Written Answers Nos. 219-238
219. Deputy Niall Collins asked the Minister for Finance the current status of the report of the Moriarty tribunal; the actions his Department is taking further to the findings of this report; and if he will make a statement on the matter. [24502/15]
View answer220. Deputy Niall Collins asked the Minister for Finance the actions his Department has taken, following the publication of the report of the Moriarty tribunal, to prevent the malpractices outlined from occurring again; and if he will make a statement on the matter. [24503/15]
View answerI propose to take Questions Nos. 219 and 220 together.
In response to the Deputy's question the Moriarty Tribunal made a number of recommendations which affected a number of Government Departments. As Minister for Finance I can only respond in relation to the recommendations made in relation to my own Department.
The tribunal pointed out problems to be addressed in our system of financial regulation. Poor supervision, an overly-deferential attitude by regulators, poor assessment of risks and a lack of follow-through on enforcement, all played a part in the financial crisis. This Government has undertaken a number of significant reforms since the financial crisis towards building a strengthened regulatory framework for the Irish financial services sector and to respond to the shortcomings identified.
In 2011 the new Fitness and Probity regime was rolled out by the Central Bank in accordance with the provisions of the Central Bank Reform Act 2010. The regime provides for new powers to be exercised by the Central Bank to ensure the fitness and probity of nominees to key positions within financial service providers and of key office-holders within those providers.
Following on from the Central Bank Reform Act, 2010, the Central Bank (Supervision and Enforcement) Act 2013 enhances the Central Bank's regulatory powers, drawing on the lessons of the recent past in Ireland and abroad. It strengthens the ability of the Central Bank to impose and supervise compliance with regulatory requirements and to undertake timely prudential interventions. The Act also provides the Central Bank with greater access to information and analysis and underpins the credible enforcement of Irish financial services legislation in line with international best practice.
The reforms introduced under the Central Bank (Supervision and Enforcement) Act 2013 are complemented by a number of strategically important reforms at EU level in financial services. Under our presidency, agreement was reached on the single supervisory mechanism, one of the main cornerstones of Banking Union which will provide for the European Central Bank to act as supervisor for systemic important banks throughout the Union. Agreement was also reached on the Capital Requirements package which will ensure that European banks hold enough good quality capital to withstand future economic and financial shocks. These legislative reforms have been supplemented by a significant increase in regulatory activity by the Central Bank with a corresponding increase in staff numbers and skill levels. The Central Bank of Ireland's Enforcement Priorities for 2015 highlight the importance of enforcement within its risk-based regulatory framework (PRISM). PRISM represents a challenging and proportionate risk-based system of supervision for all financial institutions operating in Ireland. The Central Bank's Strategic Plan 2013 2015 also sets out a strategy of assertive risk-based supervision underpinned by a credible threat of enforcement.
In response to the Tribunal recommendations I considered the provision of tax relief for donations to political parties and decided against introducing such relief. The Electoral (Amendment) (Political Funding) Act 2012 provided for changes to the Electoral Act, 1997 and imposed new limits for donations. Donations to individuals exceeding €600 must be declared and donations exceeding €1,000 in any one year may not be accepted. Political party donations greater than €1,500 must be declared and donations greater than €2,500 in any one year may not be accepted. These limits, in themselves, should act to deter any attempts by wealthy individuals to influence political activity.
The Office of the Revenue Commissioners have provided me with the following information in relation to Revenue issues raised in the recommendations of the Moriarty Tribunal.
Recommendation: Independence of the Revenue Commissioners
Section 101 of the Minister and Secretaries (Amendment) Act 2011 placed on a statutory basis the independence of the Revenue Commissioners in the exercise by the Commissioners of their statutory functions under the various taxation and customs enactments. This has given effect to the recommendation of the Report of the Tribunal into Payments to Politicians and Related Matters (that is, the report of Mr. Justice Moriarty), that the principle or convention of the independence of the Revenue Commissioners be placed on the more robust status of a legislative provision.
Recommendation: Representations to Revenue by Office holders
In relation to this proposal, I remain of the view that this recommendation could best be considered in the context of the Government's overall approach to political and parliamentary reform. Representations are a valid part of the political process. The Government may wish to consider whether this recommendation should be confined to Revenue, or to Office holders, or whether the Commissioners decision to publish data on the volume of representations made by each Deputy is an adequate response.
Recommendation: Transmission to other agencies of information obtained by Revenue under bilateral agreements
This recommendation has been considered. These agreements are international treaties which are very precisely drawn as to the purpose for which information may be used and would not permit such transmission. However if opportunities arise in the future, the Commissioners will consider the matter further. The Deputy will appreciate that Revenue is not in a position to comment on matters relating to individuals for reasons of taxpayer confidentiality.
