Thursday, 26 Mar 2015

Written Answers Nos. 70-79

Tax Exemptions

Questions (70)

Brian Walsh

Question:

70. Deputy Brian Walsh asked the Minister for Finance if there have been any provisions made for a parent (details supplied) who was in receipt of the single person child carer tax credit as the secondary claimant, under the new legislation to replace the one-parent family credit in 2014, now that the single person child care tax credit has been withdrawn in 2015, due to the fact that the ex-partner married in 2014; his plans to address this difficulty; and if he will make a statement on the matter. [12392/15]

Written answers

Minister for Finance

As 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.

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.

In the case referred to by the Deputy, the primary claimant has remarried so she no longer qualifies as a primary claimant and therefore cannot relinquish the credit.  More information on the SPCCC is available from the Revenue website at:

http://www.revenue.ie/en/tax/it/credits/single-credit-faq.pdf.

VAT Rate Reductions

Questions (71)

Thomas P. Broughan

Question:

71. Deputy Thomas P. Broughan asked the Minister for Finance the amount it would cost to the Government to lower the rate of value-added tax by each 1% point from 23% to 17%. [12401/15]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners information on estimated costs of VAT rate changes can be found in the post-Budget 2015 Ready Reckoner: http://www.revenue.ie/en/about/statistics/ready-reckoners.pdf. While the Ready Reckoner does not show all of the specific costings requested by the Deputy, other changes can be estimated broadly on a pro-rata basis with those displayed in the Reckoner. The cost of lowering the 23% VAT rate by 1% is estimated to be €275 million. Further decreases can be estimated on a straight line basis, where the cost of the additional 1% is added to the cost of the preceding 1% reduction estimate.

Tax Data

Questions (72)

Thomas P. Broughan

Question:

72. Deputy Thomas P. Broughan asked the Minister for Finance the amount the Government would raise by imposing a 48% tax on incomes over €100,000. [12402/15]

Written answers

Minister for Finance

It is assumed that the threshold for the 48% Income Tax rate proposed by the Deputy, would not alter the existing standard rate band structure applying to single and widowed persons, to lone parents, married couples and civil partnerships.

I am advised by the Revenue Commissioners that, given the current band structures, major issues would need to be resolved as to how, in practice, such a new Income Tax rate could be integrated into the current system and how this would affect the relative position of different types of income earners.

Notwithstanding these issues, the Revenue Commissioners estimate that the first and full year yield to the Exchequer of the introduction of the suggested new third rate of Income Tax of 48% would be of the order of €317 million and €512 million respectively.

All figures above are estimates for 2015, using the actual data for the year 2012 (the latest year for which data are available) adjusted as necessary for income, self-employment and employment trends in the interim. They are provisional and may be revised. A married couple or civil partners who have elected or have been deemed to have elected for joint assessment are counted as one tax unit.

Legislative Process

Questions (73)

Pearse Doherty

Question:

73. Deputy Pearse Doherty asked the Minister for Finance the number of pieces of legislation that were submitted for pre-legislative scrutiny by his Department since 2011; his plans to allow pre-legislative scrutiny for any upcoming pieces of legislation from his Department; and if he will make a statement on the matter. [12413/15]

Written answers

Minister for Finance

Following changes to Standing Orders (agreed by the Dáil on 17 October 2013), Ministers are now required, except in exceptional circumstances, to bring the general scheme or draft heads of a Bill to a Select Committee for consideration.

Committees are empowered to consider the draft Heads of Bills but they are not required to do so it is the Committee's prerogative to decide on a case by case basis whether it wishes to engage in pre-legislative scrutiny on any particular Bill.

The table below provides details of the Bills initiated by the Department of Finance since 2011 on which the Committee held a pre-legislative scrutiny hearing.

Number of Bill	Name of Bill	Date initiated
27 of 2014	Central Bank Bill 2014	7 April 2014
87 of 2014	European Stability Mechanism (Amendment) Bill 2014	26 September 2014
1 of 2015	Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015	14 January 2015

The Central Bank Bill 2014 underwent Pre-legislative Scrutiny on 26 March 2014. The European Stability Mechanism (Amendment) Bill 2014 underwent Pre-legislative Scrutiny on 24 September 2014. The Consumer Protection (Regulation of Credit Servicing Firms) Bill underwent Pre-legislative scrutiny on 3 December 2014.

