are listed as exempt on SI 91, but from preliminary analysis it appears as if the actual properties in question may not be included. The inclusion or exclusion of individual properties on the 'prescribed list' are issues for the property owners and the relevant Local Authorities to agree upon and Revenue has no role in those decisions.For the reasons just outlined it is very important that before any person claims an exemption from LPT they check to ensure their actual properties are included in the 'prescribed list' regardless of whether they already had exemption from HHC or not and where there is any doubt they should contact the relevant Local Authority to confirm. Once a person has confirmed entitlement to an exemption from LPT with their Local Authority, and can produce the necessary supporting documentation when requested, Revenue will amend the record as appropriate.

Finally, Revenue has assured me that it intends carrying out compliance checks on exempt properties to ensure the property owners in question are entitled to the concessions claimed.

Tax Rebates

Questions (176)

Brendan Griffin

Question:

176. Deputy Brendan Griffin asked the Minister for Finance the reason persons who pay their local property tax by monthly direct debit are unable to receive revenue refunds unless they pay the remainder of their liability; if the Revenue Commissioners will review this practice; and if he will make a statement on the matter. [21056/14]

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Written answers (Question to Finance)

I am informed by Revenue that property owners who are due a refund of tax and who are currently paying their 2014 LPT liability by direct debit (over the course of 2014) are entitled to receive their tax refund, provided that the direct debits have been honoured, and that the rest of their tax affairs are in order. They are not required to pay their full 2014 LPT liability now in order to receive the refund.

National Treasury Management Agency Deposits

Questions (177)

Pearse Doherty

Question:

177. Deputy Pearse Doherty asked the Minister for Finance if any assessment has been made on the potential impact of the National Treasury Management Agency's reserves of SI 182 of 2014; and if he will make a statement on the matter. [21064/14]

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Written answers (Question to Finance)

The National Treasury Management Agency (NTMA) is known as the State Claims Agency (SCA) when carrying out its role of managing claims on behalf of State Authorities who are liable in respect of claims and from whom the SCA recovers the amount of any awards and associated costs. Day-to-day claims costs are met from the Post Office Savings Bank Fund, as set out in the legislation establishing the State Claims Agency. The SCA seek reimbursement of any expenditure on claims on a monthly basis from the relevant State Authorities.

Motor Insurance Regulation

Questions (178, 189)

Terence Flanagan

Question:

178. Deputy Terence Flanagan asked the Minister for Finance his views regarding the situation under EU law whereby an insurance provider can register in a particular EU country where regulations may be soft but opt to trade in another EU country which has stiffer regulations; if he will confirm that that prudential and business regulations within EU countries are different; and if he will make a statement on the matter. [21082/14]

View answer

Luke 'Ming' Flanagan

Question:

189. Deputy Luke 'Ming' Flanagan asked the Minister for Finance what part of Government is responsible for regulating car insurance companies; if a financial-insurance company is incorporated in another jurisdiction, what powers the Central Bank or Financial Regulator have in overseeing what they do, in particular accessing their solvency; if any measures have been put in place to prevent another insurance company from collapsing and leaving its clients without insurance cover or a refund of the premium paid; and if he will make a statement on the matter. [21158/14]

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Written answers (Question to Finance)

I propose to take Questions Nos. 178 and 189 together.

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 national policy and the legal framework governing insurance regulation. In Ireland much of the legal framework governing insurance regulation is determined by agreement at a European level.

Under 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. 

The Central Bank of Ireland is the competent authority for the prudential regulation of all insurance firms authorised in Ireland, which includes those non-life insurance companies which offer car insurance. Article 5 of the Third Non-life Insurance Directive paragraph 1 states "authorisation shall be valid for the entire Community. It shall permit an undertaking to carry on business there, under either the right of establishment or the freedom to provide services". If a firm is established in another EU member state, that member state is responsible for the Prudential Regulation. In some Member States this is done by a Central Bank while in others this is done by a stand-alone Regulatory body.

A General Protocol relating to the Collaboration of the Insurance Supervisory Authorities of the Member States of the European Union is available at https://eiopa.europa.eu/en/publications/protocols/index.html . It sets out the arrangements for the sharing of information between the Insurance Supervisory Authorities of the Member States.

