Written Answers Nos. 69 - 77
69. Deputy Michael McGrath asked the Minister for Finance his views on the anomaly that a person with earnings of €18,304 who receives a €1 increase in his or her annual income will see his or her take home pay reduce by €731; and if he will make a statement on the matter. [27779/14]
View answer70. Deputy Michael McGrath asked the Minister for Finance if he has discussed with the Department of Social Protection the issue of the poverty trap that exists when employees enter the PRSI net and all of their income becomes liable for PRSI; and if he will make a statement on the matter. [27780/14]
View answer71. Deputy Michael McGrath asked the Minister for Finance the effective tax rate paid by a PAYE worker earning €18,000 per annum taking into account income tax, universal social charge and PRSI liabilities; and if he will make a statement on the matter. [27782/14]
View answer72. Deputy Michael McGrath asked the Minister for Finance the effective tax rate paid by a PAYE worker earning €19,000 per annum taking into account income tax, universal social charge and PRSI liabilities; and if he will make a statement on the matter. [27783/14]
View answerI propose to take Questions Nos. 69 to 72, inclusive, together.
I assume the Deputy is referring to the "step" effect in the PRSI system which brings all income into charge once the relevant threshold is reached. This occurs because those earning €352 per week are exempted entirely from the charge whereas those who earn more than this pay PRSI at 4% on their full earnings. This results in an anomalous situation whereby those earning between €353 and €372 per week have a lower take home pay than someone on €352 per week. While such an effect is never ideal, it is necessary to achieve the desired yield, which in itself contributes to keeping workers on incomes lower than the threshold to remain outside the charge to employee PRSI entirely.
The effective tax rate including full PRSI and the USC is estimated to be 4.9% for a single individual earning €18,000 per annum and 10.0% for a single individual earning €19,000 per annum. This differential in the two rates is mainly due to the step effect. However, it must be acknowledged that the level of the effective tax rate is still very low in international terms. A single individual earning the equivalent of €19,000 in the United Kingdom pays an effective tax rate of over 12.5%. According to the recent OECD publication, Taxing Wages 2014, Ireland has the lowest tax burden among OECD EU member states on single earners at the average wage in 2013. Furthermore, Ireland has also has the lowest tax wedge among OECD EU member states (6.8%) for one-earner/two children families at the average wage. The average for OECD countries was 26.4%.
The Advisory Group on Tax and Social Welfare (AGTSW), which includes officials from both my Department and the Department of Social Protection, are considering a range of tax and social welfare issues, with a view to increasing the incentives for individuals to return to work. It is expected that the Group will publish its report later this summer and I anticipate its recommendations will form a useful addition towards informing upcoming budgetary deliberations.
73. Deputy Michael McGrath asked the Minister for Finance if an independent valuation of the State’s holding in AIB has been carried out for the National Pensions Reserve Fund; and if he will make a statement on the matter. [27785/14]
View answerAs the Deputy will be aware the NPRFC undertook an independent valuation exercise for the remaining bank investments in the directed portfolio at the end of December 2013. This valuation included the State's holdings in AIB which were valued at circa. €10bn comprising ordinary shares (€6.5bn) and preference shares (€3.5bn). Separately the Minister holds directly a €1.6bn investment in Contingent Capital Notes. Further information on the valuation will be available in the 2013 NPRFC annual report when it is published.
74. Deputy Michael McGrath asked the Minister for Finance if he will list the occasion on which preference share dividends due to the State from AIB have been paid in the form of ordinary shares; the number of shares issued; the value on each occasion; and if he will make a statement on the matter. [27786/14]
View answerAs the Deputy will be aware, if the annual coupon payment of €280m on the State's Preference Shares in AIB is not made in cash, AIB must make the payment in shares. Since the first coupon was due in 2010, as a result of the bank's need to preserve capital, AIB has paid this annual coupon each year in shares as set out below.
|
Year |
Number of shares issued |
Issue price € |
|
2010 |
198,089,847 |
1.4135 |
|
2011 |
1,247,273,565 |
0.2245 |
|
2012 |
3,623,969,972 |
0.0773 |
|
2013 |
4,144,055,254 |
0.0676 |
|
2014 |
2,177,293,934 |
0.1286 |
The price at which the shares are issued is calculated based on the average market price for the thirty trading days preceding the 13th of May payment date. Therefore the quantity of shares the State received on each occasion was a function of the coupon due of €280m divided by this formula driven share price. This formula is embedded in the original terms of the Preference Share investment made by the State in 2009 and the bank's Articles of Association which can be found on the bank's website.
