Written Answers Nos. 214-242
215. Deputy Olivia Mitchell asked the Minister for Finance if there is a legislative requirement to pay the difference in local property tax should the sale price of a property turn out to be more than one band above the declared value, as it appears vendors are now being charged for such a difference in value for both 2013 and 2014; and if he will make a statement on the matter. [33395/14]
View answerThe Finance (Local Property Tax) Act 2012 (as amended) sets out how the tax is to be administered and how a residential property is to be valued. For Local Property Tax (LPT) purposes, the market value of a property on 1 May 2013 is valid for 2013, 2014, 2015 and 2016.
Recent media coverage associated with increasing sales prices in the property market, particularly in certain locations, seems to have sown doubt in the minds of property owners about how these increases impact on their property's valuation for LPT purposes and I am pleased to have the opportunity to clarify the matter for the Deputy and the House.
I am informed by the Revenue Commissioners that the valuation band/valuation for a property declared by the owner for LPT purposes based on its 1 May 2013 market value will not be affected by any general increase in the value of properties in the period between 2 May 2013 and 31 October 2016. As Revenue has made clear at all times, provided the 1 May 2013 declared valuation band/valuation was made in good faith by the property owner based on information available from a variety of sources recommended by the Commissioners, that valuation band/valuation would remain unchanged until 31 October 2016.
I am also advised that in order to ensure that the sale of residential properties is not delayed because of LPT, I am advised that the Revenue Commissioners have put processes in place to assist anyone selling or buying a property satisfy themselves that all LPT requirements have been met.
Outstanding LPT Payments & Returns must be dealt with prior to Sale
The amount of LPT due is based on the declared valuation band/valuation. The LPT liability (including household charge) crystallises on the sale of a residential property and must be paid in full either in advance of the sale or must be deducted from the proceeds of the sale. In addition, any outstanding LPT Returns must be submitted to Revenue. Before any sale, the seller, or their solicitor, can log-on to Revenue's LPT online facility and satisfy himself or herself that there are no outstanding LPT issues.
Process where sale price of property exceeds declared valuation for LPT
As the declared valuation band/valuation at 1 May 2013 applies for LPT purposes right up to the end of 2016, a person selling a residential property is required to provide the buyer with details of the valuation band/valuation that they declared so that the buyer can meet their LPT obligations in respect of their newly acquired property.
It should be very clear to the purchaser and his/her advisers in most cases, whether the appropriate valuation band/valuation was used by the previous owner. However, where the price sought by the seller exceeds the valuation band/valuation declared at 1 May 2013, a purchaser may have concerns that they will be left with a residual liability because the seller under-declared the valuation at the valuation date.
Prior to a sale, the person selling the property (the vendor) can obtain clearance from Revenue to prove that there are no outstanding LPT issues. In most cases, clearance can be obtained by accessing the LPT online system. To avoid unnecessary administrative burden, Revenue has stated that where the sales price of the property is greater than the declared valuation band/valuation at 1 May 2013, there will be no need to obtain written clearance from Revenue where any of the following conditions are met:
The sales price is within the following "allowable margins":
In the case of the first five valuation bands ( i.e. properties with a declared chargeable value of up to €300,000), where the sales price falls into the valuation band immediately succeeding the band that was declared;
In the case of the remaining fourteen valuation bands, where the sales price is not more than 15% higher than the upper limit of the band that was declared; and
In the case of properties where the declared chargeable valuation exceeded €1m on 1 May 2013, where the sales price is not more than 15% higher than the declared valuation.
Where the increase in the property's value is due to improvements/repairs carried out by the vendor after 1 May 2013, the above allowable margins can be adjusted to take account of the cost of the improvements/repairs.
Where the vendor based the declared valuation band on the known and verifiable sales prices of comparable properties in the area and the vendor has evidence of at least one comparable property sold within the period of six months prior to 1 May 2013.
Where none of these conditions are met and the declared valuation band/valuation at 1 May 2013 was made in good faith, the vendor should apply for written clearance from Revenue by completing Form LPT5 and including relevant supporting documentation. Revenue will review the basis for the declared valuation band/valuation and determine whether clearance should issue. Where Revenue is satisfied that the valuation band/valuation declared by the vendor was reasonable, clearance will be provided.
However, where Revenue is not satisfied that the declared valuation band/valuation was reasonable, the vendor will not obtain clearance and will be liable for an additional LPT charge, and possible interest and penalties, on the property on foot of a Revenue assessment.
The Commissioners have confirmed that further information is included in Section 4 of the Guidelines for the Sale or Transfer of Ownership of a Relevant Residential Property which were prepared by the Revenue Commissioners in consultation with the Law Society and are available on the Revenue website and on the Law Society's website.
Revenue is currently reviewing these guidelines to take account of increases in property values in certain locations since 1 May 2013 and will be consulting with the Law Society in that regard.
In conclusion, if a vendor selected a valuation band in good faith in line with comparable valuations on 1 May 2013 and sells the property for a higher value in 2014, 2015 or 2016 no additional LPT liability arises. If the vendor selected a valuation band for the property that did not reflect the market value then he or she should self correct the valuation band before finalising the sale.
216. Deputy Michael McGrath asked the Minister for Finance the impact that additional borrowings taken on by commercial semi-State bodies have on the general Government deficit and general Government debt; and if he will make a statement on the matter. [33397/14]
View answerGovernment bodies which are considered to be commercial under government accounting guidelines are not classified within the general government sector. Consequently, current or future borrowings made by these entities have no effect on the overall government deficit or debt.
