Written Answers Nos. 291-310
291. Deputy Sean Fleming asked the Minister for Finance the position regarding public service pensioners who have to pay USC on some of their pensions whereas people who are in receipt of the State pension do not have this charge imposed; his plans to address this issue; and if he will make a statement on the matter. [31114/15]
View answerThe USC was introduced in Budget 2011 to replace the Income Levy and Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and maintaining revenue to reduce the budget deficit. It is a more sustainable charge than those it replaced, and is applied at a low rate on a wide base.
The USC, like the Income Levy before it, does not apply to social welfare payments or payments of a similar nature. However, occupational pensions are liable to the USC, if the payment is greater than the exemption threshold, which from 1 January 2015 is €12,012 per annum.
As you are aware, delivering on a commitment in the Programme for Government, the USC was reviewed by my Department in the lead up to Budget 2012. The report is available at www.finance.gov.ie. The issue of USC applying to occupational pensions of retired public servants who entered the public service before April 1995 was examined as part of that review. However, the Government decided not to exempt the occupational pensions of these individuals from the USC charge as it would be very costly and difficult to achieve, and it would involve all income earners with the equivalent income benefiting from the exemption. In addition, it would also undermine the principle of the USC being applied to income with few exceptions.
However, as a result of the review of the USC, the Government decided in Budget 2012 to increase the entry point to the Universal Social Charge from €4,004 to €10,036 per annum. It is estimated that this removed almost 330,000 individuals from the charge. An estimated further 87,000 individuals have been exempted from the charge as a result of the further extension of the threshold to €12,012 in Budget 2015. This latter extension equalises the position for single individuals whose sole source of income is the State Contributory Pension with Public Service pensioners whose pension is at an equivalent level. Furthermore, I intend to continue to reform the tax system in this manner in future budgets, subject to having the required fiscal space. I would point out however, that the changes to the income tax system included in Budget 2015 mean that all those who paid Income Tax and /or USC in 2014, including pensioners, will see a reduction in their tax bill this year where income is equal.
292. Deputy Finian McGrath asked the Minister for Finance his views on a matter (details supplied) regarding tax liability on certain medical appliances; his plans to address this matter; and if he will make a statement on the matter. [31121/15]
View answerI am advised by the Revenue Commissioners that EU VAT Directive (Council Directive 2006/112/EC), with which Irish VAT legislation must comply, generally provides that supplies of goods and services be chargeable to VAT at the standard rate but that lower rates are permitted in very limited circumstances. Ireland has applied a zero rate of VAT to the supply of hearing aids since 1981 and was permitted to retain the zero rate by Article 110 of the EU VAT Directive. The zero rate also applies to parts or accessories suitable for use solely or principally with the hearing aid.
Ireland has applied the reduced rate to the repair of movable goods, including hearing aids, since 1986 and was permitted to retain that reduced rate by Article 113 of the EU VAT Directive. The EU VAT Directive does not allow Irish VAT legislation to apply the zero rate of VAT to the repair of movable goods. I would point out that the two-thirds rule applies to a supply of services where the value of the goods included in the supply exceeds two thirds of the total price charged. For example, where the cost to the hearing aid repairer of zero rated materials, which includes hearing aid batteries, used in the repair of the aid is €120 exclusive of VAT and the total charge for the repair work is €150 then the zero rate, which is the rate applicable to the materials, is the rate that applies to the total charge of €150. The reduced rate of VAT of 13.5% applies to hearing aid repair services where the materials used do not exceed two thirds of the total charge.
293. Deputy Robert Troy asked the Minister for Finance his plans to reduce PRSI contributions in budget 2016. [31148/15]
View answerPreparations for Budget 2016 and the consequent Finance Bill are ongoing. It would not be appropriate for me to comment at this stage, on what changes, if any, are being considered regarding PRSI, or in relation to any other measure.
