Written Answers Nos. 164-182
164. Deputy Eoghan Murphy asked the Minister for Finance the cost to the Exchequer of interest repayments on the national debt; the changes in comparison to the previous year and forecasts for next year; the amount these interest repayments will increase as a result of borrowing to fund the deficit in 2015. [35631/14]
View answerInterest payments on the National Debt to end August 2014 amounted to €4,829 million. The Budget 2014 consistent profile forecast interest expenditure to end August 2014 of €5,220 million. This reduction of €390 million on profile is primarily due to the December 2013 bond-buy back which resulted in lower interest expenditure in the early part of 2014, lower than expected costs from bond issuance so far this year and a favourable rate reset on the floating rate bonds post-Budget last December.
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. General government debt is made up of National Debt and debt from all bodies classified within Government. Interest repayments 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.
Budget 2014 forecast general government interest expenditure of €8,755 million in 2015 on an ESA 95 basis. This was revised down to €8,452 million in the April 2014 Stability Programme Update (SPU) primarily due to the changing interest rate environment. Budget 2015 will contain a further update to the estimate for interest expenditure in 2015 which will be on an ESA 2010 basis.
With regard to the portion of interest that relates to the deficit, the NTMA borrow not just to fund the expected deficit but also for repayments of other debt and as part of the overall debt management strategy.
Budget 2015 will also contain an updated figure for the projected underlying general government deficit in 2015. The Deputy should note the last published forecast in the SPU of €5,135 million was also prepared on an ESA 95 basis rather than the ESA 2010 basis that will be used in the Budget in October.
165. Deputy Michael McGrath asked the Minister for Finance the amount of revenue expected to be received in 2014 in respect of the local property tax; the anticipated revenue in 2015. [35633/14]
View answerI am informed by the Revenue Commissioners that compliance data in relation to the Local Property Tax (LPT) is available broken down by city and county councils nationally and the most up to date figures for LPT collected in 2013 and 2014 were published in July 2014 on the Commissioners' website at: Local Property Tax Statistics July 2014 (PDF 192KB).
The Commissioners have confirmed that the 2014 LPT Exchequer receipts to 31 August 2014 are €363m. Exchequer receipts for LPT also include payments of Household Charge.
While the 2014 forecasted yield for LPT is €550 million (this includes €50 million in Household Charge), the Commissioners advise that it is not possible to state the precise amount of LPT which is expected to be collected for 2014. A number of factors could affect the outcome, including the continuation of the strong level of voluntary compliance that was achieved in 2013, the impact of Revenue's national compliance programme to follow up with those liable persons who have failed to meet their LPT obligations for 2013 and 2014, and the compliance programme for the collection of arrears of household charge/LPT.
I am advised that these factors will also, most likely, affect the outcome for 2015. The current forecast for 2015 is €500 million. However, the Deputy will also be aware that Section 20 of the Finance (Local Property Tax) Act 2012 (as amended) allows elected members of a local authority to pass a formal resolution to vary the basic rate of LPT by up to 15% for their functional area, which may result in a lower or higher LPT rate applying for 2015, with a corresponding impact on the LPT yield for 2015.
I am further advised by the Commissioners that they intend to publish updated compliance statistics in due course.
166. Deputy Michael McGrath asked the Minister for Finance the value of Government bonds held by the Central Bank of Ireland in respect of the arrangement entered into to replace the promissory notes; if he will provide details of the disposal to date of any of these bonds; if he will specify the minimum disposal schedule agreed with the ECB; if he will indicate if there have been any changes to this agreed minimum disposal schedule; if he will specify the annual coupon and or amount of interest being paid by the Government to the Central Bank in respect of the bonds. [35635/14]
View answerSubsequent to the liquidation of IBRC the Central Bank acquired €25bn of Floating Rate Notes (FRNs) and €3.46bn of Government Fixed Coupon 2025 Government bonds. The Bank undertook to sell the combined portfolio of the FRNs and the fixed rate bond as soon as possible provided the conditions of financial stability permit.