221. Deputy Niall Collins asked the Minister for Finance if a company (details supplied) lobbied his Department for a change to the deferral of excise payment on mineral oil tax ahead of budget 2015, which was presented in October 2014; if so, when this occurred; in what form the lobbying took place; if it involved meetings between him and-or his officials and any of the company's executives, either directly representing the company or working on behalf of the Irish Petroleum Industry Association; and if he will make a statement on the matter. [24481/15]
View answer222. Deputy Niall Collins asked the Minister for Finance if he or any of his officials met a person (details supplied) at any stage between the person's purchase of a company in December 2013 and the decision to defer deferral of excise payment on mineral oil tax; if he or any of his officials had any correspondence from the person in relation to the tax ahead of the decision; and if he will make a statement on the matter. [24482/15]
View answerI propose to take Questions Nos. 221 and 222 together.
The 2009 report of the Commission on Taxation recommended a deferral system be introduced for the collection of mineral oil taxes. The report noted there was no reason for the absence of a deferral system which imposed an unfair burden on the industry and was contrary to the practice in other EU Member States.
I provided for a deferral of excise duty on Mineral Oil in the Finance Act 2014 bringing Mineral Oil excise payment arrangements into line with the other main excises such as tobacco and alcohol. The measure had been sought by the Irish Petroleum Industry Association (IPIA) for a number of years and was also supported by IBEC, SIMI, Retail Excellence Ireland and the Minister for Communications Energy & Natural Resources. Aside from bringing the excise duty on Mineral Oil into line with the other excises, I had other reasons for introducing this measure. This measure will increase security of supply of fuel, provide access to more favourable terms for retailers and reduce the administrative burden for the Revenue Commissioners.
As part of the annual Budget and Finance Bill process, my Department receives pre-budget submissions from a wide variety of stakeholders. My officials also meet with many of the stakeholders. In this context officials met with delegations representing the IPIA in November 2012, September 2013 and July 2014. At each of these meetings the IPIA delegation included a representative of the company referred to in the question.
Neither myself nor officials from my Department have received direct correspondence from or met with the person referred to, or representatives of his company, outside of the IPIA delegations referred to above, in relation to this matter.
223. Deputy Brian Walsh asked the Minister for Finance his views on the European Union bank recovery and resolution directive, or bail-in directive; and the implications he foresees for Ireland, Irish banks, and bondholders after January 2016. [24484/15]
View answerThe Bank Recovery and Resolution Directive (BRRD) lays the ground rules for the future application of resolution tools in all Member States and incorporates the principle that shareholders should bear losses first and that creditors bear losses after shareholders.
There are three pillars to the BRRD framework to facilitate a range of appropriate actions by authorities:
- Preparatory and preventative measures including reinforced supervision and robust recovery and resolution planning for major institutions,
- Early intervention provides supervisory powers to implement recovery plans and amongst other things remove senior management, and
- Resolution tools including sale of business, bridge bank, asset separation and bail-in.
From the start of 2016 the Single Resolution Mechanism (SRM) will apply the BRRD rules in a banking union context. A pan-European resolution authority, the Single Resolution Board (SRB) has already been established and it will have the power to restructure and wind-down failing banks.
There are a number of benefits to the SRM. Firstly it requires banks (as per the BRRD rules) to hold a significant level of loss absorption capacity in order to ensure as far as possible that shareholders and creditors are capable of covering any losses that arise should they get into financial difficulties. This means that in a resolution scenario bondholders will be bailed in, where necessary in accordance with the resolution hierarchy. Secondly, it provides for the Single Resolution Fund (SRF). The target level of the SRF is 1% of covered deposits of participating Member States which is equal to approximately €55bn and which is required to be reached within eight years. The fund will be paid for by contributions from the banking sectors of the participating Member States. Irish banks including international banks operating out of this country are expected to pay in the region of about €1.8bn towards this target level i.e. about €225m a year. It should be noted that these figures are still quite approximate.
The SRF where needed will be used after the bail-in process has been exhausted and there are still losses to be absorbed. During the initial eight years (transition period), the SRF will be compartmentalised in order to facilitate its progressive mutualisation. The contributions of banks will be paid into their national compartment, and should one of them get into financial trouble, then this compartment will be the first port of call for funding, where needed. However funding if required will also be available from the other compartments, and as the transitional period passes, more money will be taken from the other national compartments and less from the compartment of the affected Member State, until at the end of the transition period, the SRF has become fully mutualised.
The major implication for Irish banks is that the progressive mutualisation of the SRF should go a long way towards breaking their link with the sovereign, and thus enable them be evaluated by the market on their own underlying commercial merits.