294. Deputy Michael McCarthy asked the Minister for Finance if he will support calls to keep the VAT rate at 9% to ensure that Ireland continues to maintain a strong, vibrant and competitive tourism industry; if he will maintain this reduced VAT rate for the hospitality sector following on from the very positive implications this reduction has had on the industry in creating and maintaining employment; and if he will make a statement on the matter. [31167/15]
View answer327. Deputy Michael McCarthy asked the Minister for Finance if consideration will be given to extending the 9% tourism VAT rate beyond 2015 in order to ensure that Ireland continues to maintain a strong, vibrant and competitive tourism industry; if he will maintain this reduced VAT rate for the hospitality sector following on from the very positive implications this reduction has had on the industry in creating and maintaining employment; and if he will make a statement on the matter. [31168/15]
View answer344. Deputy Michael Healy-Rae asked the Minister for Finance his views on a matter (details supplied) regarding the VAT rate; and if he will make a statement on the matter. [31422/15]
View answer389. Deputy Michael Healy-Rae asked the Minister for Finance his views on a matter (details supplied) regarding the tourism VAT rate; and if he will make a statement on the matter. [32246/15]
View answerI propose to take Questions Nos. 294, 327, 344 and 389 together.
The 9% reduced VAT rate for tourism related services was introduced in July 2011 as part of the Government Jobs Initiative. The measure was designed to boost tourism and create additional jobs in that sector. The Deputy will be aware that it is not the practice to comment on what measures may or may not be included in the Budget in advance of Budget day.
295. Deputy Thomas P. Broughan asked the Minister for Finance if he will reconsider the serious negative impact of the pension levy on ESB, Electric Ireland and ESB Networks pensioners; her plans to restore the income lost by the imposition of this levy; and if he will make a statement on the matter. [31642/15]
View answerThe original 0.6% stamp duty levy on pension fund assets ended last year. The additional levy of 0.15% which I introduced for 2014 and 2015, mainly to help continue to fund the Jobs Initiative, will also end after this year.
The position is that the equivalent value of all of the money raised from the stamp duty levy has been used to fund the wide range of measures introduced in the Jobs Initiative to protect existing jobs and to help create new jobs and the Initiative has been a success in this regard. The measures introduced include expenditure measures such as the Jobbridge and Springboard schemes, as well as a number of tax and PRSI incentives such as the reduction in the VAT rate from 13.5% to 9% for the tourism and hospitality sectors and the halving of the lower employer PRSI rate.
The pension fund stamp duty levies are charged on the trustees of pension schemes and others (including insurance companies) who have responsibility for the management of the assets of pension schemes or plans. It is up to the trustees of pension schemes, for example, to decide whether and how the impact of the levy should be passed on and who should be impacted and to what extent. I have no detailed information on the decisions made by pension fund trustees or others in relation to the passing on of the full or a partial impact of the levy to the current, deferred or former (retired) members of pension schemes. I am aware, however, that where trustees have made the decision to pass on the impact or part of the impact of the levy to pensioners that a smaller reduction in pension payments over the lifetime of the pension may have been made in many cases in preference to a larger reduction over a shorter period.
The question raises the issue of restoration of income. While the pension fund levies have ceased and will be ceased as I have already outlined, I have no plans to repay the pension fund levy collected as has been requested in the past. The value of the funds raised by way of the levy have been used to protect and create jobs and this has helped to create the improving financial and economic position of the State. Taxpayers to whom the impact of the levy may have been passed on by the chargeable persons responsible for the payment of the levy (the pension scheme trustees etc) will benefit from the changes which I began in Budget 2015 and which will continue in future Budgets to reduce the tax burden on those on low and middle incomes.
296. Deputy Michael McGrath asked the Minister for Finance the maximum growth in public expenditure both in nominal and real terms allowable in 2016 under European Union rules; the manner in which EU expenditure rules will impact on the formulation of the budget; and if he will make a statement on the matter. [31655/15]
View answerIn 2016 Ireland will enter the preventive arm of the Stability and Growth Pact (SGP) and will have to adhere to an adjustment path towards the medium-term (budgetary) objective (MTO), currently for Ireland a balanced budget in structural terms. This is assessed in two ways. Firstly, until the MTO is reached, a minimum annual improvement in the structural balance is required. The second assessment is compliance with the expenditure benchmark.