In the case of entities regulated on a Freedom of Services based, the data provided to the Central Bank of Ireland is: Gross Premiums Written, Gross Claims Paid and Gross Commissions Paid; and 2013 data should be received by the Central Bank on or before the 31 December 2014.

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, 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 contact with the MFSA in relation to Setanta in recent times.

Setanta was regulated at EU regulatory level in accordance with a directive known as Solvency I which sets a minimum requirement on the amount of regulatory capital European insurance companies must hold against unforeseen events. Many Member States, including Ireland require insurers to hold higher capital than that required under Solvency I. I understand that Setanta met its EU regulatory obligations and under EU law is therefore entitled to trade across EU borders.  Following negotiations that were completed at European level in November, 2013, a new maximum harmonisation regime known as Solvency II will commence on 1 January 2016, which will further strengthen and unify the EU regulatory framework. The Solvency II EU Directive sets out new, stronger EU-wide requirements on capital adequacy and risk management for insurers with the key aim of increasing policyholder protection.  The new regime will also ensure greater cooperation between supervisors and greatly reduce the potential for regulatory arbitrage which currently exists.

My Department and the Central Bank will be reviewing the circumstances relating to Setanta and will be reporting to me on what lessons can be learnt and how the framework can be strengthened. The European Commission has also indicated that it will review whether any issues raised relating to the regulatory framework require action.

Tax Collection

Questions (179)

Michael McCarthy

Question:

179. Deputy Michael McCarthy asked the Minister for Finance the mechanisms in place to assist a person (details supplied) in County Cork as they do not have the financial means to meet their tax liability; and if he will make a statement on the matter. [21086/14]

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Written answers (Question to Finance)

I am advised by Revenue that it is very conscious of the current economic environment and the difficulties it can pose for some individuals in dealing with their tax affairs. Revenue has responded to this environment by encouraging taxpayers experiencing particular payment difficulties to engage proactively when such difficulties arise in order to find a mutually acceptable solution, which can quickly restore voluntary timely compliance. In this regard I am informed that Revenue currently has almost 16,000 phased payment arrangements in place to the value of approximately €124m

Where such engagement is not forthcoming then Revenue has no option but to utilise appropriate collection enforcement measures, including referral to Sheriffs, to pursue outstanding tax debts.

Revenue has informed me that in the particular case to which the Deputy refers, the tax debt was referred to the Sheriff for collection following failure by the taxpayer to respond to demands issued to him. Once a tax debt is referred in this manner then all responsibility for negotiations and payment arrangements in regard to the liability in question transfers from Revenue to the Sheriff and the taxpayer must deal directly with that office in regard to settlement.

Notwithstanding the above, Revenue has informed me that given the difficult circumstances outlined by the Deputy in this particular case it has made contact with the Sheriff and outlined the issues. The Sheriff has confirmed that he is happy to discuss the issue with the person in question and hopefully come to an arrangement that suits all parties. The person or his representative should make contact with Mr Garrett Barry in the Sheriff's Office with a view to making the necessary arrangements. Mr Barry's telephone number is 021-4270100.

Property Tax Administration

Questions (180)

Charlie McConalogue

Question:

180. Deputy Charlie McConalogue asked the Minister for Finance if there are plans to include the local property tax as a deductible expense in calculating a landlord's taxable rental income; if not, the reason for same; and if he will make a statement on the matter. [21094/14]

View answer

Written answers (Question to Finance)

The Thornhill Group, the inter-departmental group chaired by Dr Don Thornhill established to consider the structures and modalities of a property tax, recommended that Local Property Tax (LPT) paid by the owner in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates. The Government has agreed in principle to accept this recommendation but has not considered the manner or the timing in which this will happen.

Tax Credits

Questions (181)

Ciara Conway

Question:

181. Deputy Ciara Conway asked the Minister for Finance if in a situation where a separated couple can show evidence of the equal division of child benefit, this proof can be used to allow the splitting of the single person child carer credit between two working parents in view of the fact that the recipient of child benefit is being used as a deciding factor by the Revenue Commissioners in the allocation of this credit; and if he will make a statement on the matter. [21100/14]

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Written answers (Question to Finance)

Child Benefit is payable to the parents or guardians of children under 16 years of age, or under 18 years of age if the child is in full-time education, Youthreach training or has a disability. I understand that child benefit is paid by the Department of Social Protection to only one beneficiary in respect of a qualifying child.