However, there are some bodies which were set up under a commercial remit that are currently classified within the general government sector which include both RTÉ and Irish Rail. Under Eurostat guidelines these may be reclassified outside government should they operate as sustainable market entities (greater than 50% of revenue generated from commercial sources) for a period of three consecutive years.
A preliminary register of public sector bodies in Ireland is published on the Central Statistics Office (CSO) website (http://www.cso.ie/en/media/csoie/surveysandmethodologies/documents/pdfdocs/regpublicsectorbodies.pdf ) with relevant background notes as regards definitions, classifications, and methodologies. Tables 2 and 3 of this register detail the public sector bodies classified outside of the general government sector (i.e. commercial semi state bodies).
217. Deputy Michael McGrath asked the Minister for Finance the yield to date from the budget 2013 measure allowing pension scheme savings; and if he will make a statement on the matter. [33400/14]
View answerI am informed by the Revenue Commissioners that to date 10,398 individuals have availed of the option provided under section 782A of the Taxes Consolidation Act 1997 (as inserted by the Finance Act 2013) to access, before retirement, up to 30% of their Additional Voluntary Contributions (AVCs) with the amount withdrawn being subject to income tax (the withdrawals are exempt from Universal Social Charge). I assume this is the measure the Deputy is referring to in his question. In the period up to 30 June 2014 (the latest date for which details are available), the funds withdrawn under this option amount to €77,217,882.82 and income tax of €30,340,329.74 has been paid.
218. Deputy Michael McGrath asked the Minister for Finance the amount of vendor finance that has been provided by the National Asset Management Agency to date; the number of projects financed; the number of housing units that will be provided by these projects; and if he will make a statement on the matter. [33401/14]
View answerI am advised by NAMA that it has to date advanced €373m in vendor finance across six transactions involving the sale of commercial property securing its loans. NAMA makes vendor finance available in the context of the sale of commercial property by its debtors and receivers. Transactions to date have involved the sale of completed office and retail accommodation.
219. Deputy Noel Grealish asked the Minister for Finance since the initiation of the National Asset Management Agency the number of properties put on the open market; the guide price for same; the amount for which they were actually sold; the number of properties that were sold without being put on the open market; the guide price for same; for properties sold without putting them on the open market, the reason they were sold without being placed on the open market; and if he will make a statement on the matter. [33441/14]
View answerNAMA has a policy of openly marketing all properties by its debtors and receivers wherever feasible. The Deputy may wish to consider the Comptroller and Auditor General's (C&AG) Special Report dealing with NAMA's progress over the period 2010 to 2012, which was published in April 2014. The Report is available on the NAMA website, www.nama.ie. As part of this review, the C&AG examined the disposal process for properties with gross proceeds of €1 billion. The C&AG concluded from this analysis that "almost all property disposals reviewed had been sold through an open competitive process or with testing of disposal prices against market valuation". This, according to the C&AG, "provides reasonable assurance that the prices obtained were the best on offer in the market at the time the property was sold". It is NAMA's policy that the sale of loans and the sale of assets by debtors and receivers are, wherever feasible, openly marketed so as to ensure the best return to the taxpayer.
220. Deputy Michael McCarthy asked the Minister for Finance the progress that has been made in the development of a new fuel grant scheme for disabled drivers, to replace the current excise relief on fuel allowed under the disabled drivers and disabled passengers scheme (details supplied); when this will come into effect; if there will be a seamless transition between the two schemes; and if he will make a statement on the matter. [33460/14]
View answerIn April 2013 the European Court of Justice ruled that the excise relief on fuel element of the Disabled Drivers and Disabled Passengers Scheme is incompatible with the EU Energy Tax Directive. My Department has informed the European Commission of my intention to remove the excise relief element of the scheme at the end of 2014 and replace it with a fuel grant scheme in 2015. The European Commission has raised no objections.
In terms of progress on this matter, officials from my Department are continuing to engage with other Departments and the Revenue Commissioners in order to examine all the legislative, financing and payment implications of a new fuel grant scheme. I have instructed my officials to design the new grant scheme in such a way to provide as seamless a transition as possible between the two schemes.
When all the details of the new scheme have been worked out and finalised, the members of the Disabled Drivers and Disabled Passengers Scheme will be informed.
221. Deputy Michael McCarthy asked the Minister for Finance in respect of the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994 if consideration will be given to streamlining and modernising the scheme particularly in reference to the six point assessment for the primary medical certificate; and if he will make a statement on the matter. [33461/14]
View answerThe Disabled Drivers and Disabled Passengers (Tax Concessions) Scheme provides relief from VAT and Vehicle Registration Tax (up to a certain limit), and exemption from motor tax, on the purchase of an adapted car for transport of a person with specific severe and permanent physical disabilities.
The disability criteria for the tax concessions available under the scheme have changed over time. When the scheme was first introduced in 1968, the legislation only allowed for one medical ground. In 1989, four new medical grounds were added and in 1994, one new medical ground was added.
The current disability criteria, composed of the medical grounds added between 1968 and 1994, are set out in the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994. To receive a Primary Medical Certificate, an applicant must be permanently and severely disabled within the terms of these Regulations and satisfy one of six criteria.