Under this second pillar, public expenditure, in the absence of discretionary revenue measures, should grow in line with the potential growth rate of the economy, the latter estimated as an average over a ten-year horizon. Furthermore, if a Member State is not at its MTO expenditure should grow at a rate that is sufficiently below the potential growth rate (allowing for a so-called 'convergence margin') in order to ensure rapid convergence towards the MTO. The benchmark rate for expenditure growth is then calculated, taking into account projections for inflation in order to preserve the real value of expenditure.
The applicable benchmark reference rate for Ireland in 2016 is 1.9%. The convergence margin for 2016 is 1.8%. Therefore applying this to the 2015 general government expenditure aggregate gives real growth of 0.1%.
To adjust this for nominal terms, the GDP deflator is applied. This is the average of the European Commission's Spring and Autumn forecasts for 2016 for Ireland. While the former is available the latter will not be issued until November so the Department's forecast will have to be used in Budget 2016 calculations. In the Stability Programme Update in April 2015, my Department used a forecast of 1.5%. Using this and taking account of discretionary revenue measures primarily related to the indexation of the tax system and including carry forward from 2015 tax measures, the fiscal space was calculated to be €1.2bn to €1.5bn.
The Government stated in the Spring Economic Statement that this fiscal space would be split evenly between revenue and expenditure measures.
297. Deputy Peter Mathews asked the Minister for Finance the reason his assurance provided in December 2013 and February 2014 disagrees with evidence (details supplied) given under oath at the banking inquiry; and if he will make a statement on the matter. [30426/15]
View answerI have answered a number of Parliamentary Questions in the past in relation to rules adopted by banks when valuing assets including loans. These rules are determined by the relevant accounting standards and it is the responsibility of the directors of the respective banks to ensure that they have been properly applied. To provide assurance that this is the case, the proper application of the rules is subject to an annual independent external audit review.
As I have stated in the past, nothing has been brought to my attention to suggest that these rules have not been correctly applied by the banks.
Finally, I have reviewed the transcripts as supplied by the Deputy and confirm that there is nothing contained therein which would indicate that the banks have systematically overvalued loans by hiding losses.
298. Deputy Clare Daly asked the Minister for Finance the number of pay as you earn taxpayers who purchased houses during the period when 9% stamp duty was levied on the price of houses; and the reason there is no offset of this penal rate of stamp duty against the local property tax. [30484/15]
View answerI am advised by the Revenue Commissioners that the 9% stamp duty rate on residential property transactions was effective from 23 January 1997 to 8 December 2010.
Information on the numbers of purchasers of residential property that paid stamp duty at the 9% rate is not available. However, the number of transactions where the 9% rate was paid is shown in the following table from 2004 onwards (data for earlier years are not available). A transaction could have had more than one purchaser and several transactions could be for the same purchaser. Stamp duty data on residential property transactions is not captured in such a manner that would enable a breakdown between 'Pay as You Earn' taxpayers and other taxpayers.
|
Year* |
Number of Duty Paid Transactions at the 9% rate |
|
2004 |
1,968 |
|
2005 |
2,939 |
|
2006 |
4,496 |
|
2007 |
3,435 |
|
2008 |
778 |
|
2009 |
200 |
|
2010 |
186 |
*The 9% rate applied to property transactions valued over €635,000 prior to 5 November 2007 and to property transactions valued over €1,000,000 between 5 November 2007 and 8 December 2010.
The report of the Thornhill group, on which the design of the local property tax (LPT) was based, proposed a tax system that would contain very limited exemptions and reliefs. As a general principle, reliefs should only be used to address clear economic and social policy needs and should be targeted based on need. The report cautioned that reliefs create costs which have to be paid for, either by taxpayers who do not benefit from the relief or by reductions in public expenditure. The report specifically recommended against providing reliefs for those who had paid stamp duty. The reasons given were that such relief would not be targeted on need, that the tax structure was known to house purchasers at the time of purchase, that the selling price of the property may have been affected by the stamp duty paid and that the stamp duty revenues would have been spent on the provision of public services.
