Written Answers Nos. 62-69
62. Deputy Michael McGrath asked the Minister for Finance if he has at any stage exercised his power to direct the special liquidators of Irish Bank Resolution Corporation to take certain actions during the course of the liquidation process; and if he will make a statement on the matter. [25057/14]
View answerAll decisions pertaining to the Special Liquidation of Irish Bank Resolution Corporation have been made by the Special Liquidators taking into account the Ministerial Instructions issued to them.
On 7 February 2013 I issued instructions to the Special Liquidators (on foot of the Special Liquidation Order) which set out details in respect of the manner in which the winding up of IBRC was to proceed. I issued further instructions on 10 May 2013, on 20 July 2013 and on 24 April 2014. The instructions are available on the Oireachtas website at the links listed below.
http://opac.oireachtas.ie/AWData/Library3/FINdocslaid08022013_143303.pdf
http://opac.oireachtas.ie/AWData/Library3/FINdoclaid160513_151033.pdf
http://opac.oireachtas.ie/AWData/Library3/Findoclaid220713_160509.pdf
http://opac.oireachtas.ie/AWData/Library3/Findoclaid280414_151551.pdf
63. Deputy Éamon Ó Cuív asked the Minister for Finance if consideration is being given to VAT rating herbal teas, vitamins and food supplements at 23%; if so the reason this is being considered in view of the beneficial health effects of these products; and if he will make a statement on the matter. [25084/14]
View answerI am advised by the Revenue Commissioners that EU VAT Directive (Council Directive 2006/112/EC) generally provides that supplies of goods and services are chargeable to VAT at the standard rate but that lower rates are permitted in very limited circumstances. Food products can only benefit from the zero rating in accordance with Article 110 of the VAT Directive which permits the retention of the zero rate for "clearly defined social reasons" where the products were liable to VAT at the zero rate on and from 1 January 1991.
A range of food supplements and vitamins that encourage the maintenance of health, through the sustenance derived from a normal, healthy diet, benefit from the zero rate. However, a food supplement taken for the purposes of muscle growth or body mass increase, or for the purposes of weight reduction or bodily sculpture, cannot benefit from the zero rate. I would draw the Deputy's attention to Revenue eBrief 70/2011 which contains additional detail in relation to the VAT rates of vitamins and food supplements.
I am further advised by the Revenue Commissioners that paragraph 8 of Schedule 2 of the Value-Added Tax Consolidation Act 2010 provides that the supply of tea and preparations derived from the crushed leaves of the tea plant when supplied in non-drinkable form is liable to VAT at the zero rate. The VAT applicable to herbal teas derived from plants other than the tea plant has been raised with me by the industry and the matter is subject to ongoing analysis.
64. Deputy Michael McGrath asked the Minister for Finance the date by which local authorities need to notify formally the Revenue Commissioners of their intention to reduce or increase the rate of the local property tax with effect for the calendar year 2015; if notification of an indication of this intention will be sufficient; if a formal decision of the council will be required including the specific change in the rate of the local property tax; if he will provide details of the way the process of changing the local property tax rate will work in practice; and if he will make a statement on the matter. [25105/14]
View answerIn accordance with section 20 of the Finance (Local Property Tax) Act 2012 (as amended) elected members of a local authority are required to pass a formal resolution in order to vary the basic rate of Local Property Tax (LPT) in respect of residential properties situated within their functional area. The basic LPT rate can be increased or decreased by up to 15%. This is referred to as the "local adjustment factor" (LAF) and the earliest year that this can apply is 2015. The formal resolution should specify the percentage by which the basic LPT rate is to be varied and the year(s) that this variation will apply.
In determining the LAF, local authorities are required to take account of their income and expenditure projections for the coming year, their current financial position and the effect of the variation on the economy and taxpayers in their functional area. The Minister for the Environment, Community and Local Government has the power to make regulations with respect to the setting of the LAF and it is my understanding that he intends to do so.
Where the elected members of a local authority pass a formal resolution to vary the basic LPT rate for 2015, the local authority is required under section 21 of the 2012 Act to notify Revenue on or before 30 September 2014 of the LAF that will apply to the basic LPT rate for 2015 (that is, the percentage by which the basic LPT rate is to be varied). This statutory deadline is to ensure that all the necessary administrative arrangements can be put in place for the payment of LPT at the appropriate rate in 2015 and most importantly, that property owners are given adequate notice of their LPT liability for 2015 to enable them to select their preferred payment method in good time for the filing date.