Given the scale and scope of the scheme, any possible changes can only be made after careful consideration and with regard to the existing and prospective cost of the scheme and the available resources. I have no plans to expand the medical criteria at this time.
222. Deputy Michael McCarthy asked the Minister for Finance his views on extending local property tax exemptions to include households where high level care is provided; and if he will make a statement on the matter. [33462/14]
View answerI am advised by the Revenue Commissioners that while there is no specific exemption from Local Property Tax (LPT) for a household where high level care is provided, a residential property occupied by an individual who is disabled may qualify for a reduction in the market value of the property for LPT purposes. Additionally, where a residential property is occupied by an individual who is permanently and totally incapacitated, the property may be exempt from LPT. These two LPT reliefs are outlined below.
Section 15A of the Finance (Local Property Tax) Act 2012 (as amended) provides for a reduction in the market value for LPT purposes of a residential property that has been adapted for occupation by a disabled person where the adaptation has been grant-aided, or approved for grant aid, by a local authority and where the adaptation increases the market value of the property. The person with the disability must occupy the property as his or her sole or main residence after the adaptation is completed. Under the Disability Act 2005 disability means "a substantial restriction in the capacity of an individual to carry on a profession, business or occupation in the State or to participate in social or cultural life in the State by reason of an enduring physical, sensory, mental health or intellectual impairment."
Section 10B of the LPT Act provides that an exemption from the charge to LPT may apply to a residential property purchased, built or adapted to make it suitable for occupation by a permanently and totally incapacitated individual as their sole or main residence, where an award has been made by the Injuries Board (formerly known as the Personal Injuries Assessment Board) or a court, or where a trust has been established, specifically for the benefit of such individuals. In the case of adaptations to a property, the exemption only applies where the cost of the adaptation work exceeds 25% of the market value of the property before it was adapted.
Entitlement to the exemption provided for in section 10B will depend on whether the extent of a person's disability is such that they are permanently and totally incapacitated from being able to maintain themselves. "Maintain" in this context means a person's ability to support themselves by earning an income from working. Total incapacity in this context means that the individual is not capable of earning a living from any kind of work. The incapacity must also be permanent, that is, there must be no prospect of the individual recovering, or of the condition improving, to the extent that they become capable of maintaining themselves. I am also advised that whether households, where high level care is provided, qualify for relief under section 15A, or for exemption under section 10B, will depend on the facts and circumstances of each case.
The Deputy may be aware that following representations and a review of the reliefs, I announced on 2 May 2014 that I intend bringing forward legislation amending section 15A to remove the requirement that any adaptation work on the residential property must be grant-aided, or has been approved for grant-aid, by a local authority as one of the qualifying conditions for the tax relief. I also intend to remove the requirement, by way of legislation amending section 10B, that a permanent and totally incapacitated person must have benefitted from a Court or Injuries Board award or a public trust fund, to qualify for the exemption.
My officials wrote to the Chairman of the Revenue Commissioners advising her of my intention to retrospectively amend the legislation. In view of this, the Chairman has advised me that Revenue will apply the exemption and the tax relief in line with the proposed revised legislation. The Commissioners have published detailed guidelines which describe how a residential property qualifies for the reduction in market value or the exemption under the new arrangements, and how liable persons should make their application to Revenue. The Guidelines are available on their website at: Guidelines on Local Property Tax Relief For Disabled / Incapacitated Individuals.
Under the new arrangements, applications for the reduction in market value should be made on Form LPT6. Applications for the exemption should be made on Form LPT7 or, where the application concerns a permanently and totally incapacitated child for whom the Department of Social Protection pay a Domiciliary Care Allowance Form LPT8 should be completed. Applications should be sent to the Revenue Commissioners, LPT Branch, PO Box 1, Limerick. I am informed that Revenue will examine each application and may seek additional information if considered necessary before determining whether the person is entitled to a reduction in the market value of the property or to the exemption, whichever one is being claimed.
The Commissioners have also advised that no further action is required where a property previously qualified for the reduction in the market value under the LPT legislation and the liable person declared the reduced valuation when filing the 2013 LPT1 Return. Similarly, no further action is required where a property previously qualified for the exemption and the exemption was claimed when filing the 2013 LPT1 Return. The reliefs will continue to apply for all years up to 2016, inclusive.
I have no plans for the further extension of exemptions in relation to the above issues.
223. Deputy Michael McGrath asked the Minister for Finance the number of section 90 reviews of credit unions carried out by the Central Bank of Ireland in each year since 2010; and if he will make a statement on the matter. [33480/14]
View answerSection 90 of the Credit Union Act, 1997, provides that the Central Bank may appoint an authorised officer to carry out an inspection and to provide a report of the inspection to the Central Bank. Section 24 of the Central Bank (Supervision and Enforcement) Act, 2013 provides that an authorised officer can include any officers or employees of the Central Bank or other suitably qualified persons.
In 2011, the Central Bank adopted a risk-based approach to supervision underpinned by a credible enforcement deterrent. The Probability Risk and Impact System - PRISM, is a risk-based system of supervision that applies to financial institutions regulated by the Central Bank of Ireland. In 2012 PRISM was extended to credit unions.