The Bank also indicated that, as a minimum, it will make sales in accordance with the following schedule: to end 2014 (€0.5 billion), 2015-2018 (€0.5 billion per annum), 2019-2023 (€1 billion per annum), and 2024 on (€2 billion per annum until all bonds are sold). The Bank's recent Annual Report notes that sales have been made from this combined portfolio, with the Bank selling €350mn of its holdings of the Government 2025 Fixed Rate Bond in 2013.
The timing of the sales and the management of its investment holdings are a matter for the Central Bank, which is independent in the exercise of its functions. Neither I nor the Department of Finance have any role in the matter.
I have been advised by the NTMA that total cash interest payable on the floating rate bonds in 2013 was €638 million. Following last month's rate reset in respect of the December 2014 interest payment, total cash interest payable in 2014 is presently expected to be just over €750 million. The increase in interest payable in 2014 compared to 2013 largely reflects the fact that a full year's interest is payable this year. Interest payable on the floating rate bonds is currently projected to increase in the coming years, consistent with the projected increase in the six-month Euribor interest rate as the interest margins on the floating rate bonds are fixed. The interest margin averages 2.63% across the eight issues.
167. Deputy Michael McGrath asked the Minister for Finance if it is possible to invest in social housing through the Ireland Strategic Investment Fund. [35637/14]
View answerThe objective of the Ireland Strategic Investment Fund (ISIF) is to invest on a commercial basis to support economic activity and employment in the state.
Pursuant to the NTMA Amendment Act 2014, the NTMA shall determine, monitor and keep under review the fund's investment strategy. In this context, the agency must consult with both myself and my colleague, the Minister for Public Expenditure and Reform. The investment strategy for the ISIF is currently in draft form, pending consideration by the, soon to be appointed, NTMA Board and timely consultation with both the Minister for Finance and the Minister for Public Expenditure and Reform.
The ISIF will consider any investment opportunities that may arise in the social housing sector and in this regard has already had some engagement with relevant parties, including NTMA agencies, Government Departments and private sector agencies.
168. Deputy Brian Walsh asked the Minister for Finance the number of individuals who have successfully applied for tax rebates under the seed capital scheme in each of the years 2011, 2012 and 2013; and the total cost of these rebates to the Exchequer. [35644/14]
View answerI am informed by the Revenue Commissioners that the number of individuals who successfully applied for tax rebates under the Seed Capital Scheme in each of the years 2011, 2012 and 2013 and the total cost of these rebates to the Exchequer is as set out in the following table:
|
Year |
Number of Individuals |
Estimated Cost of Rebates -€m |
|
2011 |
80 |
2.0 |
|
2012 |
88 |
1.6 |
|
2013 |
59 |
1.3 |
169. Deputy Brian Walsh asked the Minister for Finance if he will consider extending the seed capital scheme to allow individuals to apply who intend to operate as sole traders or partnerships rather than incorporated companies. [35645/14]
View answerIt is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
However, as the Deputy will be aware, a review of the Employment and Investment Incentive and Seed Capital Scheme was carried out this year. Part of this review included a public consultation and a series of stakeholder meetings. The results of this review will be considered as part of the forthcoming Budget and Finance Bill and any announcements will be made on Budget Day.
170. Deputy Michael McCarthy asked the Minister for Finance his views on raising the current VAT registration threshold given that it places a significant financial burden on new small independent retailers. [35709/14]
View answerVAT registration thresholds provide a mechanism for exempting business with a low turnover from having to register for VAT. This reduces the administrative burden on both small businesses often at the developmental stage and on the Revenue Commissioners. The VAT registration thresholds for small businesses are currently €37,500 in the case of a person supplying services and €75,000 in the case of person supplying goods.
With regard to increasing the thresholds, it is not the practice to comment on what measures may or may not be introduced in advance of the Budget.