The person who receives the child benefit payment is being used as the initial indicator by the Revenue Commissioners to identify the individuals who are likely to qualify for the new credit.  However, the credit will in the first place go to the person who cares for the child for most of the year. Agreement as to who will be the principal carer of a child is a matter for the parents or guardians.

It would be very difficult to administer the apportionment of the tax credit and extended standard rate band given the myriad potential child care arrangements possible.  However, in cases like the one you have outlined, there is nothing to stop a primary carer claiming it in one year and relinquishing it to the non-primary carer for the following year.

Tax Code

Questions (182)

Dan Neville

Question:

182. Deputy Dan Neville asked the Minister for Finance the position regarding a pension deduction in respect of a person (details supplied) in County Limerick; and if he will make a statement on the matter. [21109/14]

View answer

Written answers (Question to Finance)

I am advised by the Revenue Commissioners that, according to their records, the amount of the deduction referred to by the taxpayer appears to be neither income tax nor Universal Social Charge.

An amended tax credit certificate, on a week one basis, showing a reduced tax credit, issued to the taxpayer on 4 March 2014. Based on the level of pension in previous years this certificate should result in approx. €7 per week income tax being deducted. No arrears of this tax would be deducted due to the week one basis. As the taxpayer's total income, excluding DSP pension is less than €10,036 he has been deemed to be exempt from paying Universal Social Charge.   

It is suggested that the taxpayer consult his pension provider again to find out the exact nature of the deduction and a breakdown of the amount if it is made up of different elements. If the deduction includes tax or USC and he is unable to resolve the issue with his pension provider he should contact Revenue at 1890 222425 to seek further assistance.

Tax Reliefs Cost

Questions (183)

Michael McGrath

Question:

183. Deputy Michael McGrath asked the Minister for Finance the number of persons who received tax relief on pension contributions in 2012 and 2013; the total tax expenditure associated with pension tax relief in each year; the average level of relief received; and if he will make a statement on the matter. [21111/14]

View answer

Written answers (Question to Finance)

I am informed by the Revenue Commissioners that detailed data in respect of the tax year 2012 are currently being processed and will be available in due course, while data in respect of 2013 are still in the process of being collected or are not required to be returned until later this year.

Information on tax expenditure associated with tax relief on pension contributions in respect of 2011 is provided in the following table. As regards the number of individuals availing of pension tax relief, it should be borne in mind that the same individuals may be included in more than one category in some cases. In addition, the data on contributions to occupational pension schemes are only required to be provided on an aggregate basis by employers.

Estimate of the cost of tax and PRSI reliefs for private pension provision 2011

-

Estimated costs €million

Estimated numbers

Employees' Contributions to approved Superannuation Schemes (Occupational Pension schemes)

584

636,000

Employers' Contributions to approved Superannuation Schemes (Occupational Pension schemes)

142

310,000

Estimated cost of exemption of employers' contributions from employee BIK

532

310,000

Retirement Annuity Contracts (RACs)

164

79,000

Personal Retirement Savings Accounts (PRSAs)

72

58,000

Universal Social Charge Exemptions

Questions (184, 203)

Michael McGrath

Question:

184. Deputy Michael McGrath asked the Minister for Finance the cost in 2015 of retaining the exemption which is due to expire on 1 January 2015 from the 7% rate of universal social charge for those on medical cards who have an aggregate income below €60,000; and if he will make a statement on the matter. [21112/14]

View answer

Michael McGrath

Question:

203. Deputy Michael McGrath asked the Minister for Finance the yield that would be realised from retaining in 2015 the 10% rate of USC for self employed persons earning more than €100,000 per annum; and if he will make a statement on the matter. [21220/14]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 184 and 203 together.

I am advised by the Revenue Commissioners that the estimated full year cost, estimated by reference to 2014 incomes, of retaining the exemption from the 7% rate of Universal Social Charge (USC) for those on medical cards with an aggregate annual income below €60,000 is tentatively estimated in the order of €102 million. I am further advised by the Revenue Commissioners that the yield from retaining the 10% rate of USC, which is currently applicable to self-employed income in excess of €100,000, estimated by reference to 2014 incomes, would be of the order of €123 million.