Prior to the implementation of PRISM the Central Bank carried out thematic supervisory reviews across a number of selected credit institutions. Engagement between the Central Bank and credit unions for 2010 and 2011 is set out in the Central Bank's Annual Performance Statement Financial Regulation 2011-2012 as follows:
|
- |
2010 |
2011 |
|
Inspections |
7 |
21 |
|
Outsourced Inspections |
200 |
202 |
|
Meetings |
84 |
88 |
|
Year-end Reviews |
286 |
351 |
From 2012 onwards risk based supervision in the form of PRISM was introduced. Engagement between the Central Bank and credit unions for 2012 and 2013 is set out in the Central Bank's Annual Performance Statement Financial Regulation 2013-2014 as follows:
|
- |
2012 |
2013 |
|
Full Risk Assessment |
14 |
21 |
|
Other Meetings (not as part of engagement model) |
101 |
109 |
|
1-day engagements |
70 |
90 |
|
Other Review non-PRISM |
49 |
9 |
The Central Bank has informed me that engagement with credit unions for 2014 is on-going and details of this engagement will be published in the Annual Performance Statement Financial Regulation 2014-2015.
224. Deputy Michael McGrath asked the Minister for Finance the fee structure that has been agreed with the liquidator of a credit union (details supplied); and if he will make a statement on the matter. [33481/14]
View answerI have been informed by the Central Bank that section 76 of the Central Bank and Credit Institutions (Resolution) Act 2011 provides that the Companies Acts apply to the winding-up of an authorised credit institution. The approval of the remuneration of the liquidators in the case of Berehaven Credit Union Limited is therefore a matter for the Courts. The matter has yet to be considered and approved by the Courts.
225. Deputy Michael McGrath asked the Minister for Finance the status of an investigation into reports that certain credit unions employed illegal tactics to obtain personal details relating to customers in arrears; and if he will make a statement on the matter. [33482/14]
View answerCredit unions are expected to fully comply with all legal and regulatory obligations including all data protection requirements. It is further expected that all credit unions fully co-operate with the Office of the Data Protection Commissioner in relation to any matters raised.
Under Section 27(A)(1) of the Credit Union Act, 1997, a credit union is required to maintain appropriate oversight, policies, procedures, processes, practices, systems, controls, skills, expertise and reporting arrangements to ensure the protection of members' savings. Where a credit union outsources its activities it must fully comply with the requirements of Section 76(J) of the Credit Union Act, 1997 and the outsourcing chapter of the Central Bank's Credit Union Handbook. A credit union remains legally responsible for compliance with requirements imposed under financial services legislation in respect of those activities.
However, as Minister for Finance I am not in a position to comment on the ongoing investigation being under taken by the Data Protection Commissioner in relation to claims that credit unions have hired private investigators to obtain confidential details on customers.
226. Deputy Michael McGrath asked the Minister for Finance when Ireland will comply with the transparency directive on disclosure of holdings in contracts for difference and other financial instruments; and if he will make a statement on the matter. [33483/14]
View answerIreland, during its Presidency of the EU Council, steered the negotiations with the European Parliament on the revised Transparency Directive to successful conclusion. The new rules will prevent the secret building up of a holding 'hidden ownership' by requiring the disclosure of holdings of a wider range of instruments including contracts for differences, swaps, futures and other cash settled derivatives. The deadline for transposing the Transparency Directive is November 2015.
The Deputy will be aware that there is an extensive package of EU Financial Services legislation requiring transposition over the coming months and years. Meeting the various transposition deadlines will be challenging for Ireland and indeed for all member states. We, like other member states, will give immediate priority to transposing Banking Union legislation where the single supervisor mechanism needs to be implemented by the end of October and the resolution regulation needs to be transposed by the end of the year. Within this context every effort will be made to transpose the Transparency Directive in advance of November 2015 deadline.
227. Deputy Michael McGrath asked the Minister for Finance his views on the taxation treatment of contracts for difference; his plans to review the matter; and if he will make a statement on the matter. [33484/14]
View answerI am informed by the Revenue Commissioners that a contract for difference (CFD) is a form of derivative instrument that enables an investor to take a position on a share in a company and its likely performance (either a rise or fall in share value) without owning the shares. The contract is between two parties, usually described as "buyer" and "seller", stipulating that the seller will pay to the buyer the difference between the current value of the share and its value at contract time. If the difference is negative, then the buyer pays to the seller.
Where a CFD is held in the course of a financial trade, the accounting profit or loss on the transaction is taken into account in calculating the profit or loss of the trade for tax purposes.
Where a CFD is held otherwise than in the course of a financial trade, then it is a capital asset for CGT purposes. There are no special rules applying to CFDs; they are subject to the same rules as any other chargeable asset. Accordingly, any gain realised on a CFD is taxable with a deduction for broker fees incurred in entering into the transaction.
CFDs are exempt from VAT.
A CFD does not attract a stamp duty liability. In general, stamp duty arises on the purchase of shares. Where shares are acquired by a person in the course of carrying on a financial trade as intermediary, the intermediary is not subject to stamp duty. This position was reconfirmed when the law as it relates to stamp duty on share transactions underpinning CFDs was reviewed in 2007 with a view to ensuring that the market in Irish equities would continue to be a liquid market conducive to capital acquisition by Irish firms.
If any issues, which it is considered would justify the current taxation treatment of CFDs being reviewed, are brought to my attention they will be examined in consultation with the Revenue Commissioners.