A pre-legislative scrutiny hearing was also held on 27 January 2015 and 25 February 2015 in relation to the Finance (Tax Appeals Commission) legislation. This proposed legislation has not yet been published as a Bill.

Future legislation will be submitted for pre-legislative scrutiny as a general rule, in accordance with Standing Order requirements. Finance Bills are exempt from pre-legislative scrutiny.

Tax Exemptions

Questions (74)

Seamus Kirk

Question:

74. Deputy Seamus Kirk asked the Minister for Finance his plans to re-activate the disabled drivers and disabled passengers (tax concessions) scheme; and if he will make a statement on the matter. [12461/15]

Written answers

Minister for Finance

I take it that the Deputy is referring to the fuel grant I am introducing to replace the excise relief element of the Disabled Drivers and Disabled Passengers (Tax Concessions) Scheme that was revoked at the end of 2014.

In April 2013 the Court of Justice of the European Union ruled that the excise relief element of the Disabled Drivers and Disabled Passengers Scheme was incompatible with the EU Energy Tax Directive.

My Department 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 in 2015. The European Commission raised no objections. To give effect to this I signed a statutory instrument in March 2014 (S.I. 139 of 2014) with the effect that Regulation 16 of the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations (S.I. 353 of 1994) would be revoked as of 1 January 2015. In January 2015 I informed members of the Scheme that they should claim any outstanding excise relief due on fuel used up to 31 December 2014.

From 1 January 2015, current and prospective members of the Scheme have been eligible for a fuel grant in respect of fuel used during the year. I intend to maintain the current practice of paying the sum a year in arrears, so that the first payment of the fuel grant will take place from 1 January 2016. I have instructed my officials to design the new grant in such a way to provide a seamless a transition as possible between the excise repayment on fuel element of the Scheme and the new fuel grant and, as I stated in March 2014, members of the Scheme will not be at a loss in the transition.

Banking Operations

Questions (75)

Terence Flanagan

Question:

75. Deputy Terence Flanagan asked the Minister for Finance the position regarding bank accounts (details supplied); and if he will make a statement on the matter. [12468/15]

Written answers

Minister for Finance

It is a matter of good commercial practice that any firm should know its customers.  It is particularly important that a financial institution confirms the identity of their customers because financial institutions often undertake high value transactions on behalf of their customers. In addition, EU directives require that  financial institutions ascertain the identities of their customer in order to prevent the use of the financial system for the purpose of money laundering and terrorist financing.

Section 33 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended, sets out the requirements in relation to customer due diligence ('CDD').  Pursuant to section 33, designated persons are required to identify the customer and verify the customer's identity on the basis of documents (whether or not in electronic form) or information, that the designated person has reasonable grounds to believe can be relied upon to confirm the identity of the customer. The Central Bank does not prescribe what documents or information designated persons should obtain from a customer in order to satisfy the requirements of section 33.  This is a matter for each designated person to determine.

General Principle 2.11 of the Consumer Protection Code 2012 (the CPC) provides that '[a] regulated entity must ensure that in all its dealings with customers and within the context of its authorisation it: without prejudice to the pursuit of its legitimate commercial aims, does not, through its policies, procedures, or working practices, prevent access to basic financial services'.

Guidelines on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing are available on my Department's website at http://www.finance.gov.ie/sites/default/files/Criminaljustice2012.pdf. Appendix 2 of these guidelines is a non-exhaustive and non-mandatory list of alternative documents that can be used to verify identity in circumstances where a prospective customer cannot, for justifiable reasons, meet the standard identification and verification requirements, or has experienced difficulties in the past when seeking to open accounts. I would advise this individual to examine this list to see how he can meet identification requirements and then approach the financial institution again.

If an individual is not happy with the way that a regulated financial institution has treated them, they can make a complaint to the institution. If they are not happy with the outcome of the complaint made they can refer the matter to the Financial Services Ombudsman (FSO). Further information on how to make a complaint to the FSO is available at www.financialombudsman.ie. The FSO can investigate, mediate and adjudicate on complaints made about the conduct of regulated financial service providers involving a failure or refusal to provide a service.

