Tuesday, 3 Nov 2015

Written Answers Nos. 301-317

Living City Initiative

Questions (301)

Pearse Doherty

Question:

301. Deputy Pearse Doherty asked the Minister for Finance the number of applications received under the living city initiative, by eligible city; and if he will make a statement on the matter. [37715/15]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that, in relation to the Living City Initiative, applications are only required to be made to the relevant local authority under the residential element of the scheme. Applications are not required to be made under the commercial element of the scheme. Since the scheme launched in May 2015, based on information received from the councils to date, the number of applications received under the residential element of the Living City Initiative per eligible city is as follows:

City	Applications Received
Dublin	7
Cork	1
Limerick	0
Waterford	6
Kilkenny	2
Galway	2

Dublin City Council and Cork City Council have both received, in error, two applications under the commercial element of the scheme, which are not reflected in the above numbers. Details of the numbers participating in the commercial element of the scheme will become available when the income tax returns for 2015 are processed.

Banking Sector

Questions (302)

Jim Daly

Question:

302. Deputy Jim Daly asked the Minister for Finance if he will confirm the total value of facilities sanctioned by the Irish pillar banks that were offered to private developers for the purpose of site acquisition; the cost of construction and site development works for new dwelling houses to be offered to the market, excluding home mortgage facilities, for each of the past four years; and if he will make a statement on the matter. [37734/15]

Written answers

Minister for Finance

I am advised that the banks disclose  information on their loan activities to the various sectors in their Interim and Annual Reports. The information disclosed relates only to loans that have been drawn down and not loans sanctioned.

All relevant disclosures in relation to AIB's Property & Construction loan portfolio are contained in the Risk Management section of their reports, the most recent of which is the AIB 2015 Half-Yearly Financial Report (pages 95-96). This report is available at the following link:

https://investorrelations.aib.ie/content/dam/aib/investorrelations/docs/resultscentre/resultspresentation/aib-half-yearly-financial-report-2015.pdf .

Similarly, Bank of Ireland disclose their Property & Construction loan portfolio in Annual and Interim Reports, the most recent of which is the Interim Report for the six months ended 30 June 2015 and is available at the following link:

https://www.bankofireland.com/fs/doc/wysiwyg/boi-interim-report-2015.pdf.

In relation to the second part of your question, the cost of construction and site development works for new residential dwellings to be offered to the market, it is determined by a complex variety of market, planning and other factors. As Minister for Finance, it does not fall within my remit to account for all the construction and site development works costs borne by developers, and the Deputy may wish to consider addressing his questions in this regard to industry professional bodies such as the Society of Chartered Surveyors Ireland.

Tax Code

Questions (303)

Clare Daly

Question:

303. Deputy Clare Daly asked the Minister for Finance if he will clarify if budget 2016 altered the situation regarding the reply to Question No. 83 of 20 September 2015 in respect of persons who rent a room in their private residence being exempt from tax on income generated according to the limits set, regardless of the basis upon which they rent that room, particularly in light of those persons who are involved with AirBnB and other similar networks. [37744/15]

Written answers

Minister for Finance

It is assumed that the Deputy is referring to Question No. 83 from 30 September 2015. I can confirm that Budget 2016 made no change to the position as outlined in that response.

Tax Code

Questions (304)

Eoghan Murphy

Question:

304. Deputy Eoghan Murphy asked the Minister for Finance his plans to encourage employers to hire persons returning to work after being absent for a number of years for reasons of child rearing or other family considerations. [37804/15]

Written answers

Minister for Finance

Creating jobs and rewarding work is a key driver of growth and prosperity in the economy. It is critical that work pays for every family. The tax system has a role to play in supporting job creation and the maintenance of existing jobs.

As the Deputy will be aware, there are costs associated with hiring an employee, which include the wages of that employee and the relevant employer's PRSI liability. In addition, the level of the income tax liability of employees affects net pay, with consequential effects on decisions whether to take up or return to employment, or indeed to work additional hours. Reductions in income tax therefore can support job creation and thus lead to more job opportunities for individuals in general, as well as for those who have been absent from the workforce for a number of years for reasons of child-rearing or other family considerations.

The changes I announced in Budget 2016 aim to support job creation. They focus the majority of the available resources on tax reductions for low and middle income families.

From the 1st of January, the entry threshold to USC will increase from €12,012 to €13,000, removing over 40,000 workers from the scope of the charge entirely. It is estimated that over 700,000 income earners will not be liable to USC at all from next year.