171. Deputy Seán Kenny asked the Minister for Finance the estimated cost to the Exchequer of reducing the excise duty on a pint of beer by 5 cents. [35711/14]
View answerI am informed by the Revenue Commissioners that a reduction to the excise duty by 5 cent will also reduce VAT by 1.15 cent. The estimated cost to the Exchequer of the total reduction of 6.15 cent is €41 million.
172. Deputy Pearse Doherty asked the Minister for Finance the date on which the White Paper on receipts and expenditures will be published. [35748/14]
View answerThe White Paper on the estimates of receipts and expenditure is published in advance of the Budget and sets out the technical 'no-policy' change position for the forthcoming year. The White Paper for the year ending 31 December 2015 will be published at midnight on Friday, 10th October 2014 in advance of Budget day on Tuesday, 14th October 2014.
173. Deputy Bernard J. Durkan asked the Minister for Finance if a notice of assessment for 2013 will issue in the case of a person (details supplied) in County Kildare; and if he will make a statement on the matter. [35789/14]
View answerI am advised by the Revenue Commissioners that a return of income for the tax year 2013 was received from the person concerned on 19th August 2013 and that a Notice of Assessment was issued on 5th September 2013.
175. Deputy Mick Wallace asked the Minister for Finance the reason homeowners' mortgages with IBRC were sold to Shoreline without the change of ownership being reflected on the property folio. [35838/14]
View answerIt is the responsibility of the new mortgage provider to update the details on the property folios in question. The Special Liquidators of IBRC are unable to comment on the subsequent actions taken by purchasers of loan assets once the loan assets have been sold.
176. Deputy Finian McGrath asked the Minister for Finance his views on a matter raised in correspondence (details supplied) regarding inheritance tax; and if he will make a statement on the matter. [35844/14]
View answerCapital Acquisitions Tax (CAT) is the overall name for both gift and inheritance tax.
For the purposes of CAT, the position is that the relationship between the person who provides the gift or inheritance (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary) determines the maximum tax-free threshold known as the "Group threshold" below which gift or inheritance tax does not arise.
There are, in all, three separate Group tax-free thresholds based on the relationship of the beneficiary to the disponer.
Group A: €225,000 applies where the beneficiary is a child (including adopted child, step-child and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.
Group B: €30,150- applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.
Group C: €15,075- applies in all other cases.
Any prior gifts or inheritances received by a beneficiary since 5 December 1991 from within the same Group threshold are aggregated for the purposes of determining whether any tax is payable on the current benefit.
CAT is charged on the amount of the gift or inheritance that exceeds the beneficiary's tax-free threshold.
For example, as set out above, each child can separately receive gifts or inheritances from their parents up to the value of €225,000 without incurring any liability to CAT.
As each child in a family is entitled to their own separate tax-free threshold of €225,000 parents can make substantial gifts or bequests to each of their children tax-free.
The rate of CAT on the excess over the child's tax-free threshold of €225,000 is 33%.
Apart from the tax-free thresholds, a number of exemptions and reliefs from CAT are provided in CAT legislation.
A complete exemption from CAT is available in relation to gifts and inheritances transferring between spouses.
A gift or inheritance of a dwelling house that is the only or main residence of the beneficiary is exempt from CAT, subject to certain conditions.
Significant relief is also given to gifts and inheritances of agricultural property and business property, again subject to certain conditions.
It is not clear from the details supplied by the Deputy what particular aspect of the Capital Acquisitions Tax legislation he believes constitutes a burden on families. If the Deputy could supply full details of the particular matter that has been raised with him, I will arrange to have it considered.
177. Deputy Clare Daly asked the Minister for Finance in view of the European Court of Justice ruling which explicitly makes it clear that member states can set different VAT rates for e-books, the measures he will take to retain the VAT exempt status of printed books; and his plans to abolish VAT on e-books. [35847/14]
View answerThe VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. In this regard, EU VAT law specifically provides that all digitised publications, including e-books, are treated as the supply of a service liable at the standard rate of VAT, which in Ireland is 23%. While Ireland applies a zero VAT rate to printed books including atlases, children's picture, drawing and colouring books and books of music, by virtue of a derogation under the VAT Directive for such exceptional treatment, there is no option under EU VAT Law to either exempt e-books from VAT or to apply the zero VAT rate or a reduced VAT rate to such products.