224. Deputy Eric Byrne asked the Minister for Finance his view on correspondence (details supplied) regarding standard variable rate mortgages; and if he will make a statement on the matter. [24489/15]
View answerAs the Deputy will be aware, I met with senior management of Ireland's six main mortgage providers including Permanent TSB in May. The meetings focused on the mortgage market and specifically the comparatively high standard variable rates currently being charged by the banks.
I outlined my view, that Standard Variable Rates being charged in the Irish market are too high. There was agreement from all lenders that customers should have access to more competitive mortgage products as per my recommendation.
The banks agreed to review their rates and products and, by the beginning of July, to have simple options to reduce monthly mortgage payments for SVR customers. Some of the potential products include lower standard variable rates for existing and new customers, competitive fixed rate products and lower variable rates taking account of loan to value for new and existing customers.
In addition to the issue of rates I also outlined the need for greater competition in the market and the need for a more active and well-resourced campaign by the individual banks. This should focus on promoting awareness of their best offering and how easy it is for customers to take up new products and switch between different institutions if they wish to avail of better rates.
The position of home owners who are in negative equity was also discussed and assurances were sought and received that these homeowners will be able to avail of options to reduce their monthly repayments.
Officials in my Department will review progress over the coming weeks and a follow up set of meeting with each of the six banks will take place in September in advance of the Budget.
225. Deputy Micheál Martin asked the Minister for Finance his views on the situation in Greece; if the Government is concerned that Greece may default and-or possibly exit the euro; and if he will make a statement on the matter. [16220/15]
View answerFollowing circulation of an Aide Memoire and a list of Prior Actions to the Greek authorities in the first week of June and a subsequent meeting between Prime Minister Tsipras, European Commission President Juncker and Eurogroup President Dijsselbloem to discuss the proposal, it seemed like both sides were moving closer together.
However following submission of Greek counter proposals on 12th June it was clear that there has been a complete rowing back on the Greek side.
Attempts at a technical level to make progress concluded with no agreement.
As a result, an additional Eurogroup meeting and Informal Euro Summit were called on 22 June 2015 in Brussels. The purpose of these meetings was to exchange views on Greece and clarify the positions and the situation in the ongoing talks between the Greek authorities and the Institutions.
A revised list of counter proposals was submitted by the Greek authorities yesterday leaving no time to assess them prior to the meetings. The Greek authorities will now work with the Institutions to agree a comprehensive list of reforms and a list of prior actions by tomorrow that can be presented to the Eurogroup.
The euro area has an obligation to Greece in these difficult times but Greece has an obligation to itself. It needs to reform the economy and return it to sustainable growth.
Ireland, together with the other Member States, understands and empathises with the difficult situation faced by the Greek people. This is why there has been a willingness to negotiate a way forward which takes account of the realities of the situation in Greece and the political priorities of its new Government, while also respecting existing commitments.
Even at this very late stage, there is still time for a deal to be agreed - but Greece must put reasonable proposals on the table. It is still in everyone's interest that agreement is reached. We have already seen backtracking on previous reforms and this is unacceptable. The Member States and institutions are working in good faith - Greece must do so also.
The situation of Greece's finances is very challenging with immediate financing needs to be addressed. In addition, deposit outflows have continued from the banking system. Therefore, urgent agreement on the necessary structural reforms is imperative to conclude the 5th review and release the associated disbursements.
Direct trade and financial linkage between Ireland and Greece are small, therefore the risk to the Irish economy are second round in nature. If turbulence in Greece results in a slowdown in the EU economy then this could have a knock effect on the Irish economy given our openness to trade.
226. Deputy Micheál Martin asked the Minister for Finance the specific actions and recommendations made by the European Council in relation to addressing banks that are acting fraudulently, helping tax evaders or selling bad products to retail customers; the actions the Commission has actually taken; and if he will make a statement on the matter. [16217/15]
View answerThis question covers a number of areas.
Actions to address banks that are "acting fraudulently"
Directors of banks operating in Ireland are required to ensure that they have governance and control arrangements in place that comply with the European Banking Authority's Governance Guidelines, and inter alia, the Central Bank of Ireland's Corporate Governance Code.
Directors of any Irish company, including banks, incorporated under the Companies Act, 1963, or the Companies Act, 1990, are required to comply with their fiduciary duties to that company, which include:
- acting in good faith and in the interests of the company as a whole,
- avoiding conflicts of interest,
- a prohibition on making undisclosed profits from their position as directors and must account for any profit which they secretly derive from their position as a director, and
- an obligation to carry out their functions with due care, skill and diligence.
The Central Bank of Ireland's Fitness and Probity regime also requires credit institutions to assess the suitability of members of the management body and requires high standards of behaviour of those individuals on an ongoing basis.
Banks are expected to have strong controls in their front line businesses, in their risk management and compliance functions and an effective internal audit capability, such that conflicts of interest are managed appropriately and the associated risks are mitigated. These arrangements are assessed through, for example, external audits and are also subject to ongoing supervisory engagement by the Central Bank of Ireland, including through regular inspections.