228. Deputy Michael McGrath asked the Minister for Finance if he will request the National Asset Management Agency to take greater consideration of the nature and long-term plans of investors who purchase loans from the agency; and if he will make a statement on the matter. [33485/14]
View answerThe issue raised by the Deputy is a commercial matter for NAMA. NAMA's policy is to ensure that assets offered for sale are subject to a competitive bidding process with the objective of obtaining the best price available in the market for the ultimate benefit of all Irish taxpayers. NAMA does not give preferential treatment to particular bidders based on their country of origin or on their investment strategy and I fully endorse NAMA's policy in that respect. I do not propose to place NAMA and, by extension, Irish taxpayers, at a competitive disadvantage relative to other deleveraging entities through the imposition of restrictions or curtailments on its ability to recover maximum value for the State through the sale of loans and the property assets securing those loans. Strategies pursued by purchasers after acquisition is a commercial matter for them.
229. Deputy Michael McGrath asked the Minister for Finance the number of occasions on which he has made a direction to the National Asset Management Agency to carry out certain actions under the terms of powers vested in him by the NAMA Act; and if he will make a statement on the matter. [33486/14]
View answerI have made four of the ten direction orders to NAMA under the NAMA Act. I have also made four direction orders to NAMA under the IBRC Act 2013. I have set out the details of each direction below.
A copy of each Direction Order was laid before the Houses of the Oireachtas and published in Iris Oifigiúil at the time.
Directions made by me relating to NAMA under the NAMA Act and the IBRC Act 2013 are also publicly available on the NAMA website, www.nama.ie/governance/legislation/
Directions to NAMA issued under the Irish Bank Resolution Act 2013
20 Feb. 2013: Direction that a draft Deed of Assignment and Transfer be entered into between the Central Bank of Ireland (as seller) and NAMA (as buyer), pursuant to Section 13(1) of the Irish Bank Resolution Act 2013.
7 Feb. 2013: Direction to the Board of NAMA to provide a short-term facility to the Special Liquidators of IBRC, pursuant to Section 13(1) of the Irish Bank Resolution Act 2013.
7 Feb. 2013: Direction to the Board of NAMA that it make a bid for assets of IBRC, pursuant to Section 13(1) of the Irish Bank Resolution Act 2013.
7 Feb. 2013: Direction that a draft Deed of Assignment and Transfer be entered into between the Central Bank of Ireland (as seller) and NAMA (as buyer), pursuant to Section 13(1) of the Irish Bank Resolution Act 2013.
Directions issued under the NAMA Act
30 Mar. 2012: Direction to the Board of NAMA to adopt all reasonable measures to facilitate the short-term financing of IBRC issued under Section 14 of the NAMA Act.
7 Mar. 2012: Direction to the Board of NAMA concerning the operation of a NAMA Advisory Group, issued under Section 14 of the NAMA Act.
11 May 2011: The Minister for Finance amends the terms and conditions of the Senior notes in order to retain the current valuation of the instruments to support the stability of those credit institutions that hold the notes. Direction issued under Section 14 of the NAMA Act.
22 Oct. 2010: The Minister for Finance amends the regulations issued on 3 March 2010 to allow for the accelerated acquisition of the remaining loans from the participating institutions. Regulations issued under Section 79 of the NAMA Act.
22 Oct. 2010: The Minister for Finance directs the Agency to expedite the acquisition of remaining loans from the participating institutions. Direction issued under Section 14 of the NAMA Act.
22 Oct. 2010: The Minister for Finance confers additional functions on the Agency in order to expedite the acquisition of the remaining loans from the participating institutions. Direction issued under Section 11 of the NAMA Act.
14 May 2010: The Minister for Finance makes a Direction concerning the issuance of government-guaranteed debt by NAMA. Direction issued under Section 14 of the NAMA Act.
3 Mar. 2010: The Minister for Finance issues regulations in relation to the valuation methodology to be applied by NAMA when acquiring loans. Regulations issued under Sections 75, 76, and 79 of the NAMA Act.
23 Dec. 2009: The Minister for Finance issues regulations prescribing certain classes of bank assets as eligible for acquisition by NAMA. Regulations issued under Section 69 of the NAMA Act.
21 Dec. 2009: The Minister for Finance designates 21 December 2009 as establishment day for NAMA. Direction issued under Section 8 of the NAMA Act.
230. Deputy Michael McGrath asked the Minister for Finance the implications of a court ruling (details supplied) on the manner in which the National Asset Management Agency conducts future loan sales; and if he will make a statement on the matter. [33487/14]
View answerI am not aware that the ruling has any implications for NAMA's policy of ensuring that assets are offered for sale to the open market so as to optimise the proceeds realised for the benefit of Irish taxpayers. It would not be appropriate for me to comment any further on matters that are before the Courts other than to say that NAMA is not party to the proceedings to which the Deputy refers.
231. Deputy Michael Creed asked the Minister for Finance the contracts he has had with the National Asset Management Agency in connection with the sale of developer loan books; if in view of the housing shortage and the stated Government objectives to address this issue he has discussed with NAMA the way the sale of developer loan books should proceed in this regard; his view on whether it is desirable to insert conditions of sale to ensure that the purchasers are obliged to proceed with housing construction on land banks within these loan portfolio; and if he will make a statement on the matter. [33524/14]
View answerThe strategy informing the sale of loans by NAMA and the sale of properties by NAMA debtors and receivers is a commercial matter for NAMA. More generally, I do not intend to put NAMA and, by extension, Irish taxpayers, at a competitive disadvantage relative to other deleveraging entities through the imposition of restrictions or curtailments on its ability to recover maximum value for the State through the sale of loans and property assets securing those loans.