The different VAT treatment of printed books and e-books reflects the nature of these products, the latter being a richer product often providing content beyond simple text to include embedded digital music, software, film and internet links.
With regard to the recent judgement of the European Court of Justice in Case C-219/13 K Oy, this relates to the VAT treatment of printed vs audio books, that is, books on all physical means of support as defined in point 6 of Annex III to the EU VAT Directive. The Court judged that it is possible for a Member State to apply different VAT rates to printed books and books on CDs or CD-ROMs. E-books are not supplied on a physical means of support and as such are not included in Annex III. EU VAT law makes a distinction between electronic supplies, in this case an audio-book, and electronically supplied services, such as an e-book, and as stated earlier, all electronically supplied services must be applied at the standard VAT rate.
178. Deputy Joe Carey asked the Minister for Finance the procedures used in considering a review of the application of VAT rate decisions; and if he will make a statement on the matter. [35859/14]
View answerThe determination of the VAT rate applicable to various goods and services, and what changes may be made to the VAT rate applying to any activity, must be mindful in the first instance of EU VAT law. VAT is governed by the EU VAT Directive, with which Irish VAT law must comply, and the application of VAT rates to various goods and services must comply with the rules regarding VAT rates in that Directive. For instance, the VAT Directive provides that Member States must apply a standard VAT rate which in Ireland is 23%. The Directive also allows Member States to apply up to two reduced VAT rates to goods and services as listed in Annex III of the Directive. The application of the 9% VAT rate to tourism activity is possible because of this provision. In addition, the VAT Directive allows for historic VAT treatment to be maintained under set conditions. Article 110 allows for the continuation of the application of a zero rate or a rate less than 5% to goods or services where that rate applied on and from 1 January 1991. Ireland takes advantage of this provision in our application of the zero rate to most food, books, medicine and children's clothing, as well as our application of the 4.8% VAT rate on livestock. Furthermore, Article 118 of the Directive allows Member States to retain the application of a reduced VAT rate of 12% or more on goods and services not contained in Annex III, that had applied at a reduced VAT rate on and from 1 January 1991. The application of the 13.5% VAT rate in Ireland to domestic fuels, commercial construction and some labour intensive services is based on this provision.
Furthermore, making changes to existing VAT rate treatment is also conditional on the terms of the EU VAT Directive, especially considering much of Ireland's VAT rating is historic and subject to specific rules. It is possible to apply the standard VAT rate to all goods and services. Taking any particular good or service currently applying at the 23% standard VAT rate, it is only possible to apply a reduced VAT rate of 9% or 13.5% to it if it is listed in Annex III of the VAT Directive; it is not possible to apply a zero rate to it as this only applies to goods and services applying at the zero rate since 1991. It is not possible to apply a different reduced VAT rate to it as it is only allowable to apply two reduced VAT rates.
It is possible to apply a reduced or standard VAT rate to the goods currently applying at the zero rate, however, the conditions of Article 110 provide that it would not be possible to revert those goods back to the zero rate as the zero rating must be continued from 1991. Similarly, it is possible to apply a standard VAT rate to the goods and services currently applying at the 13.5% rate under Article 118, but it would not be possible thereafter to revert them to a reduced VAT rate. In addition, as stated earlier, it is not possible to apply a rate of less than 12% to goods and services under Article 118, which means that it would not be possible to apply our 9% VAT rate to the goods currently applying at the 13.5% rate under this Article.
Outside of the conditions laid out in the EU VAT Directive, Ireland is free to set the level at which the various VAT rates apply, and free to apply a reduced or standard VAT rate to the goods and services contained in Annex III of the Directive. In this context, the determination of the level of the standard and reduced VAT rates is based on their economic effect and on the demands of the Exchequer, on a national level and in relation to the specific sector to which a particular good or service relates. This is undertaken as part of the annual Budget cycle.