Where an action by a director or employee of a Bank constitutes fraud or offence, they are subject to the rigour of criminal law.
The Garda Bureau of Fraud Investigation (GBFI) is charged with investigating serious and complex fraud matters and has resources and expertise to carry out this function.
The GBFI works closely with other bodies with relevant enforcement functions, including the Office of the Director of Corporate Enforcement (ODCE), the Central Bank, Revenue Commissioners, and the Competition Authority, with staff of the GBFI seconded to both the ODCE and the Competition Authority.
I would encourage any party who is aware of any incidences of fraud to report such fraud to An Garda Síochána.
Actions to address banks "helping tax evaders"
The Revenue Commissioners have advised me that, on 9th December 2014, EU Member States, recognising the need to cooperate more closely to prevent tax fraud and evasion, agreed to adopt Council Directive 2014/107/EU on administrative cooperation in direct taxation ('DAC2'), which provides for mandatory automatic exchange of financial information. Under the Directive, financial institutions in each Member State will be required to report financial account information to the tax administration including account balances; information on interest, dividends and other similar income; and gross proceeds from the sale of financial assets. Tax administrations will then exchange this information, where it relates to account holders who are residents of other Member States, with the other Member States concerned.
Legislation to implement this Directive will be introduced later this year, with due diligence in relation to tax residence and tax identification numbers (TIN's) for new accounts due to begin on 1 January 2016. Exchange of information in relation to account information for 2016 is due to commence in 2017. The reporting will be more extensive than the current requirements under the EU Savings Directive, which relate only to interest income. The EU Savings Directive will be superseded by the new Directive - DAC2 - and will be phased out accordingly. Implementation of DAC2 will greatly enhance the capacity of tax administrations to tackle the challenge of cross-border tax evasion.
In addition, the European Union and Switzerland signed an agreement last month, which provides for the automatic exchange of financial account information and is aimed at improving international tax compliance. It upgrades a 2004 agreement that required Switzerland to apply withholding tax to interest payments, in line with the option adopted by some Member States under the EU Savings Directive (in preference to exchange of information). Under the new agreement, the EU and Switzerland will automatically exchange information on the financial accounts of each other's residents, starting in 2018. The aim is to address situations where a taxpayer seeks to hide amounts representing income or capital gains in respect of which tax has not been paid.
The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended (the "CJA 2010"), implements Ireland's EU anti-money laundering obligations. The CJA 2010 requires Irish banks to identify and verify customers and in addition, where a customer is a non-resident PEP, the CJA 2010 requires the bank to always determine the source of wealth and the source of funds of any transaction the customer wishes the bank to carry out.
The Central Bank has advised me that, in light of the reference to tax evaders, it should be noted that a bank, including any employee or officer of the bank, who knows, suspects or has reasonable grounds to suspect on the basis of information obtained in the course of carrying on their business, that another person has been engaged in an offence of money laundering or terrorist financing, shall report that knowledge or suspicion to the Garda Síochána and the Revenue Commissioners, as soon as practicable after acquiring that knowledge or forming that suspicion.
Actions to address Banks "selling bad products to retail customers"
Directive 2008/48/EDC on Credit Agreements for Consumers is a harmonised Directive that ensures that all consumers in the EU enjoy a high and equivalent level of protection of their interests, enabling them to make their decision about consumer credit in full knowledge of its costs and conditions as well as their rights and obligations.
This Directive was transposed in Ireland by SI 281 of 2010 European Communities (Consumer Credit Agreements) Regulation 2010.
The Regulations give effect to the provisions of Directive 2008/48/EC on Credit Agreements for Consumers (the 'CDD') and the scope includes credit agreements where the loan amounts are between €200 and €75,000. Part II of the Regulations set out the information and practices preliminary to conclusion of credit agreements. Regulation 11 sets out the obligation on creditors to assess creditworthiness of consumers on the basis of sufficient information, where appropriate obtained from the consumer, and where necessary, on the basis of a consultation of the relevant database.
Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property (the Mortgage Credit Directive) is to be transposed by 21 March 2016. As referred to in recital 4 of the Mortgage Credit Directive, the Directive is designed to address 'a series of problems that were identified in mortgage markets within the Union relating to irresponsible lending and borrowing and the potential scope for irresponsible behaviour by market participants'. The Mortgage Credit Directive places an obligation on creditors to assess the creditworthiness of the consumer before concluding a credit agreement (Article 18). Article 18 states that the assessment of creditworthiness 'shall take appropriate account of factors relevant to verifying the prospect of the consumer to meet his obligations under the credit agreement'.