The Deputy may be aware that NAMA has committed to protecting its ability to ensure the timely and coherent delivery of key Grade A office space and new residential development in areas of most need. NAMA has publicly committed to facilitating the delivery of 4,500 new homes in the Dublin area in the period to end-2016 and, following a detailed analysis of debtor residential development sites, is working with its debtors and receivers to progress residential development sites through appraisal, design and planning processes with a potential to deliver up to a total of 25,000 new homes in the years after 2016. I understand that in this context the NAMA Board regularly considers the merits of various delivery methods for commercial and residential units including funding arrangements, joint ventures, partnerships and the sale of development rights.
232. Deputy Ruth Coppinger asked the Minister for Finance if he intends to reduce the VAT rate on defibrillators as a measure to increase their availability to community and sporting organisations. [33526/14]
View answer243. Deputy Pearse Doherty asked the Minister for Finance if there are any legal constraints to reducing the VAT charged on defibrillators to 9%; and his plans to reduce the VAT rate on defibrillators. [33798/14]
View answerI propose to take Questions Nos. 232 and 243 together.
The VAT rating of goods and services is constrained by the requirements of EU VAT law with which Irish VAT law must comply. Defibrillators, other than implantable defibrillators, are liable to VAT at the standard rate of 23%. Parts or accessories and training are also liable to VAT at the standard rate.
There is no provision in the EU VAT Directive that would make it possible to exempt from VAT or apply a zero rate to the supply of defibrillators. Under the VAT (Refund of Tax) (No.15) Order, 1981 it is possible for individuals to obtain repayment of VAT expended on certain goods and appliances which assist persons with a disability to overcome that disability. In this context, a defibrillator purchased by or on behalf of an individual may qualify for a VAT refund. However, a defibrillator purchased for general use by a sports body or charity would not qualify for such a refund.
233. Deputy Michael McGrath asked the Minister for Finance the impact that new statistical methodologies for the national accounts have had on the debt and deficit outturn for 2010 to 2013, inclusive; and if he will make a statement on the matter. [33530/14]
View answerThe European System of National and Regional Accounts (ESA) define the accounting rules utilised by Member States and are consistent with the United Nations System of National Accounts (SNA) in definitions, accounting rules, and classifications. ESA 2010 are an update of the current rules of national accounts (ESA 95) and must be adopted by all member states by September 2014.
The primary impact of the new rules is a change in the methodology for calculation of GDP as a result of which the level of nominal GDP increases thus improving the key ratios (Debt to GDP and deficit to GDP). These amended GDP figures were first published by the CSO as part of their National Income and Expenditure (NIE) results 2013 on 03 July 2014. This new measurement basis has been widely discussed in Ireland and other EU member states.
The impact of ESA 2010 can be seen in the overall deficit and debt figures and the underlying components of these two measures. The changes which impact on deficit and debt can be broken into three categories: sector classification changes; changes in the treatment of the assets and liabilities of pension schemes where pension obligations are transferred to government; changes in the treatment of interest on swaps and forward rate agreements (FRAs).
The sector classification issue with the greatest level of materiality is in relation to the classification of Irish Bank Resolution Corporation (IBRC) in the general government sector with effect from mid-2011. This is as a result of the technical change from the ESA 95 standards whereby entities that were classified as Monetary Financial Institutions were excluded from general government. This automatic exclusion no longer applies under ESA 2010. This inclusion of IBRC will primarily impact the deficit and debt for the period 2011-2013, with little or no effect in 2014 due to the progression of the liquidation process, and is set out as follows:
|
- |
2011 |
2012 |
2013 |
2014f |
|
GG Deficit impact |
-0.2 |
-0.4 |
0.7 |
0.0 |
|
(% GDP; - implies deficit worsened, + implies deficit improvement) |
~ |
~ |
~ |
~ |
|
GG Debt impact |
12.2 |
10.3 |
7.2 |
1.0* |
|
(% GDP; + implies debt increase) |
~ |
~ |
~ |
~ |
*This is a current provisional estimate.
Under ESA 95, the transfer of a pension fund to government was treated as revenue in the year that it took place. However, using ESA 2010 rules there is a neutral effect where the assets and liabilities are equal and a negative impact on the deficit where the liabilities exceed the assets of the scheme.
Under ESA 2010 the calculation of interest for government deficit purposes will in future be measured pre-swap under ESA 2010 rather than the current post-swap basis. Depending on the relevant transactions the exclusion of swaps may have the effect of either improving or worsening the deficit figures.
Taking account of the changes above the most recent deficit and debt information published under both methodologies are:
ESA 95
|
- |
2010 |
2011 |
2012 |
2013 |
|
Deficit % GDP |
-10.6 |
-8.9 |
-8.2 |
-7.2 |
|
Debt % GDP |
91.2 |
104.1 |
117.4 |
123.7 |
Source: CSO, Eurostat (EDP, April 2014)
ESA 2010
|
- |
2010 |
2011 |
2012 |
2013 |
|
Deficit % GDP |
-11.0 |
-8.6 |
-8.1 |
-5.7 |
|
Debt % GDP |
87.4 |
111.1 |
121.7 |
123.3 |
Source: CSO (Q1 GFS release)
234. Deputy Olivia Mitchell asked the Minister for Finance if any consideration has been given to the unfair treatment of the secondary carer, who is also a major financial contributor to the child, being unable to receive the single person child carer credit when the primary carer chooses to cohabit and is no longer able to relinquish the credit to the secondary carer; and if he will make a statement on the matter. [33534/14]
View answerAs the Deputy is aware, the One-Parent Family Tax Credit (OPFTC) has been replaced with the Single Person Child Carer Credit from 1 January 2014. However, the reformed credit is more targeted in that it is, in the first instance, only available to the primary carer of the child.