I am advised by the Revenue Commissioners that, as part of their customer service and information campaign in relation to the LAF, they wrote to each City and County Manager at the end of March 2014 to remind all Managers of the deadline by which Revenue must be notified if their particular local authority intends to vary the LPT rate for next year. A copy of the letter in question will be sent directly to the Deputy.
I am also advised that the Commissioners will be writing to all City and County Managers again in advance of the September 2014 deadline specifying the details, which the Commissioners expect will be straightforward, that they require from local authorities in connection with the LAF.
Any adjustments in the rate of tax will be reflected in the usual communication which Revenue will issue in advance of the next filing date in respect of properties which, according to their records, are in the relevant local authority area.
65. Deputy Michael McGrath asked the Minister for Finance if he will provide full details of the information given by his Department and the Revenue Commissioners to the European Commission as part of the information gathering exercise undertaken by the Commission since September 2013 in respect of the operation of Ireland's corporation tax regime in the case of certain multinational companies; if Ireland has concluded any specific deal with multinational companies operating here pertaining to the application of our corporation tax system; and if he will make a statement on the matter. [25106/14]
View answerI am advised by the Revenue Commissioners that they have cooperated fully with the European Commission enquiries, as required under EU law, providing comprehensive information to the Commission on administrative practice in relation to advance opinions, the types of issues on which opinions are provided, and details of specific opinions given. The details provided to the Commission by Revenue in respect of advance opinions are confidential taxpayer information and accordingly details of the information supplied to the Commission cannot be provided. The Deputy will also appreciate that the contents of the confidential correspondence with the Commission may, in the event of an unfavourable decision at a future date by the Commission on foot of the State Aid investigation announced yesterday, become the subject of litigation between Ireland and the Commission.
The Commission has been advised that Revenue advance opinions are non-binding and seek to clarify the tax treatment of proposed transactions or business activities under the applicable legislation, so that companies can file a correct tax return and comply fully with their tax obligations.
It is normal Revenue practice to provide an advance opinion on the application of tax legislation in circumstances where there might otherwise be uncertainty and the taxpayer requires clarification of the matter. As stated above, Revenue opinions are designed to provide clarity in relation to the applicable tax rules so that taxpayers can file a correct tax return and comply fully with their tax obligations. Advance opinions set out the correct application of the law as applied to specific transactions or activities. They do not provide any 'special deal' or special treatment.
As I have outlined on numerous occasions, Ireland does not do deals with multinational companies on corporate tax. Ireland's corporation tax system is statute-based and Revenue has no authority to do deals, to which the Deputy refers, with multinationals or any other taxpayers. In providing advance opinions as outlined above, Revenue has not done any deals or granted any special or favourable treatments.
The European Commission announced yesterday that it will open formal State Aid investigations in a number of Member States as part of its on-going wider enquiries in relation to tax rulings and patent box regimes in a number of member states. In the case of Ireland, our understanding of the particulars of this case is that the Commission is focussing on advance opinions, provided a number of years ago in respect of the Irish operations of one company, which address the calculation of the taxable base of profits for those Irish operations. I am confident that there is no state aid rule breach in this case and we will defend all aspects vigorously. However, we understand that the European Commission has a responsibility to investigate potential breaches of state aid rules and, accordingly, we will continue to do everything we can to ensure that they have the full information they require.
At present the Commission is not saying that there is state aid, merely that they are formally examining this case. Their examination is not about Ireland's corporation tax rate or the Irish corporate tax system. The enquiry relates to the application of the rules in one particular case.
When it completes its investigation, the Commission will publicly announce its decision. In the event of an unfavourable decision, it will be open to Ireland to launch a legal challenge in the European courts.
I am very confident that we will successfully defend our position. Ireland does not have a statutorily-binding tax ruling system. As stated above, advance opinions do no more than set out the correct application of the law as applied to specific transactions or activities. Advance opinions do not provide special treatment. There was no special deal in this or any other case. As there was no special treatment, we do not believe that there was any state aid. We will be providing a detailed, technical legal rebuttal of the Commission's concerns and, if necessary, will defend our position in the European Courts.