Banking Sector

Questions (76)

Pearse Doherty

Question:

76. Deputy Pearse Doherty asked the Minister for Finance if he will provide details of all persons and companies he or his officials have met, or are planning to meet, regarding the sale of shares of Allied Irish Banks and Permanent TSB; and if he will make a statement on the matter. [12494/15]

Written answers

Minister for Finance

As the Deputy is aware, as part of our broader efforts to encourage investment in Ireland in the wake of the financial crisis, stakeholders across the Irish system, including the banks, NAMA, IBRC, the IDA, the NTMA as well as my officials and myself, meet with parties interested in investing in Ireland. This has included meetings with representatives of investment funds and private equity firms who may be interested in investing in Irish banks.

One key function of these meetings includes obtaining general market feedback and feedback on our banking investments directly from potential investors so we are better informed when making decisions concerning our banking investments.

The Deputy may be aware that Permanent TSB announced on 11 March 2015 its intention to raise €525 million of capital from private investors.  The capital raising process will require the issuance of new equity and debt by Permanent TSB, taking advice from Deutsche Bank and Davy.  In this regard, Permanent TSB has met in excess of 60 potential investors and will meet with many more potential investors before the capital raise process is completed.

For Permanent TSB, I am of the view that the best way to protect the value of the State's investment is to ensure the bank is well prepared, that it conducts a comprehensive and competitive exercise to raise the capital with appropriate legal and financial advice, and that the State has meaningful oversight and involvement in the process. Officials from my Shareholding Management Unit and our financial advisers, JP Morgan Cazenove, are well placed to fulfil this role.  Due to the commercially sensitive nature of the capital raise process being undertaken by Permanent TSB it is not appropriate, at this time, to divulge the names of institutions in discussions with Permanent TSB who have also had meetings with me or my officials.  

With regards to AIB, given the scale of the State's investment some €20.8 billion and the range of options available to recoup value from the bank, officials within my department are working with AIB on reconfiguring its capital structure. As we announced previously Goldman Sachs International has been appointed to provide financial advice to the Department in this regard.  My officials and occasionally myself meet with investment banks/stockbrokers and investment funds/private equity investors who are, or may in the future be, interested in AIB either as a potential adviser to us or as an investor.  There have been no meetings specifically regarding the sale of any AIB shares and any meetings have been of a general nature regarding the wider economy and the banking sector.  

Tax Code

Questions (77, 93)

Patrick O'Donovan

Question:

77. Deputy Patrick O'Donovan asked the Minister for Finance the total amount raised in deposit interest retention tax in each of the years 2011 to 2014; the implications of attaching the universal social charge to deposit interest, including the amounts raised in the same years; and if he will make a statement on the matter. [12508/15]

Michael McGrath

Question:

93. Deputy Michael McGrath asked the Minister for Finance the cost of exempting the first €100, €200 and €500 of interest from deposit interest retention tax; and if he will make a statement on the matter. [12643/15]

Written answers

Minister for Finance

I propose to take Questions Nos. 77 and 93 together.

The following table sets out the net yield from Deposit Interest Retention Tax (DIRT) collected from 2011 to 2014.

Year	€million
2011	473.3
2012	580.6
2013	499.5
2014 (provisional)	436.7

I am informed by the Revenue Commissioners that DIRT on interest bearing deposits is declared and paid on a four-times yearly basis by financial institutions. The total value of DIRT due and paid is reported to Revenue at institutional level. Detailed figures are not required in these returns to identify the numbers of accounts on which DIRT was paid, the amount of interest earned or DIRT payment per account or the tax forgone resulting from DIRT exemptions.

Separately, under regulations, as provided for in Section 891B of the Taxes Consolidation Act 1997, certain financial institutions, such as banks and credit unions, are required to make automatic annual returns at account level electronically to Revenue. The primary purpose of this Section is to provide information for use in risk analysis by Revenue and therefore the requirement to report interest focuses on account holders in receipt of larger payments.