The European Banking Authority (EBA) is expected to publish final guidelines on product oversight and governance (guidelines) later in 2015. These guidelines provide a framework for robust and responsible design and distribution of retail banking products (e.g. mortgage loans, deposits, payment accounts, payment services and electronic money), and in this regard, seek to avoid future cases of consumer detriment. In particular, the guidelines provide that 'manufacturers' of retail banking products (including credit institutions) should consider the needs of their customers when designing and bringing products to the market and also require such firms to review these products over their life cycle to ensure they continue to meet the interests, objectives and characteristics of the target market for which they were intended. It is expected that these guidelines will be implemented in January 2017.
227. Deputy Micheál Martin asked the Minister for Finance if he or his Department have considered the comments of the President of the European Central Bank, Mr. Mario Draghi about being wary of quantitative easing having a negative impact on the distribution of wealth and, in some cases, causing more inequality; the action his Department is taking to prevent this from happening; and if he will make a statement on the matter. [20238/15]
View answerThe President of the ECB, in a recent speech, discussed the evolution of monetary policy since the crisis and the challenges and benefits associated with the decisions made to date. This included a reference to the distributional consequences of monetary policy by penalising savers to the benefit of debtors and through asset price increases which may disproportionately favour the wealthy and increase inequality.
Let me firstly point out that Mr Draghi also highlighted the distributional effects from monetary policy inaction as well as action.
The Expanded Asset Purchase Programme (EAPP), launched on 9 March 2015, is aimed at fulfilling the ECB's price stability mandate. Asset purchases provide monetary stimulus to the economy in a context where key ECB interest rates are effectively at the lower bound. They should further ease monetary and financial conditions. They should also help to support investment and consumption, and ultimately contribute to a return of inflation rates which are close to 2 per cent.
Ireland should benefit from quantitative easing in a number of ways:
- Through improved financing conditions for households and firms;
- By raising demand in the euro area, Ireland's single largest export destination;
- Through the depreciation of the currency which improves the competitiveness of Irish exports outside the euro area;
- Through the restoration of price stability which will help reduce the real debt burden.
While quantitative easing will likely be beneficial for the Irish economy, there is nevertheless the possibility of side effects such as increased asset prices which will benefit the owners of these assets.
In this regard, I would point out that Capital Gains Tax applies on any chargeable gain from the disposal of many assets, including non-principal private residences and to equity gains. Stamp Duty also applies to the purchase of assets such as property and shares. Therefore, in the event of increases in asset values, there would be a proportionate increase in the tax paid.
Finally, I would point out that all tax rates and regimes are held under continuous review by my Department and that any changes are made in the context of the annual budgetary cycle, including the Finance Bill.
228. Deputy Micheál Martin asked the Minister for Finance his views on the recently published report by the Irish Fiscal Advisory Council; and if he will make a statement on the matter. [22944/15]
View answerThe Fiscal Assessment Report published recently by the Council is being considered by my officials. As is normal, a comprehensive response to all of the pertinent issues will be published in the coming weeks. I will however, give my initial views on a significant issue raised by the Council.
As the Deputy will be aware, from 2016 onwards, the public finances in Ireland will be subject to the requirements of the preventive arm of the SGP. The European Commission assesses compliance with the preventive arm on the basis of two complementary pillars. First is the minimum annual improvement in the structural balance and the second is compliance with the expenditure benchmark. The minimum improvement in the structural balance and the expenditure benchmark are in theory designed to be complementary, although differences between the two metrics can emerge from time to time.
The Fiscal Council noted that the fiscal projections contained in the Stability Programme Update (SPU) did not show Ireland complying with our requirements under the Stability and Growth Pact (SGP); in other words, that the improvement in our structural balance is below the required 0.6 percentage points in 2016.
However, SPU estimates show that for Ireland compliance with the expenditure benchmark is consistent with delivering a lower suggested quantum of structural adjustment in 2016. This somewhat counterintuitive outcome was explicitly addressed in the SPU, and emphasises the material problems posed by some of the technical aspects of the rules.
It should be noted that compliance with the requirements of the SGP is ultimately assessed on the basis of analysis undertaken by the European Commission. In this context, the recent assessment of the SPU published by the European Commission as part of the European Semester process finds that 'on the basis of information in the 2015 Stability Programme Update recalculated according to the common methodology, progress towards the MTO is in line with the requirements of the preventive arm of the [Stability and Growth] Pact. The assessment by the Commission also finds that 'the rate of expenditure growth net of discretionary revenue measures, as planned in the SPU, is expected to be in line with the requirements of the expenditure benchmark pillar'. In summary, therefore, the projections in the SPU are consistent with the requirements of the Stability and Growth Pact.
While I will address other issues comprehensively in my formal response to the Council, I would strongly make the point that when formulating Budget 2016, the Government are acutely aware of the importance of adhering to the fiscal rules and our fiscal policy will reflect this.