While some individuals had a significant Stamp Duty liability, they may have been able to claim mortgage interest relief (MIR) on interest up to €20,000 per annum; and individuals who bought properties between 2004 and the end of 2012 can continue to claim mortgage interest relief until 2017. Mortgages taken out since 31 December 2012 do not qualify for mortgage interest relief.
A system of deferral arrangements is available where there is an inability to pay and certain specified conditions are met, whereby a person may opt to defer, or partially defer, payment of the tax. Where a person qualifies for a full deferral then 100% of the liability can be deferred. Where a person qualifies for partial deferral then 50% of the liability can be deferred and the balance of 50% of the tax must be paid.
299. Deputy Mattie McGrath asked the Minister for Finance the number of loans in the Bank of Ireland branch in the Four Courts (details supplied) that have been transferred to the National Asset Management Agency; the number of customers from this branch who have had their loans written off; and if he will make a statement on the matter. [30501/15]
View answerMy Department does not possess the information to answer this question. However, I can confirm that officials in my Department have referred the Deputy's question to Bank of Ireland for comment and the bank has responded as follows:
The Bank of Ireland Annual Report includes all required declarations to the market in relation to engagement with the National Asset Management Agency (NAMA) and defaulted and impaired loans. The most recent full year for which an Annual Report is available is 2014 at:
https://www.bankofireland.com/fs/doc/wysiwyg/boi-annual-report-2014.pdf
300. Deputy Fergus O'Dowd asked the Minister for Finance if he will introduce equality proofing measures in the budget, as requested by the Equality Budgeting Campaign (details supplied); and if he will make a statement on the matter. [30529/15]
View answer304. Deputy Finian McGrath asked the Minister for Finance if he will support the principle of equality proofing measures (details supplied) in the next budget; and if he will make a statement on the matter. [30619/15]
View answerI propose to take Questions Nos. 300 and 304 together.
The issue of equality proofing the budget and the proposal for an independent budget office are not the same, although there is an element of overlap.
Dealing with the latter first, my Department is working with the Department of Public Expenditure and Reform on proposals to establish an independent budget office. The intention is to prepare heads of a bill, bring these to Government and then commence pre-legislative scrutiny. I hope to reach the pre-legislative scrutiny stage by the end of this year.
As the primary purpose of the independent budget office is to assist opposition parties with costing of budgetary proposals, analysing the economic impact of budgetary packages and advising on the impact of the fiscal rules, it is likely and appropriate that the pre-legislative scrutiny should be a lengthy process. It is here that the campaign for equality budgeting and this proposal overlap. If there is demand or support for the equality impact of budgetary proposals and packages being put to the independent budget office to be considered, then it can be incorporated in the Bill.
I want to make it clear that budgetary proposals and legislation being put to the Dáil by the Government will not be a matter for the new office.
Under the Constitution, budgetary allocation is a fundamental responsibility of the Dáil and its individual members and the Government is responsible to Dáil Éireann. It follows that it is up to Dáil Éireann to consider the Government's budgetary proposals and legislation and decide upon them. The extent to which it wants to take equality impacts into account is a matter for it to decide. However, Government's budgetary proposals are presented to the Dáil first and this will continue to be the case.
Having said all of the above, I want to assure the Deputies that Government takes equality very seriously. This starts with the fact that Cabinet procedures require a whole range of impacts to be covered in every decision proposed to Government. This ensures that the impact of policy proposals on gender equality, rural communities, North-South/East-West Relations, employment, persons experiencing or at risk of poverty or social exclusion, people with disabilities and industry costs are taken into account.