The three lowest rates of USC are also being reduced, from 1.5%, 3.5% and 7% to 1%, 3% and 5.5% respectively. This will reduce the marginal rate of tax to 49.5 per cent for all earners under €70,044; the first time since the supplementary budget in April 2009 that the marginal rate has dropped below 50 per cent for middle income earners.

The Home Carer Tax Credit is being increased by €190 to bring it up to €1,000 per year, to assist single income married couples with children or who care for an elderly or incapacitated relative.  In a move specifically targeted at supporting lower-income families, the income threshold up to which the home carer can earn has also been increased by €2,120. Where the income of the primary earner does not exceed €35,600, the home carer will now be able to earn up to €7,200 and still benefit in full from the tax credit.

I have also announced in Budget 2016 changes to the current PRSI system, to address an issue affecting lower-paid workers which could result in a situation where an employee could receive a pay increase but find themselves with less net salary after deductions due to the PRSI 'step effect'. A tapered PRSI credit is being introduced to alleviate the step effect across a range of incomes. This change will ensure that low income earners within this income range will see a significant improvement in net take-home pay.

For Employer's PRSI, the entry point to the top 10.75 per cent rate will be increased by €20 per week to €376 per week. This will ensure that the liability to employer's PRSI for a full-time worker on the minimum wage will remain subject to the lower 8.5 per cent rate of PRSI following the increase in the minimum wage announced in Budget 2016.

These changes are designed to support job creation and reward work, both for new entrants to the job market and for people returning to the workforce after a number of years.

In addition, the Deputy may be interested in the JobsPlus scheme. It is an employer incentive which encourages and rewards employers who employ jobseekers who are on the Live Register. It is designed to encourage employers and businesses to employ individuals who have been out of work for long periods. It is administered by the Department of Social Protection. Further information is available at that Department's website at the following link http://www.welfare.ie/en/Pages/Jobs-Plus.aspx.

Tax Code

Questions (305)

Eoghan Murphy

Question:

305. Deputy Eoghan Murphy asked the Minister for Finance his plans to exempt those over 66 years of age from stamp duty if they downsize their homes and purchase another; and if he will make a statement on the matter. [37808/15]

Written answers

Minister for Finance

I have no plans to introduce a measure along the lines suggested by the Deputy. The Deputy will appreciate that tax reliefs and exemptions have costs which have to be paid for and their introduction must be considered only where there is a clear economic and social policy need to be addressed.

Stamp Duties are payable on the acquisition of residential property. The current rates are 1% on values up to €1M and 2% on any balance over that. I do not consider that a rate of 1% on the purchase of a property would represent a serious disincentive to any property owner considering trading down.

In relation to Capital Gains Tax (CGT), an exemption is in place on the disposal of a person's principal private residence.  The exemption applies to any gain made on the disposal of an individual's dwelling house together with land occupied up to an area of one acre, excluding the site of the house. Full CGT relief applies where the period of occupation matches the period of ownership, and partial relief applies where the house has not been occupied by the individual for the full period of ownership.

It should be noted in relation to local property tax (LPT), that where a person downsizes their residential property, assuming they stay in a similar location to the property they are selling, their LPT liability will, most likely, be less than the amount they would have been liable for on their original property.

Finally, individuals over the age of 65 with annual incomes below €18,000, or couples over that age who are married or in civil partnerships with annual incomes below €36,000 are exempt from DIRT on any savings with a financial services provider. Marginal relief is available for those whose incomes slightly exceed these amounts. This exemption would be available to such persons where the downsizing involved the movement to a property of lower value with part or all of the balance being placed with a financial services provider.

Tax Code

Questions (306)

Eoghan Murphy

Question:

306. Deputy Eoghan Murphy asked the Minister for Finance his plans to encourage homeowners to sell a part of their site for development, by, for example, exempting the sale from capital gains tax; and if he will make a statement on the matter. [37809/15]

Written answers

Minister for Finance

I have no plans to introduce a tax exemption as suggested by the Deputy. I am assuming that the suggestion is being made in the context of the housing supply issues which we face and while I appreciate the intention, I do not believe that the proposal offers any real solution to the problems involved.

It is Government policy to tackle the impediments and barriers to housing supply and the proper functioning of the property market. In this regard, Construction 2020 sets out the Government's strategy for tackling those critical blockages that appear to be inhibiting the sector's capacity including problems in the planning system, the weak balance sheet situation of developers, access to development finance, rigid construction costs and industry capacity constraints - including skilled labour shortages.