229. Deputy Paul Murphy asked the Minister for Finance if any officials from his Department accompanied the Minister for Foreign Affairs and Trade on his recent visit to Switzerland. [24572/15]
View answerNo official from my Department accompanied the Minister for Foreign Affairs and Trade on his recent visit to Switzerland.
230. Deputy Paul Murphy asked the Minister for Finance if he will provide, in tabular form, the number of certificates for non-deduction of withholding tax issued for each of the past five years for accounts in the following states: the Netherlands Antilles, Jersey, Guernsey, Isle of Man, British Virgin Islands, Turks and Caicos Islands, Andorra, Liechtenstein, Monaco, San Marino and Switzerland. [24573/15]
View answerI am informed by the Revenue Commissioners that the purpose of the EU Savings Directive is to ensure that individuals resident in an EU member state who receive interest income from another Member State are taxed in the Member State in which they are resident for tax purposes. To this end, payments of interest are either (1) reportable by paying agents in the EU to the tax authorities in the home member state of the paying agent or (2) subject to withholding tax in those member states which opted to apply withholding tax rather than report the payment.
Most of the EU member states opted to exchange information regarding the interest payments made by paying agents in their jurisdiction to individuals resident in another member state. Initially, Austria, Belgium and Luxembourg opted to apply the withholding tax instead of exchanging information. Some associated and dependent territories, namely, Netherlands Antilles, Jersey, Guernsey, Isle of Man, British Virgin Islands and Turks and Caicos Islands and certain third countries, namely, Andorra, Liechtenstein, Monaco, San Marino and Switzerland also entered into agreements with the EU to apply a withholding tax. In this regard, the Savings Directive and the related agreements provided for a procedure to allow recipients of interest, who would otherwise receive interest payments under deduction of withholding tax from these countries and territories listed above, to apply to their own tax authority for a certificate for non-deduction of withholding tax. The application would be made on the basis that the interest income concerned is being returned to the beneficial recipient's tax authority and is being fully taxed.
I am informed by the Revenue Commissioners that the information requested by the Deputy is not recorded on Revenue's systems. However there is no record that any non-deduction certificates have been issued by Large Cases Division, which deals with high net worth individuals, for an account in the jurisdictions listed by the Deputy. While the Commissioners consider it unlikely that such certificates were issued by other Revenue Divisions, they will check in that regard and correspond directly with the Deputy.
231. Deputy Thomas Pringle asked the Minister for Finance the reason Irish Water was included in the Government balance sheet for the spring economic statement; the extent to which the inclusion of Irish Water affected the figures provided, in relation to the finances available for Government expenditure; and if he will make a statement on the matter. [18270/15]
View answerAs per Parliamentary Question No.163 of the 15th of April 2015 (14545/15) and Box 1 on page 15 of the April 2015 'Stability Programme Update' (SPU) Irish Water is provisionally classified within general government pending a final classification decision by Eurostat. This is a closed process and the CSO are now awaiting a final adjudication in relation to the matter. Following the decision the final treatment regarding classification will be reflected in the October EDP notification and 'Budget 2016' publication. The effect of this treatment on the general government figures as outlined on page 15 of the SPU can be summarised as follows:
|
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
|
|
Net impact on GGB (€ bn) |
-0.34 |
-0.58 |
-0.39 |
-0.26 |
-0.29 |
-0.45 |
-0.37 |
|
Net impact on GGB (pp of GDP) |
-0.18 |
-0.29 |
-0.19 |
-0.12 |
-0.13 |
-0.19 |
-0.15 |
|
Net impact on GGDebt (pp of GDP) |
0.08 |
0.29 |
0.47 |
0.57 |
0.67 |
0.83 |
0.95 |
Source: Department of Finance, CSO, Department of Environment, Community and Local Government
232. Deputy Joe Carey asked the Minister for Finance his views and those of his Department in respect to the plans by Allied Irish Banks to transfer application and development management to a third-party service provider in the context of consumer service provision; and if he will make a statement on the matter. [24604/15]
View answer243. Deputy Billy Timmins asked the Minister for Finance his views on correspondence (details supplied) regarding proposals by Allied Irish Banks to outsource work and staff from the application and development management teams within its information technology division to a third-party service provider; and if he will make a statement on the matter. [24799/15]
View answer259. Deputy Joanna Tuffy asked the Minister for Finance if he is aware that Allied Irish Banks is currently developing proposals to outsource work and staff from the application and development management teams within its information technology division to a third-party service provider, which decision will have a huge impact on customers and staff; if he will request the bank's senior management to reconsider this decision; and if he will make a statement on the matter. [25019/15]
View answerI propose to take Questions Nos. 232, 243 and 259 together.