Given the difficult fiscal environment, it is essential to review all tax reliefs, credits and incentives in order to ensure that they are properly targeted and if necessary re-focused in order that they can achieve the socio-economic objectives that are set for them.
The Commission on Taxation acknowledged that the previous One Parent Family Tax Credit played a role in supporting and incentivising the labour market participation of single and widowed parents. However, in its recommendations it concluded that the credit should be retained but that it should be allocated to the primary carer only. The restructuring of the credit achieves such an outcome.
The person who cares for the child for most of the year is entitled to the credit in the first instance. Agreement as to who will be the primary carer of a child is a matter for the parents or guardians. However, only the primary carer is entitled to the credit.
For information, it should be noted that where a primary carer is married, in a civil partnership or cohabiting they would not be entitled to the new credit (or indeed the former one), on the basis that the relevant child is not, in the main, being cared for by a single person. In such circumstances the primary carer cannot relinquish the credit to a secondary carer. In addition, a secondary carer who is married, in a civil partnership or cohabiting, would not be entitled to the new credit (or indeed the former one) regardless of the marital status of the primary carer.
236. Deputy Jim Daly asked the Minister for Finance if he will request the Central Bank of Ireland to publish the number of mortgages held in covered institutions that have been converted from a tracker rate to a variable rate in the past five years; and if he will make a statement on the matter. [33588/14]
View answerAs the Deputy will be aware there are a range of consumer protection measures in place for consumers with tracker mortgages. In the case of those in mortgage difficulty the Central Bank's Code of Conduct on Mortgage Arrears (CCMA) sets out requirements for mortgage lenders when dealing with borrowers facing or in arrears on a mortgage which is secured on a primary residence. The CCMA provides a strong consumer protection framework to ensure that borrowers struggling to keep up repayments on a mortgage loan which is secured on a primary residence are treated in a fair and transparent manner by their lender, and that long term resolution is sought by lenders with each of their borrowers in genuine mortgage difficulty.
With regard to the protections for those mortgage holders who are on a tracker rate and in difficulty with their mortgage, the CCMA provides that the lender must not require a cooperating borrower to change from an existing tracker mortgage to another mortgage type, as part of any alternative repayment arrangement offered to the borrower, except in certain limited circumstances. However, in the case of an existing tracker mortgage, if, following consideration of the options for an alternative repayment arrangement the lender concludes that none of the option(s) that would allow the borrower to retain his/her tracker interest rate is/are appropriate and sustainable for the borrower's individual circumstances, the lender may offer the borrower an alternative repayment arrangement which requires the borrower to change from an existing tracker mortgage to another mortgage type, if that alternative repayment arrangement is:
a) affordable for the borrower, and
b) a long-term sustainable solution which is consistent with Central Bank of Ireland policy on sustainability.
With regard to the publication of the information you have sought, I understand that the position of the Central Bank is that there is no evidence that the collection of this data from the covered institutions would supplement the data currently disclosed publicly by the Central Bank.
237. Deputy Joanna Tuffy asked the Minister for Finance the cost of servicing the national debt; the total amount owed and the interest rate paid each year from 2010 to 2014, inclusive; the amount of interest he anticipates will be paid in the year 2015; the details of the source of funds used to pay the debt; and if he will make a statement on the matter. [33596/14]
View answerA time series on the outstanding stock of national debt and the servicing of national debt are available in the Budgetary & Economic Statistics published by my Department. However, as general government debt expressed as a percentage of gross domestic product is the standard metric internationally for assessing debt levels, this is the more appropriate metric to look at. On that basis, the general government data is set out in the following table.
The national accounts are compiled in the EU according to the European System of National and Regional Accounts (ESA) framework. Since July 2014, the national accounts are being presented on a new statistical basis, ESA 2010. The table presents 2010 to 2013 data on an ESA 2010 basis, as restated by the CSO in the quarterly government finance statistics published in July 2014.
It should be noted, however, that the latest estimates for 2014 and 2015 are those published in my Department's Stability Programme Update of April 2014, which were prepared on the previous ESA 95 basis. The ESA 2010 changes will impact the forecast for interest due on general government debt for the years 2014 and 2015 and will be included in the next update of the macro-economic and fiscal forecasts, to be published as part of Budget 2015.
Table 1 Interest, debt and average interest rate 2010 - 2015
|
- |
2010 |
2011 |
2012 |
2013 |
2014f1 |
2015f1 |
|
General government interest (€ million) |
4,920 |
5,888 |
7,157 |
7,658 |
7,966 |
8,452 |
|
General Government Debt (€ million) |
144,163 |
190,111 |
210,226 |
215,538 |
204,400 |
209,300 |
|
Implied average interest Rate2 |
4.71% |
4.08% |
3.76% |
3.64% |
3.9% |
4.1% |
Notes:
1 2014 and 2015 data on an ESA 95 basis
2 The implied interest rate is calculated by dividing the general government interest in year t by the stock of general government debt outstanding in year t1. Because of the break in the series, the implied interest rate for 2014 is that published in SPU 2014.