I would also like to draw the Deputy's attention to the announcement made in Budget 2016 in relation to NAMA's intention to target the delivery of 20,000 additional residential units before the end of 2020.  90% of the residential units will be provided in the greater Dublin Area, where the demand for housing is greatest. Approximately 75% of these units will be houses, primarily starter homes.

These actions along with other initiatives such as Social Housing Strategy are important in revitalising the sector and increasing the supply of housing however it will take time for the full effect of these measures to be realised.

I can assure the Deputy that the sector's recovery is being actively monitored and where appropriate this Government will adopt additional measures that support the long-term sustainable development of the sector.

Tax Relief Data

Questions (307)

Eoghan Murphy

Question:

307. Deputy Eoghan Murphy asked the Minister for Finance the reason for the increase in the disregard applied to the tax relief for tuition fees in respect of third level education, from €2,750 to €3,000; the estimated revenue anticipated from this change; and if he will make a statement on the matter. [37810/15]

Written answers

Minister for Finance

Section 473A of the Taxes Consolidation Act 1997 provides for tax relief at the standard rate of income tax (currently 20%) in respect of qualifying fees chargeable in respect of attendance at approved undergraduate courses. The definition of qualifying fees in this section includes the "student contribution" paid by all students attending third level institutions, including those not subject to tuition fees.

In order to restrict the relief to tuition fees, an amount equal to the amount of the student contribution is disregarded from any claim to relief in respect of qualifying fees.

The reason for the increase in the amount which is disregarded for the purposes of the relief from €2,750 for 2014 to €3,000 for 2015 in respect of full-time courses, was to reflect the increase from €2,750 to €3,000, over the same period, in the amount of the student contribution payable in respect of such courses.

This change served only to continue to exclude relief from the revised amount of student contribution and did not in any way reduce the tax relief available in respect of tuition fees. On that basis it is not expected to result in additional revenue for the Exchequer.

Vehicle Registration

Questions (308)

Tony McLoughlin

Question:

308. Deputy Tony McLoughlin asked the Minister for Finance if Ireland's vehicle registration tax measures infringe upon a number of European Union laws (details supplied); and if he will make a statement on the matter. [37814/15]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that section 132(1), Finance Act, 1992 provided for the introduction, from 1 January 1993, of "a duty of excise, to be called vehicle registration tax".

Article 110 of the Treaty on the Functioning of the European Union (TFEU) (ex Article 90 TEC) provides that Member States may not impose on the products of other Member States any internal taxation in excess of that imposed directly or indirectly on similar domestic products.  Over the years, the Court of Justice of the European Union, in a number of opinions and rulings, has stated that the charging of a tax such as VRT is within the competence of a Member State provided that it does not breach Article 110 of the TFEU.

Article 26 of the TFEU  (ex Article 14 TEC) provides that the European Union shall adopt measures with the aim of establishing the functioning of the internal market. Article 30 of the TFEU  (ex Article 25 TEC) provides that customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States.

Prior to 1 January 1993, Motor Vehicle Excise Duty (MVED) was levied on a motor vehicle upon manufacture and release for purchase in the State or upon importation into the State. Following the signing of the Maastricht Treaty, considerable reform of Ireland's excise duty regime was undertaken to ensure the compatibility of all excise duties with European Union law. As part of this reform, the MVED, which could have been held to be incompatible with what were then Articles 18 and 25 TEC, was replaced with VRT, which is compatible with European Union law.

I am satisfied that VRT is compatible with the provisions of the Treaty on European Union and the Treaty on the Functioning of the European Union, including those provisions relating to the free movement of goods and services. 18 of the 28 Member States of the European have a form of Vehicle Registration Tax.

Tax Code

Questions (309)

John Browne

Question:

309. Deputy John Browne asked the Minister for Finance further to parliamentary Question No. 242 of 20 October 2015, if he is satisfied that in light of the decision of the European Union Commission in a legal case (details supplied), that the differential treatment between insured and non-insured approved retirement fund providers under the Ireland-United Kingdom double tax agreement A does not constitute state aid; and if he will make a statement on the matter. [37830/15]

Written answers

Minister for Finance

In answering Parliamentary Question No. 242 of 20 October 2015, I noted, in relation to the treatment of ARF's for Irish tax purposes, that subsection (2) of section 784A exempts income and chargeable gains arising in respect of assets held in an ARF from income tax and capital gains tax. In replying to the Deputy's question of 20 October, I also noted that the Irish tax treatment of exempting income and chargeable gains applies regardless of whether the ARF provider is an insurance company or a different type of provider.