75. Deputy Michael McGrath asked the Minister for Finance the deficit that would be achieved in 2015 based on current information if a budget adjustment of €1 billion took place; and if he will make a statement on the matter. [27787/14]
View answerThe most up-to-date budgetary estimates, published in the SPU in April, are based on the assumption of a consolidation package of €2.0bn in 2015 which is designed to deliver a deficit of 2.9 per cent of GDP in 2015. This is within the excessive deficit procedure (EDP) ceiling of 3.0 per cent. The macro-economic forecasts underpinning the SPU have been endorsed by the Irish Fiscal Advisory Council.
On the basis of SPU assumptions, reducing this figure to €1bn would, as a first-round effect, add about 0.6 percentage points to the forecast deficit in 2015. However, a lower quantum of consolidation would likely weigh less on economic activity and see higher revenue growth, which would ameliorate the increase in the deficit to a certain extent. It should be noted that the exact impact on revenue and the deficit is difficult to estimate given the significant number of dependent factors, most significantly, assumptions around the composition of adjustment.
Overall, given the number of moving parts and only five months of revenue and expenditure data to hand, it is too early to speculate on what the starting position for the Budget will be. The next formal forecast will be the White Paper on Receipts and Expenditures which will be published in advance of the Budget and will set out the no-policy-change position for 2015. In general, fiscal policy has to continue the process of necessary fiscal consolidation while, at the same time, supporting economic growth and job creation. Achieving an optimal balance between these goals is essential for maintaining and bolstering Ireland's hard-won market confidence.
76. Deputy Michael McGrath asked the Minister for Finance if he has formally put forward specific policy suggestions as to how retrospective bank debt relief could be achieved; and if he will make a statement on the matter. [27788/14]
View answerThe Euro-area Heads of State or Government (HoSG) agreed in June 2012 that "it is imperative to break the vicious circle between banks and sovereigns", and that when a Single Supervisory Mechanism, involving the ECB, is in place and operational, the European Stability Mechanism could recapitalize banks directly.
The Eurogroup meeting on 20 June 2013 agreed on the main features of the European Stability Mechanism's Direct Recapitalisation Instrument or DRI. There is a specific provision included in those main features, which states that "The potential retroactive application of the instrument should be decided on a case-by-case basis and by mutual agreement." Therefore, the agreement, that we were active in negotiating, keeps open the possibility to apply to the European Stability Mechanism for a retrospective direct recapitalisation of the Irish banks, should we wish to avail of it.
On 10 June 2014, the euro area Member States reached a preliminary agreement on the European Stability Mechanism's (ESM) direct recapitalisation instrument (DRI). This now requires a decision by mutual agreement of the ESM Board of Governors to create a new ESM instrument in accordance with Article 19 of the ESM treaty and the aim is to have this process completed by November this year. This would allow the ESM DRI to come into effect once the Single Supervisory Mechanism is in place and operational which is expected to be in November of this year.
In relation to retrospective recapitalisation, the preliminary agreement states that the potential retroactive application of the instrument should be decided on a case-by-case basis and by mutual agreement. However, as I indicated last week when I was before the Joint Oireachtas Committee on Finance and Public Expenditure and Reform, it is not possible to make a formal application to the ESM for retrospective recapitalisation in advance of the Instrument being in place. Therefore, at this juncture, it is premature to make specific policy suggestions on the implementation of retrospective recapitalisation in advance of the instrument being in place.
I remain confident that the commitment made by the Euro-area Heads of State or Government in June 2012 to break the vicious circle between banks and sovereigns will be respected. Finally, as I have indicated in the past, both I and my Government colleagues ensure that Ireland's case for retrospective direct recapitalisation is made at all levels as appropriate.
77. Deputy Sandra McLellan asked the Minister for Education and Skills if he will provide a breakdown of the amount of money that has been paid out by Caranua to survivors since it was established; if he will provide in tabular form the purpose of the payments; and if he will make a statement on the matter. [27596/14]
View answerI understand from enquiries made by my officials that, by 20th June, Caranua has made 249 payments in respect of 113 individual former residents, to the value of €349,174.33. Caranua approves services across three general areas – Health and General Well-being; Housing Support and Education, Learning and Development. The payments made to date are broken down in the attached table. Full details of the range of services that can be provided for are set out in the information and guidelines published on Caranua's website: http://www.caranua.ie. Caranua normally deals directly with the service providers and payments issue directly to them and only issues payments to former residents on submission of valid receipts with Caranua's prior agreement. The payments made to date include payments made in respect of professional assessments or recommendations which are required by Caranua to determine entitlement to certain services.
|
Category |
No of Payments |
No of Former Residents |
Value of Payments |
|
Health and General Well-being |
126 |
81 |
€71,120.75 |
|
Housing Support |
99 |
56 |
€233,958.94 |
|
Education, Learning and Development |
36 |
23 |
€54,094.64 |
|
Total |
261 |
113 |
€359,174.33 |
Note: As former residents can receive services across service categories, the total number of former residents assisted does not equal the sum of the individual categories.