As the Deputy will be aware under the Relationship Frameworks the State does not intervene in the day to day operations of the banks in which it holds investments or their management decisions regarding commercial matters and hence any discussions around matters such as outsourcing are a matter for the bank, the relevant staff and their union representatives. Notwithstanding this position, my officials do take an active interest in how the bank's cost base evolves to ensure that the State's interests as shareholder are protected and to ensure that the Government's remuneration policy is enforced.
The bank has previously indicated that as part of its restructuring plan to reduce costs and increase efficiencies, outsourcing of certain functions would be considered in consultation with unions and affected staff. I have also been informed by the bank that there have been no compulsory redundancies as a result of its recent outsourcing activities. Any staff who transfer under outsourcing arrangements transfer under the TUPE regulations.
I have been informed that AIB has not at this stage confirmed any agreement to outsource some of its technology services in Application and Development Management teams to a third party provider. Should any such decision be confirmed, then affected staff will be informed immediately and AIB will enter into a full process of information and consultation with employee representatives, as required both by law and under engagement principles agreed with the Irish Bank Officials Association (IBOA).
233. Deputy Michael McGrath asked the Minister for Finance the number of estates of deceased persons in each year from 2010 where benefactors became subject to capital acquisitions tax; and if he will make a statement on the matter. [24616/15]
View answerI am advised by the Revenue Commissioners that information on the number of estates of deceased persons where benefactors became subject to Capital Acquisitions Tax is not available. However, the numbers of individual disponers who provided property by way of an inheritance, and where their beneficiaries paid Capital Acquisition Tax, is shown in the following table.
Number of individual disponers
|
2010 |
2011 |
2012 |
2013 |
2014 |
|
5,731 |
4,362 |
4,505 |
4,656 |
5,133 |
234. Deputy Michael McGrath asked the Minister for Finance in relation to the comment (details supplied) in the Tax Strategy Group Paper 14/05, if the relevant costings have been received from the Revenue Commissioners; and if he will make a statement on the matter. [24617/15]
View answerI can confirm that the costings referred to have been received from the Revenue Commissioners.
I am informed by Revenue that, on a yield costing basis, there could be an overall net loss of about €18m associated with the change, and that the loss could be significantly larger than this. There would also be significant administrative issues and costs associated with such measures.
235. Deputy Brian Walsh asked the Minister for Finance the range of incentives available in respect of the development and operation of nursing homes; and if he will make a statement on the matter. [24645/15]
View answerCapital expenditure incurred on registered private nursing homes qualifies for capital allowances in the form of an industrial building annual allowance at the rate of 15% over 6 years and 10% in the seventh year. Capital allowances are granted for such capital expenditure incurred on the construction or refurbishment of a building providing that the building is in use for the purposes of the trade. In this regard, capital expenditure on registered private nursing homes must have been incurred during the period 3 December 1997 to 31 December 2009. This termination period was extended to 30 June 2010 where the work to be carried out did not require planning permission, provided at least 30% of the construction and refurbishment costs had been incurred on or before 31 December 2009. Where planning permission was required, the termination period was further extended to permit expenditure incurred up to 30 June 2011 to qualify provided a full and valid application for planning permission was submitted on or before 31 December 2009 and acknowledged by the planning authority.
Expenditure on the construction or refurbishment of residential units associated with a registered private nursing home also qualified for capital allowances by treating the unit as if it were a building in use for a trade of operating or managing such a home subject to certain conditions. Qualifying expenditure can also be written off at a rate of 15% over 6 years and 10% in the seventh year. The allowances were originally available for qualifying expenditure incurred in the five-year period commencing on 25 March 2002. The termination date was extended to 31 July 2008 in Finance Act 2006 but the amount of qualifying expenditure was restricted to 75% of that incurred in the period from 25 March 2007 to 31 December 2007 and to 50% of that incurred in the period 1 January 2008 to 31 July 2008. Finance Act 2007 further extended the qualifying period to 30 April 2010, but only where the expenditure was incurred on or after 1 May 2007 where development was carried out on foot of contracts entered into on or after that date. Where the contracts were entered into before that date, the termination date remained at 31 July 2008 with qualifying expenditure being subject to the 75% and 50% caps on expenditure. Although an extended termination date to 30 April 2010 applies, there is a further restriction on qualifying expenditure. Qualifying expenditure was reduced to 50% of that actually incurred in the case of individuals and to 75% in the case of companies.
As the Deputy will be aware, my Department carried out a review of the Employment and Investment Incentive (EII) in advance of the last Budget. As a result of the review, I extended the EII to include the management and operation of nursing homes for 3 years, subject to approval from the European Commission. It is not possible to provide a timeframe for receipt of the Commission's approval but my officials will be engaging closely with the Commission to ensure that it can be provided as soon as possible. Finally, I would advise the Deputy that registered private nursing homes are exempt from the Local Property Tax.