66. Deputy Michael McGrath asked the Minister for Finance his views on the criticism in the Comptroller and Auditor General's recent report regarding off-market sales conducted by the National Asset Management Agency; and if he will make a statement on the matter. [25107/14]
View answerI refer the Deputy to the NAMA Chief Executive's evidence before the Dáil Committee of Public Accounts (PAC) on the 29th of May during which it was confirmed that all NAMA-related property disposals subject to review by the Comptroller and Auditor General (C&AG) were fully openly marketed.
As the Deputy is aware, the C&AG, as part of its recent review of NAMA, examined a sample of 144 property disposals with a gross disposal value of €1 billion. The C&AG concluded "overall, almost all had been sold through an open competitive process or with testing of disposal prices against market valuation". The C&AG went on to state that this provides reasonable assurance that the prices obtained by NAMA were the best on offer in the market at the time a property was sold.
In 4 of the 144 cases sampled, with a combined gross disposal value of €500,000, the C&AG stated that there was no evidence at the time of the report that the properties were openly marketed. However, having looked in detail at the 4 cases post publication of the C&AG report, NAMA has provided the C&AG with evidence that the 4 properties were in fact openly marketed. This evidence includes written confirmation from the selling agents that the properties were fully advertised through the normal channels, including on property websites such as www.myhome.ie and www.daft.ie.
67. Deputy Michael McGrath asked the Minister for Finance if he will provide full details, including all relevant statistics, of the Revenue Commissioners' efforts to collect any unpaid household charge and local property tax liability; and if he will make a statement on the matter. [25108/14]
View answerI am advised by Revenue that it has collected over €291m to date in 2014 in respect of Local Property Tax (LPT) and Household Charge (HHC). This figure is approximately 8% ahead of target up to 31 May 2014.
In regard to HHC, Revenue has collected over €20m in respect of more than 122,000 properties since it assumed responsibility for securing the outstanding liabilities. Approximately €18m of this amount, in respect of almost 112,000 properties, has been collected since Revenue launched its compliance campaign earlier this year. Revenue has also largely dealt with 70,000 items of HHC related correspondence which was received since the compliance campaign started. On that basis, Revenue is in a position this week to move on to debt collection/enforcement action against those who have still not complied, as previously advised to property owners.
In regard to LPT compliance, the Deputy will be aware that Revenue has to date achieved a compliance rate of 94% in respect of 2013 and a 91% rate in respect of 2014 and will, in tandem with HHC compliance action, move on to debt collection/enforcement action against LPT non-compliers over the coming weeks.
The actions to be deployed against HHC/LPT non-compliers will include deduction from employment income for PAYE workers or from occupational pensions or certain Government payments where appropriate. The actions to be deployed against self-assessed taxpayers, some of which have already been used, will include withholding of Tax Clearance Certification, surcharges on Income Tax, Corporation Tax and Capital Gains Tax returns and withholding/offset of any other tax refunds. The actions will also include referral to a Sheriff or Solicitor or the use of Attachment where it is appropriate to do so. Interest on late payment at a rate of 0.0219% per day, may also be included in any enforcement action, which will be calculated from the relevant due date up to the date of payment. The Deputy will agree that these actions have been well flagged by Revenue.
Revenue has advised me that approximately 50,000 letters will issue this week to property owners who are taxed under the PAYE system informing them that notifications are issuing to their employers instructing them (the employers) to deduct the €200 HHC liability from salary over the remaining pay periods in 2014. These amounts will be in addition to any deductions that may already be in place in respect of LPT. Following the issue of the letters to the property owners, Revenue will then issue the instruction to their employer or occupational pension provider to deduct the amount due over the rest of the year. Revenue has advised me that the production schedule for the employer instruction takes a seven day turnaround from the issue of the letter to the property owner and if the property owner pays (or makes payment arrangements) or can show Revenue that they are not liable within 5 days of the date of the letter, Revenue will be able to stop the issue of the instruction. If the owner pays (or makes payment arrangements) or can show Revenue that they are not liable after the instruction is issued, Revenue will cancel the instruction immediately, depending on the employer's payroll cycle. If deductions have started credit will be given for any payment taken. These arrangements are set out in the letters to property owners.