The Department of Finance carries out distributional analyses of budgetary options using the Economic and Social Research Institute's (ESRI) Simulating Welfare and Income Tax Changes (SWITCH) model. For Budget 2015, the Department produced analysis of the distributional impact of tax measures. These are contained in the Tax Strategy Group papers and inform the budgetary decision process. These papers are subsequently made public after the Budget and are available here http://www.finance.gov.ie/what-we-do/tax-policy/tax-strategy-group. Further distributional analyses are carried out by the Department of Public Expenditure and Reform and the Department of Social Protection including distributional analysis of Budget measures and social welfare changes. Indeed, for this year's budget, it is also planned that the Departments of Finance, Public Expenditure and Reform, and Social Protection will conduct a social impact assessment of the main tax and welfare measures contained in the final Budget package.
Finally, the Budget book contains illustrative examples of the impact of taxation changes on different income earners. Overall, the analysis and transparency of the decision making process has been undergoing constant improvement over recent years and I would envisage this continuing.
301. Deputy Dominic Hannigan asked the Minister for Finance if he will consider a proposal (details supplied) for a bike to school scheme; and if he will make a statement on the matter. [30534/15]
View answerThe Cycle to Work scheme is essentially an environmental measure. It was introduced on that basis to help lower carbon emissions, reduce traffic congestion, encourage more employees to cycle to work and also to help improve health and fitness levels. However, as children tend to receive bicycles from their parents there is a concern that such an extension to the scheme would become a subsidy towards purchases which would happen anyway and would therefore drive up bicycle prices, as subsidies tend to do. In addition, any subsidy to the children of parents who are in employment could be seen as discriminatory towards children whose parents do not work.
Finally, as Minister for Finance I must be conscious that the introduction or expansion of any scheme creates a cost and that cost must be recovered elsewhere. It was estimated at the time of the introduction of the scheme that approximately 7,000 employees would avail of it over the first five-year period of its operation. However anecdotal evidence would suggest that the scheme has been considerably more successful than this.
I am not in a position at this point, therefore, to consider extending the scheme as the Deputy suggests and I have no plans to do so.
302. Deputy Fergus O'Dowd asked the Minister for Finance if he has received a pre-budget submission from the Asthma Society of Ireland; and if he will make a statement on the matter. [30540/15]
View answerI can confirm that a submission from the Asthma Society of Ireland has been received.
To date my Department has received in the order of 400 Pre-Budget Submissions from a wide range of groups and individuals. These are being considered by the relevant officials in the context of Budget and Finance Bill preparation.
However the Deputy will be aware that it is not the practice of the Minister for Finance to discuss the details of measures which may be under consideration as part of the Budget and Finance Bill.
303. Deputy Eoghan Murphy asked the Minister for Finance if he will consider implementing a digital certificate authority for cash transactions involving State bodies (details supplied). [30572/15]
View answerThe development of the digital economy is a key plank of Ireland's economic development strategy. The Government keeps under review various initiatives, which could help Ireland reap the full rewards of a digitally enabled society. There continues to be significant growth of the digital economy in Ireland, including in payments, for example there has been a 26% increase in active users of online banking from 2012 and 2014. The use of card payments is also increasing with debit card usage tripling over the last eight years.
In forming policy in this area, including considering the implementation of a digital certification authority for cash transactions involving State bodies, the Government has to be cognisant of the changed technological and regulatory environment in which payments operate. While historically European payments were segmented into individual national payment systems, since 2014 we have become integrated in the Single Euro Payments Area. Developing national solutions in isolation is now neither always optimal nor, indeed, feasible. As such the work of the European Retail Payments Board in this area is monitored, this currently includes recommendations on technical standards related to payment cards to tackle fraud, as well as the investigation electronic invoicing solutions related to retail payments. My Department will monitor this work with a view to identifying those technologies and opportunities which can help promote the development of the digital economy in Ireland.