The Deputy's question concerns the United Kingdom treatment, under the Ireland/UK Double Taxation Convention, of income and gains from UK property of an ARF. As stated in my reply to the previous Parliamentary Question, I am advised by the Revenue Commissioners that this UK treatment is a matter that is under consideration by her Majesty's Revenue and Customs and the Revenue Commissioners. The UK treatment for tax purposes of the income and gains concerned is primarily a matter for the United Kingdom. In these circumstances it would be inappropriate to comment on the possible relevance for such treatment of, as yet unpublished, EU Commission decisions.

Tax Code

Questions (310)

Billy Kelleher

Question:

310. Deputy Billy Kelleher asked the Minister for Finance given recent budgetary changes on excise taxes on tobacco products, the minimum price that retailers can charge for a packet of 20 cigarettes and a packet of fine tobacco for the rolling of cigarettes; and if he will make a statement on the matter. [37845/15]

Written answers

Minister for Finance

EU Directive 2011/64/EU ('the Tobacco Products Tax Directive'), which harmonises the structures and definitions of tobacco products across EU Member States, provides that manufacturers and retailers are free to determine the retail selling price of tobacco products and Member States cannot impose minimum prices. The Directive does allow Member States to impose a minimum excise duty on tobacco products, which in practice puts a floor under retail prices and protects tax revenues.

The minimum excise duty in Ireland currently amounts to €6.15 on a pack of 20 cigarettes; VAT on this excise duty would amount to €1.41, giving a total of €7.56 before any account is made for the trade element in the price and consequential further excise and VAT.  The excise duty payable on a 25g pack of roll-your-own tobacco is €7.29; VAT on this excise duty would amount to €1.68, giving a total of €8.97 before any account is made for the trade element in the price and consequential further VAT.

Tobacco companies are obliged to declare to Revenue the maximum retail selling price of cigarettes. No such obligation applies in relation to other tobacco products. The Commissioners inform me that, at present, the lowest maximum price declared for cigarettes range from €8 to €8.50 for 20 cigarettes. Most cigarettes sold in Ireland retail at higher prices and the Budget 2016 tax increases had the effect of increasing the price of cigarettes in the most popular price category by 50 cent to €10.50 per pack of 20.

The high levels of tax have a key influence on the retail price of tobacco products and Ireland has among the highest prices and taxes in respect of  tobacco products in the EU. The high rates of tax prevailing here reflect the long-standing commitment by successive Governments to use tobacco taxation to raise the retail price of tobacco as an instrument to discourage smoking, particularly among younger people. The tax and pricing policy is having the desired affect and the Healthy Ireland survey carried out this year for the Department of Health indicates that the number of daily smokers has been reduced to 19% of the adult population.

Question No. 311 answered with Question No. 293.

Banking Sector

Questions (312)

Michael McGrath

Question:

312. Deputy Michael McGrath asked the Minister for Finance the terms under which Allied Irish Banks can redeem the contingent convertible bonds which the State holds in the bank; the manner in which a redemption of these bonds would impact on the State’s finances; and if he will make a statement on the matter. [37875/15]

Written answers

Minister for Finance

The State holds €1.6 billion of contingent convertible capital notes in AIB which were issued on 26 July 2011. The interest payable on these securities is €160 million per annum. The maturity date of this instrument is 28 July 2016, upon which date it is expected that the full value of the notes will be returned to the State by the bank. As I stated in my Budget 2016 speech the proceeds from the sale and redemption of the State's investments in the banks will be used to reduce the national debt.

Banking Sector

Questions (313)

Michael McGrath

Question:

313. Deputy Michael McGrath asked the Minister for Finance the terms under which Allied Irish Banks can redeem the preference shares which the State holds in the bank; and if he will make a statement on the matter. [37876/15]

Written answers

Minister for Finance

The State holds €3.5 billion of preference shares in AIB. These were acquired on 13 May 2009. The interest payable on these securities is €280 million per annum. The shares were purchased at a price of €1.00 per share and thus the state owns 3.5 billion shares. The 2009 Preference Shares may be purchased or redeemed at the option of AIB, in whole or in part, at a subscription price of €1.25 per share, after a step-up of 25% was applied in 2014 as per the conditions of the instrument.