236. Deputy Michael McGrath asked the Minister for Finance the last occasion on which the €3,000 annual small gifts exemption for the purposes of capital acquisitions tax was changed; and if he will make a statement on the matter. [24663/15]
View answerI am advised by the Revenue Commissioners that section 69 of the Capital Acquisitions Tax Consolidation Act, 2003 provides for a cumulative annual exemption of €3,000 for gifts taken by any one person from any one donor in each calendar year. This annual exemption was originally £250 (€317) and was increased to £500 (€635) in 1979, £1,000 (€1,270) in 1999 and most recently to €3,000 in 2003.
237. Deputy Catherine Murphy asked the Minister for Finance the relationship and oversight procedures which were put in place between his Department and the special liquidators of the Irish Bank Resolution Corporation; if such measures are robust; the extent to which he may inquire about and intervene with the day-to-day management of the corporation in special liquidation; if any Departmental personnel are seconded to act in an oversight or public interest capacity; and if he will make a statement on the matter. [24738/15]
View answerThe Irish Bank Resolution Corporation Bill 2013 (the "IBRC Act") was passed by the Dáil on 7 February 2013. The IBRC Act provided for the winding up of IBRC in an orderly and efficient manner in the public interest.
On 7 February 2013, I as the Minister for Finance, made an Order pursuant to Section 4 of the IBRC Act providing for the winding-up of IBRC under the provisions of the IBRC Act. Pursuant to the same Order, Mr. Kieran Wallace and Mr. Eamonn Richardson (the "Special Liquidators") of KPMG were appointed joint special liquidators of Irish Bank Resolution Corporation Limited (in Special Liquidation) with all of the duties and powers conferred upon them by the IBRC Act. In addition, the liquidation of IBRC and the behaviour of the Special Liquidators are subject to the provisions of the Companies Acts, except those provisions specifically disapplied by the IBRC Act.
The Department of Finance's role in the liquidation of IBRC is one of monitoring and oversight and my department is not involved in the ongoing decision making during the liquidation of the bank, however, under Section 17 (c) of the Ministerial Instruction issued to the Special Liquidators on 7 February 2013, they are obliged to provide update reports at the request of the Minister for Finance.
The Special Liquidators issue the following to the Department of Finance: 1. Monthly update reports; 2. A report on budgeted costs; 3. Regular fee update reports; and 4. Progress update reports. In addition to this, there are regular update meetings held with the Department of Finance.
The most recent progress update report is available to view on the Department of Finance website at http://www.finance.gov.ie/sites/default/files/DOF_IBRC_Progress%20update%20report%20to%2031%20Dec%2014.pdf
I can confirm that there are no Department of Finance personnel seconded to Irish Bank Resolution Corporation Limited (in Special Liquidation) in any capacity.
238. Deputy Catherine Murphy asked the Minister for Finance the audit and oversight procedures to which the National Asset Management Agency is subject; if he is aware of any instances where the agency's internal audit procedures uncovered fraud or criminality in relation to loans acquired by the agency which had been contracted though forged documentation and credentials presented to former lenders; if so, if he will provide details of same, including the total amounts concerned; and if he will make a statement on the matter. [24739/15]
View answerNAMA is subject to statutory audit by the Comptroller and Auditor General (C&AG) and internal audit by PwC (formerly by Deloitte). NAMA provides a significant level of disclosure regarding its audit functions and accountability in its Annual Reports. The Deputy may be interested to review the following sections of NAMA's Annual report for 2014, available on NAMA's website, which provides a rich source of information regarding NAMA's audit and oversight procedures:
- pg. 54: Report by the Chairperson of NAMA's Audit Committee
- pg. 64: NAMA's Statement on Disclosure and Accountability
- pgs. 69-73: NAMA's Statement on Internal Financial Control
- pgs. 74-75: The C&AG's Report for presentation to the Houses of the Oireachtas (Audit Opinion)
I am advised by NAMA that in the course of its management of acquired loans, there have been a small number of cases where a claim has been made alleging, amongst other things, forgery. Where such a claim is made, the matter is fully investigated in conjunction with the bank from which NAMA acquired the loans and which completed the loan documentation, and appropriate actions are taken.
I am further advised that in the very small number of cases involved, NAMA's security position in respect of the assets securing its loans is in no way impacted. In so far as there could be an issue, any resolution would ultimately have to be determined by the Courts. NAMA cannot prejudice the outcome of any such future proceedings and so is not in a position to provide details of any individual cases. NAMA has not written down any debt to date as a result of this.
To the extent any such claims arise, they are fully investigated by NAMA. To the extent the Deputy is aware of any such cases, I would encourage her to bring them to the attention of NAMA and the relevant authority in order that they too can be investigated thoroughly.