305. Deputy Tom Fleming asked the Minister for Finance his plans in the forthcoming budget to substantially reduce the 33% capital gains tax on any gains arising on the disposal of shares as this rate is a disincentive to starting business and creating jobs; and if he will make a statement on the matter. [30672/15]
View answerPreparations for Budget 2016 and the consequent Finance Bill are ongoing. It would not be appropriate for me to comment on what changes, if any, are being considered to the CGT rate or any other tax measure.
306. Deputy Tom Fleming asked the Minister for Finance his plans to reduce the carbon tax on household fuel as due to the variable inclement weather conditions this tax is imposing additional financial hardship on vulnerable lower income consumers; and if he will make a statement on the matter. [30673/15]
View answerCarbon Tax is an environmental tax which was introduced to send a price signal that there is a cost associated with the consumption of fossil fuels to the detriment of the environment. Carbon tax is seen as a way to promote the reduction in overall emissions in order to reach our EU 2020 emission targets on greenhouse gases.
Carbon tax was introduced in Budget 2010 on a phased basis. Initially it applied only to transport fuels, then to other liquid fuels such as kerosene, agricultural diesel and natural gas and lastly it was extended to solid fuels on a phased basis in 2013 and 2014.
Coupled with the long lead in period to the implementation of carbon tax on solid fuels this Government has also provided, through the Sustainable Energy Authority of Ireland, generous grants via Better Energy Homes and also provides home energy upgrades free of charge to vulnerable households via Better Energy Warmer Homes to reduce dependence on combustion of fossil fuels for home heating. In 2014 the Better Energy programme provided €53m grant support towards €118m energy upgrade works.
Carbon tax promotes energy efficiency, reduces emissions and reduces our dependence on imported fossil fuels.
All taxes are reviewed in the context of the annual Budget.
307. Deputy Tom Fleming asked the Minister for Finance his plans to introduce measures, similar to France, to alleviate the reduction in milk prices in which dairy farmers are predicted to lose over €500 million in 2015 and the French initiative proposed is to delay the payment of income tax for three months to support its farmers; if he will introduce a similar initiative to help producers cope with the falling prices; and if he will make a statement on the matter. [30674/15]
View answerI have no plans to introduce a scheme that would allow farmers to delay payment of taxes. As the Deputy will be aware, income averaging is available to farmers in recognition of the volatility of their income, which I believe is ultimately more beneficial than delaying the payment of tax.
The Deputy may be aware that following the review of agri-tax measures that was carried out in 2014, I amended the income averaging scheme for farmers to extend the period over which income can be averaged from three years to five, in order to give more scope for income smoothing within a commodity price cycle.
308. Deputy Brendan Griffin asked the Minister for Finance if a person can defer payment of capital gains tax in respect of shares sold; if so, the facilities that can be put in place by the Revenue Commissioners to accommodate the taxpayer; if the taxpayer could avail of a lower rate of CGT if the rate is reduced in the following budget; and if he will make a statement on the matter. [30679/15]
View answerI am advised by the Revenue Commissioners that there are no provisions in the Capital Gains Tax (CGT) code whereby a person can defer payment of CGT in respect of shares which are sold. The rate of CGT that will apply to the sale of the shares is the rate applying on the date the contract for the sale of the shares is entered into.
309. Deputy Ruth Coppinger asked the Minister for Finance the meetings he has had with a company (details supplied); if the matter of the interest rate it charges was discussed; and if he will make a statement on the matter. [30689/15]
View answer310. Deputy Ruth Coppinger asked the Minister for Finance the meetings he has scheduled with a company (details supplied); if he will discuss the matter of the interest rates it charges; and if he will make a statement on the matter. [30690/15]
View answerI propose to take Questions Nos. 309 and 310 together.
I would like to confirm to the Deputy that I have not had meetings with Start Mortgages, nor do I have any meetings scheduled with that company.
However, I have just concluded a second set of meetings with senior management of Ireland's six main mortgage lenders to review mortgage interest rates and my Department continues to keep the situation under review.
I would strongly urge borrowers to examine the options that are now available to them to see how they can reduce their monthly mortgage payments, either with their existing lender or with a new lender if that is a practical option in their specific circumstances.