These costing are provisional. The basic calculations are derived from the Revenue tax forecasting model using actual data for the year 2011 adjusted as necessary for income, employment and self-employment trends in the interim. While not directly available from tax records, recent data exchanges between Revenue and the HSE mean medical card holders can be identified and linked to Revenue's taxpayer records. Based on this, it is estimated that 20% of earners with USC liable income between €16,016 and €60,000 hold a medical card and this is the basis for the above costing.    

Financial Transactions Tax

Questions (185)

Michael McGrath

Question:

185. Deputy Michael McGrath asked the Minister for Finance the current status of plans for a financial transactions tax under the EU's enhanced co-operation mechanism; the Government's view on this matter; and if he will make a statement on the matter. [21113/14]

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Written answers (Question to Finance)

The Government's position is that a Financial Transactions Tax (FTT) would be best applied on a wide international basis to include the major financial centres to prevent the danger of activities gravitating to jurisdictions where taxes are not levied on financial transactions.  Notwithstanding this, the Government is not prepared to stand in the way of EU Member States that wish to work together to implement a Financial Transactions Tax and in this regard adoption of a decision formally authorising enhanced cooperation took place during the Irish Presidency of the EU in January 2013.

The proposal for a Directive from the European Commission in the area of financial transaction tax was published in February 2013. Ireland had many concerns about the proposal as drafted, not least of which were the potential impacts on, and the trading of, Irish Sovereign debt in the secondary market and in total, the potential negative impact on the liquidity of the financial sector as a whole. Members of the Economic and Financial Sub-Committee on EU Sovereign Debt Markets have stated that the introduction of the FTT would have a significantly negative effect on Sovereign Debt Markets and may impair the good-functioning of secondary markets for sovereign debt resulting in reduced liquidity, reduced investor demand and therefore higher financing costs for States.

Our concerns are widely shared amongst the Member States, including some of the participating countries. These concerns have led to the issuing of a communique by the participating Member States last week, announcing that they have agreed to implement a financial transaction tax in a progressive manner, with the first step being a charge on shares and some derivatives. However, significant technical and legal discussions will continue to be required at the Council Working Party before the text of the proposed Directive can be finalised. With this in mind, the targeted implementation date for the FTT has been rescheduled to 1 January 2016.

As the Deputy will be aware, Ireland already has a tax on financial transactions, a Stamp Duty on transfers of shares in Irish incorporated companies, which currently stands at 1%. It now appears that this will be the form of the initial tax measure that is being considered by the participating countries. This means that in effect these countries, some of which do not apply any financial transactions tax currently, are now considering a tax along the lines of that which already applies in Ireland, the UK and certain other countries. The rate at which such transactions would be charged remains to be finalised but it was proposed in the draft Directive that transactions in shares would be subject to a charge of 0.1%, which is lower than that which currently applies in Ireland.

Assurances were given at ECOFIN last week that all Member States will be kept fully informed in the Council Working Party that is developing the proposals. I understand that the participating Member States hope to conclude discussions on the draft text of the proposal by the end of this year. However, the next meeting of the Council Working Party has yet to be scheduled.

VAT Exemptions

Questions (186)

Heather Humphreys

Question:

186. Deputy Heather Humphreys asked the Minister for Finance with regard to farmers who let 100% of their farmland and their single farm payment entitlements and who now have to sell those entitlements to active farmers before 15 May 2014; if these farmers will be subject to VAT on the sale of entitlements worth over €37,500 or if they will be exempt from VAT; and if he will make a statement on the matter. [21125/14]

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Written answers (Question to Finance)

Where a person, such as that described by the Deputy, sells their payment entitlement without land then VAT at the standard rate of 23% applies if the sale proceeds exceed the relevant threshold for registration (currently €37,500 per 12 month period).  There is no exemption in Irish or EU VAT legislation for such sales.  However, where a flat-rate farmer exceeds the threshold solely by virtue of selling a payment entitlement, that person is permitted to register for VAT in respect of that single transaction only, and can remain a flat-rate farmer for other transactions.

Where the value of entitlements being sold by a farmer is less than the VAT registration threshold of €37,500, no VAT will apply to the sale.  In addition, if the land is sold with the entitlements for farming purposes, no VAT would be due as it would be considered a transfer of a business.