As the Deputy will be aware, work is continuing between my Department, AIB and its regulator in relation to potential capital restructuring options and sequencing in order to maximise the return of cash to the State from our AIB investments over time. These decisions include considerations around the potential restructuring of the Preference Shares, which it is possible for the bank to redeem or, alternatively, convert to ordinary shares with my prior  agreement.

Banking Sector

Questions (314)

Michael McGrath

Question:

314. Deputy Michael McGrath asked the Minister for Finance the income in cash terms received by the State in respect of the preference shares which it holds in Allied Irish Banks; and if he will make a statement on the matter. [37877/15]

Written answers

Minister for Finance

The State holds €3.5 billion of preference shares in AIB. These were acquired on 13 May 2009. The interest payable on these securities is €280 million per annum and is payable in cash or ordinary shares in the event of non-payment in cash. AIB issued ordinary shares to the State in lieu of the dividend due on the preference shares in May 2010, May 2011, May 2012, May 2013 and May 2014. The State received a cash dividend of €280m in relation to its 2009 Preference Shares for the first time in 2015.

Tax Yield

Questions (315)

Eoghan Murphy

Question:

315. Deputy Eoghan Murphy asked the Minister for Finance the revenue calculated from capital gains tax in each of the years 1995 to 2014; and the applicable rates in each year. [37881/15]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that a wide range of statistical information is now available on the Commissioners' statistics webpage at www.revenue.ie/en/about/statistics/index.html.

In relation to the Deputy's question, information on the revenue from Capital Gains Tax (CGT) from 2003 can be found under the Revenue Net Receipts by Tax Head at http://www.revenue.ie/en/about/statistics/net-receipts.pdf. CGT receipts for earlier years can be found in table TR2 in the statistical reports at http://www.revenue.ie/en/about/publications/statistical-reports.html for the relevant years.

The tax rates from 2008 are available on the Revenue website in the CGT section at http://www.revenue.ie/en/tax/cgt/index.html. Rates for earlier years can be found in the statistical reports (http://www.revenue.ie/en/about/publications/statistical-reports.html) under the descriptive text associated with CGT section for the relevant years.

Pension Provisions

Questions (316)

Michael McGrath

Question:

316. Deputy Michael McGrath asked the Minister for Finance the maximum amount that a person can withdraw per year from an approved minimum retirement fund before reaching the age of 75; his plans to change this maximum percentage; if the amount drawn down annually is subject to income tax, the USC and PRSI; and if he will make a statement on the matter. [37899/15]

Written answers

Minister for Finance

With effect from 2015, the maximum amount that the beneficial owner of an Approved Minimum Retirement Fund (AMRF) can draw down annually, up to the age of 75, is 4% of the value of the fund.

The maximum 4% drawdown was introduced by Finance Act 2014 and gives an AMRF owner the discretion to access up to 4% of the assets of the fund on one occasion in each year, instead of the facility to draw-down the accrued income and gains of such funds, as had applied previously.

I have no plans to change the AMRF drawdown arrangements at this time.  I should say, of course, that an AMRF owner can use some or all of the funds in his or her AMRF at any time to purchase a pension annuity.

On the question of the taxation of AMRF drawdowns, I am advised by the Revenue Commissioners that a Qualifying Fund Manager (QFM) who manages an AMRF is required under section 784A of the Taxes Consolidation Act 1997 (as applied by section 784C (7) of that Act), to treat a withdrawal from the fund as a payment of emoluments in the year in which the payment is made and to subject that payment to income tax under the PAYE system. The fund manager is obliged to deduct tax at the higher rate of income tax for the year in which the payment arises unless Revenue has issued a certificate of tax credits and standard rate cut-off point for the individual prior to the payment being made. PRSI (up to age 66) and USC would also be payable on any payments, as appropriate.

I am further advised by the Commissioners that an individual planning to drawdown AMRF funds should apply to his or her local Revenue Office for a certificate of tax credits and standard rate cut-off point in advance of withdrawing the moneys as this will ensure that any such withdrawal is taxed at the individual's appropriate marginal rate of tax.

Finally, I am advised that in the event that tax is charged in the first instance at the higher rate (in the absence of a tax credit certificate) in circumstances where the standard rate applies to some or all of the AMRF payment, a taxpayer can apply to Revenue for a repayment of any tax overpaid after the end of the tax year in question.

Question No. 317 answered with Question No. 290.