The information under S891B is provided only where the total payment of interest is greater than €635 in a year, regardless of deduction of DIRT, and in all instances of a first interest payment irrespective of threshold for accounts opened on or after 1 January 2008. The Deputy may also wish to note that under statutory instrument (S.I. No. 56 of 2015), signed on February 15th 2015, the annual reporting threshold was reduced from €635 to €300 and applies to returns in respect of the year 2014.

Therefore, I am advised by the Revenue Commissioners that the data are not available on Revenue records to provide a basis for compiling estimates of the cost of attaching Universal Social Charge to deposit interest or exempting the first €100, €200 and €500 of interest from DIRT.

Revenue Documents

Questions (78)

Róisín Shortall

Question:

78. Deputy Róisín Shortall asked the Minister for Finance if he will provide an explanation for the apparent discrepancy between an answer he provided to Parliamentary Question No. 91 of 12 January 2012 and to Parliamentary Question No. 295 of 17 September 2014, in which he advised that there were 14,319 Revenue Commissioners affidavits filed in 2010 (details supplied) yet he informed this Deputy that just 9,576 were filed; and if he will recheck and confirm the correct number of CA24 forms filed in each year from 2005 to 2014. [12515/15]

Written answers

Minister for Finance

I have been advised by the Revenue Commissioners that the numbers to which the Deputy refers  are different because different methods were used by them to compile the figures.  The figures in the reply to Parliamentary Question No. 91 of 12 January 2012, are based on the number of Inland Revenue Affidavits filed in a year, and were based on historical manual records of Capital Acquisitions tax correspondence. The figures in reply to Parliamentary Question No. 295 of 17 September 2014, are based on the number of Inland Revenue Affidavits processed during a year.

Arising from the deployment of new technology in Revenue, in conjunction with the modernisation of CAT in 2010, figures are now recorded electronically  when the forms CA24 are processed by Revenue rather than when they are received.

Revenue apologises for not clearly distinguishing the nature of activity reported for different years. 

This table sets out the number of Inland Revenue Affidavits received by Revenue in the years 2005 to 2009.

Year	Inland Revenue Affidavits Received *
2005	21,881
2006	22,225
2007	23,196
2008	23,748
2009	19,219

* The figures for these years are  extracted from manual records of items processed in Revenue's  CAT unit, and on re-examination of the figures it would appear that they  include in some instances beneficiaries as well as disponors, and also other forms including for example corrective affidavits.  

This table sets out the number of Inland Revenue Affidavits processed by Revenue in the years 2010 to 2014.

Year	Inland Revenue Affidavits Processed
2010	9,576
2011	13,548
2012	12,946
2013	12,484
2014	15,089

Credit Unions

Questions (79)

Michael McGrath

Question:

79. Deputy Michael McGrath asked the Minister for Finance his views on the efforts of the credit union sector to expand into mortgage lending; and if he will make a statement on the matter. [12522/15]

Written answers

Minister for Finance

My role as Minister for Finance is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.

The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions.  Within her independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members.

Currently credit unions are not prohibited from providing mortgages to members. Mortgages are subject to the maturity limits contained in section 35(2) of the Credit Union Act 1997, which sets out the percentage of a credit union s loan book that can be outstanding for periods exceeding both five and ten years, as well as limits on the maximum outstanding liability to an individual member.

On 27 November 2014, the Central Bank issued a consultation paper - CP88 "Consultation on Regulations for Credit Union on commencement of the remaining sections of the 2012 Act". This consultation paper includes draft lending regulations. Under these draft lending regulations credit unions can continue to provide mortgages. Existing maturity limits that are currently contained in section 35 of the 1997 Act are included in the draft lending regulations. A maximum maturity limit of 25 years is also introduced in the draft regulations.  The draft lending regulations also include a large exposure limit on the maximum exposure a credit union may have to a borrower or a group of borrowers who are connected.

Where a credit union is providing mortgages, it must ensure that it has the appropriate systems, controls and expertise to undertake this type of lending. Also, scale is an important factor in determining whether a credit union can put these processes in place and offer mortgages as a viable business line. 

The Government recognises the important role of credit unions as a volunteer co-operative movement in this country and welcomes any initiatives that might enhance the business model while simultaneously ensuring the protection of members' savings.