Household Charge Collection

Questions (187)

Pearse Doherty

Question:

187. Deputy Pearse Doherty asked the Minister for Finance the number of persons who did not pay the household charge and are now faced with a bill for double the amount; the amount the Revenue Commissioners estimates will be generated from collection of the remaining household charge payments; what this money will do for the projected tax profile; if it will be included in property tax figures or separately; if the additional charge will generate more tax income than was expected; and where that money will be allocated. [21137/14]

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Written answers (Question to Finance)

Section 156 of the Finance (Local Property Tax) Act 2012 (as amended) provides that where the €100 Household Charge for 2012 had not been paid by 1 July 2013 the arrears amount is increased to €200 and is treated as Local Property Tax (LPT).  Section 156 also made Revenue responsible for collecting the arrears.

The Deputy will be aware that by 1 July 2013 those who had not paid were already liable for €145 including accrued interest.  Residential property owners were given notice by the Local Government Management Agency of the increase in unpaid HHC between 2012 and 2013.  The Government's decision to refer the matter to Revenue, and the increase to €200 was debated and legislated for in this House. Property owners could have avoided paying the €200 had they paid the original €100 when it was due, or had paid the charge plus accrued interest any time prior to 1 July 2013.  Furthermore, the Deputy will be aware that Revenue offered an opportunity which was well publicised to pay the €200 charge without further interest.

As I previously informed the House in my reply to Questions 168 and 169 on 6 May, the Revenue Commissioners undertook a comprehensive data matching exercise between the Local Property Tax Register and the Household Charge Register and identified a database of some 400,000 properties for which the Household Charge (HHC) was outstanding. The Commissioners have confirmed that work on verifying this database of non-compliant HHC property owners is continuing.

The House was also informed that it is accepted that the database may not be 100% accurate for a number of reasons, including:

- The LGMA Register captured the name of the person who paid the HHC rather than the owner of the property, therefore, for example, where a son or daughter paid the HHC on behalf of a parent and particularly where the address of the property was a 'non-unique' rural address, Revenue may not have been able to match the HHC payment to the right property;

- The legislative basis for both the HHC and LPT are different. Some properties that are liable for LPT were exempt from the HHC and, unlike LPT, property owners were not actually required to make a claim for exemption from HHC.  For that reason, Revenue could not identify every property that was exempt from HHC through the cross-referencing process;

- There are some examples where the LGMA register did not fully record situations where the HHC was paid to a Local Authority directly.  In all its communications with property owners during the current compliance campaign, the Revenue Commissioners have highlighted that these inconsistencies exist and have outlined the action that owners need to take if the HHC is not due.The Commissioners have also confirmed that to date they have written to some 227,000 property owners who, according to their records, had not paid the €200 arrears in respect of about 273,800 properties. The Commissioners are continuing to examine the remaining cases on their database of HHC arrears and further letters will issue in due course. The published forecasted yield for LPT in 2014 of €550m took full account of the work to be done by the Revenue Commissioners in relation to HHC. This figure includes estimates for LPT payments received in 2014, which are likely in the normal course to include current tax, arrears and prepayments, and HHC arrears collected this year.

The Commissioners advise that it is not possible at this stage to confirm how much they will collect in 2014 in relation to HHC arrears or if the forecast of €550m will be achieved. This will depend on the outcome of their Household Charge compliance campaign, bearing in mind the database issues set out above.  However, while the HHC receipts will be recorded as LPT in the Revenue data, the amount of HHC paid will be identifiable, and will be capable of being reported on.

I am also informed that, to date, about €2m was collected in 2013, €13.8m has already been collected in 2014, of which €8.2m was paid since Revenue's compliance campaign began on 17 April 2014.  The Commissioners continue to receive approximately 3,500 to 4,000 payments of HHC arrears every day.

I am further advised by Revenue that they will shortly begin to take appropriate enforcement action against any property owner that they have written to in connection with HHC arrears and the property owner has not responded.  Such enforcement action may include deduction at source from salaries, occupational pension and certain Government payments as well as sheriff or solicitor action.  I strongly encourage any property owner, therefore, who has not dealt with their arrears of HHC to do so as a matter of urgency.

As regards allocation of LPT, the legislation provides that, in each financial year commencing with 2014, the Minister shall pay from the Central Fund or the growing produce thereof into the Local Government Fund (LGF) an amount equivalent to the LPT, including any interest paid thereon, paid into the Central Fund during that year. The allocation of funding from the Local Government Fund is a matter for my colleague the Minister for the Environment, Community and Local Government.