A further 20,000 letters will issue towards the end of this week to property owners who have not paid the HHC and whose only source of income is from the Department of Social Protection. The letters will advise the owners that they are likely to be eligible for a deferral of the €200 charge which will be granted automatically unless they contact Revenue to pay the amount due (or make payment arrangements) or advise why they may not be liable. The deferral will be liable to the reduced interest charge of 4% per annum (compared to c. 8% in non compliant cases).
Further tranches of letters will issue to non-compliant property owners taxed through the PAYE system in respect of combinations of HHC, 2013 LPT and 2014 LPT liabilities (as relevant) over the remaining weeks of June and the first week of July. These letters will again confirm that notices are issuing to employers/pension providers to start deductions at source as soon as possible within the payment cycle.
Revenue has also advised me that payment demand letters in respect of combinations of outstanding HHC, 2013 LPT and 2014 LPT liabilities will issue to all property owners taxed under self-assessment system during June and early July. The demand letters will confirm that the outstanding liabilities will be referred to Sheriffs or Solicitors for collection or will be the subject of Attachment orders unless payment is immediately received. It is important to realise that once a debt is referred to a Sheriff or Solicitor the property owner must deal with that body rather than Revenue in regard to issues such as phased payments, etc. In addition the property owner will be liable to pay the Sheriff's costs which will increase the overall liability by something in the region of 10% of the amount due.
In total Revenue anticipates that in excess of 200,000 compliance letters will have issued by early July, though this number will most likely reduce as property owners decide to pay their outstanding liabilities to avoid the additional expense and embarrassment that comes with Revenue debt collection/enforcement activity.
Finally, I want to commend Revenue for the job it has done to date in achieving such high collection and compliance rates in respect of both LPT and the arrears of HHC. This is particularly the case in regard to HHC, where the liability doubled from €100 to €200 if not paid by 1 July 2013, which obviously increased the collection/compliance challenge. I have no doubt that the increased liability has also placed a strain on property owners that could have been avoided if the original charge had been paid on time. I am concerned that this unnecessary increased liability and stress of dealing with Revenue arose, in some instances, on foot of poor advice to citizens by some commentators. While I fully support political debate in the design and development of our laws, I would urge all those advising citizens to bear in mind that the consequences, for example in the case of the Household Charge, is an increased liability. I strongly recommend anyone who receives one of these letters from Revenue to act now and pay or make arrangements to pay any outstanding liability by following the instructions included on the letter.
68. Deputy Michael McGrath asked the Minister for Finance for each State-supported bank, if he will provide details of the amount of principal dwelling house mortgage debt written off so far this year, including agreements to write off mortgage debt in the future subject to conditions being met; the number of mortgages affected; and if he will make a statement on the matter. [25109/14]
View answerI have been provided with the following information by AIB and permanent tsb.
AIB
All relevant data in relation to AIB s mortgage portfolios, including arrears data, for December 2013 are made on pages 71 to 119 of AIB s 2013 Annual Financial Report, published on 5 March 2014.
Permanent TSB
PTSB for the year to end May 2014 has charged off/written off circa €55m of Home Loan Mortgage Debt representing 349 cases. In addition, it has entered into insolvency and voluntary disposal arrangements with customers that will result in debt write-off of a further circa €0.5m (4 cases) subject to customers meeting the terms of these agreements.Separately in relation to Bank of Ireland I would draw your attention to the disclosures on its Irish mortgage portfolios, including mortgage arrears, in its Annual Financial Report on pages 381-398, while there is additional asset quality data on pages 79 to 98 which is relevant. The document is available on the bank's website.
69. Deputy Michael McGrath asked the Minister for Finance his views on whether or not the banks operating here should pass on the recent ECB interest rate reduction to mortgage holders on standard variable rates and small and medium enterprise loan customers also on standard variable rate; and if he will make a statement on the matter. [25110/14]
View answerFirstly, 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 cut to small and medium enterprise (SME s) loan customers or in relation to the mortgage interest rates charged to consumers. 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 loan position of SME s or consumers.
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 interest rates that financial institutions operating in Ireland charge to SME s and 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.