Regarding the interest rate paid each year, the various elements of general government debt can attract a range of different interest rates. A more practical metric would be to calculate an average interest for all general government debt. The table above shows the results of these calculations.
General government debt is made up of National Debt and debt from all bodies classified within Government. Funds to service the National Debt are sourced from the Central Fund and are shown on the Exchequer Statement under non-voted current expenditure. The service of debt from bodies classified within Government may be paid from own-resource income or from funding allocated to those bodies.
238. Deputy Pearse Doherty asked the Minister for Finance the persons that own the old Newbridge Credit Union building now occupied by PTSB; and if PTSB is not the owner, if it is paying rent to any State body and the amount of that rent. [33631/14]
View answerI have been informed that the legal entity Newbridge Credit Union Limited was placed in liquidation following an order of the High Court granted on 16 December 2013. The Newbridge Credit Union building remains in the ownership of the legal entity Newbridge Credit Union Limited. The liquidation process is ongoing.
permanent tsb has made arrangements with the Liquidator to continue to have access to the building for a period of time on a commercial basis and these arrangements are still in place.
239. Deputy Pearse Doherty asked the Minister for Finance if he is going to proceed as previously promised with allowing the common bond areas of Kilcullen, Kildare Town and Rathangan Credit Unions be extended to cover the Newbridge area following the loss of the town's credit union. [33632/14]
View answerWhile the Government is absolutely determined to support a strengthened and growing credit union movement and has highlighted its support for the return of credit union services to Newbridge, my role is to ensure the legal framework for credit unions is appropriate for the effective operation and supervision of the sector.
I have been informed by the Central Bank that it previously confirmed its openness to any proposals to re-establish credit union services in the Newbridge area. Any proposal to establish a new credit union or to extend the common bond of an existing credit union is subject to regulatory approval by the Central Bank.
241. Deputy Eoghan Murphy asked the Minister for Finance if he will address the following biases in the tax code vis-à-vis self-employed persons (details supplied). [33732/14]
View answerThe position is that the PAYE allowance, as it was then, was introduced in 1980 to improve the tax progression of PAYE taxpayers and to take account of the fact that the self-employed generally then had the advantage of paying tax on a preceding year basis. The argument was also made at the time that the general scheme of allowances for expenses discriminated against employees and in favour of other taxpayers.
There have been some changes since 1980. For example, the self-employed now pay tax on a current year basis. In addition, the PAYE allowance has become a tax credit. However, significant timing benefits remain, depending on the accounting period used by the taxpayer. In addition, the expenses regime remains somewhat more liberal than that afforded to employees and therefore the self-employed can actually pay less tax when compared to a PAYE worker on the same income.
Although employees who earn less than €352 per week are exempt from making an employee PRSI contribution, employers are obliged to make an employer's contribution, which is currently 8.5%, on their behalf, provided the employee earns in excess of €38 per week. In the absence of a similar employer PRSI element to PRSI for the self-employed, the minimum self-employed PRSI contribution ensures that a contribution to the Social Insurance Fund is made in respect of all those who work. In return eligibility for certain generous Social Protection payments is accrued.
An employer is obliged, on making any payment of earnings or emoluments to an employee, to deduct from the earnings or emoluments the amount of PRSI which is due in relation to the employment with him or her. If an employee works for different employers in the same income tax week, each employer is obliged to make deductions at the correct class of PRSI in relation to the employment with him or her only.
Section 13 (2) (a) of the Social Welfare Consolidation Act 2005 states "where in any contribution week a payment of not more than €352 per week (or the equivalent thereof) is made to or for the benefit of an employed contributor in respect of reckonable earnings of that contributor relating to an employment, a contribution shall not be payable by that employed contributor in respect of those earning from that employment". Notwithstanding the above, the employer PRSI element remains payable.
242. Deputy Seamus Kirk asked the Minister for Finance if he has received a copy of the recent report for Fáilte Ireland, An Analysis of the Impact of the VAT Reduction on Irish Tourism and Tourism Development; if he has noted its content; if his attention has been drawn to the fact that the report published by Fáilte Ireland outlined that the lower VAT rate of 9%, which was introduced to give the tourism sector a boost in 2011 and which has been maintained ever since, is continuing to have significant benefits for the economy; if he has noted that since its introduction more than 30,000 jobs have been added to the sector as a result of the measure being in place; and if he will make a statement on the matter. [33733/14]
View answerI have received the report from Fáilte Ireland as part of the Budget submission from the Minister for Transport, Tourism and Sport. As with all pre-Budget submissions, the proposals will be considered as part of the wider budgetary objectives.
The 9% reduced VAT rate for tourism related services was introduced in July 2011 as part of the Government Jobs Initiative. The measure was designed to boost tourism and create additional jobs in that sector. In Budget 2014 I announced that the 9% VAT rate would be retained indefinitely at a cost of €290 million in 2014 and €350 million in a full year. The Budget change means that the 9% rate is not due to expire, but it is subject to change in the normal course of the budgetary and Finance Bill process, as with all taxes. In this context, there would be no additional cost of maintaining the 9% VAT rate in 2015 and subsequent years.
