Written Answers Nos. 70-78
70. Deputy Eric Byrne asked the Minister for Finance the annual cost in revenue foregone if a new threshold of €500,000 was introduced for inheritance tax purposes; and if he will make a statement on the matter. [39825/15]
View answerI assume that the Deputy is referring to the annual cost of increasing the Capital Acquisitions Tax category A threshold, which applies to gifts and inheritances from a parent to a child, from the post-Budget 2016 threshold of €280,000 to €500,000.
I am advised by the Revenue Commissioners that the cost of increasing the category A threshold to €500,000 would be approximately €74 million on a full year basis and €63 million on a first year basis.
71. Deputy Eric Byrne asked the Minister for Finance if he will set out the feasibility of introducing a tax on foods high in saturated sugar, salt, and saturated fats; if such a tax has been introduced in other jurisdictions; the level required to yield €188 million in one year; and if he will make a statement on the matter. [39826/15]
View answerAs the Deputy will be aware, there have been a number of proposals in recent years to impose taxes on food and beverages to achieve public health objectives. Generally, such proposals encompass either specific products, such as sugar sweetened drinks, or a range of food products with certain characteristics, such as foods with saturated fats above a certain level, foods with added sugar, or foods with added salts.
In 2011, Denmark introduced a tax of DKK 16 (at that time €2.15) per kilogram of saturated fat on all food products produced or imported into Denmark which exceeds 2.3g per 100g in saturated fat. This tax was provided for the in 'Danish Fat Tax Act 2011', which commenced on 1 October 2011. The Danish 'Fat Tax' applied to meat, certain diary products, animal fats, edible oils and other fats, margarine, spreadable composite products, and other products which are considered substitutes of the above-mentioned foods.
The tax was collected at the first point of supply in Denmark, and producers and importers of such products were required to register with the Danish tax authorities, to facilitate the collection of the Fat Tax. Such persons could use publicly available information which provided standards for the levels of specific foodstuffs, the amount of saturated fat based on technical analysis of the specific food product, or nutrition labelling.
In November 2012, the Danish Government made a decision to abolish the Fat Tax, citing concerns relating to cross-border shopping and the significant compliance costs imposed on food producers, many of whom were small and medium-sized enterprises.
In September 2011, Hungary imposed taxes on energy drinks, snacks with a salt content in excess of 1g per 100g, sweets, biscuits, and ice-creams. In January 2012, these food-related taxes were extended to chocolate with added and total sugar of greater than 40g per 100g and a cocoa content of less than 40g per 100g, to all sweetened products with added and total sugar of greater than 25g per 100g, and to syrups or concentrates with a fruit content of less than 25%. All of these taxes are imposed volumetrically, with the duty imposed a specific amount per quantity of the product itself, rather than the added sugar, added salt or saturated fat content as in the Danish case.
I believe that Danish case indicates that it is feasible to introduce the types of tax referred to by the Deputy. However, the feasibility of a tax does not imply that it is desirable to impose one. I think any proposal would have to take into account, inter alia, the compliance cost for smaller producers of products such as meat and cheese, the requirements for additional Revenue resources to administer a tax of this nature, the possible cross-border effects and, not least, the potential impact of such measures on the Agri-Food Sector.
I would also note that any tax introduced would have to comply with Article 110 of the Treaty on the Functioning of the European Union, which prohibits Member States imposing internal taxation of any kind on products of another Member State in excess of that imposed directly or indirectly on similar domestic products. Furthermore, it is a requirement that a Member State must notify the Commission under Directive 98/34/EC ('the technical standards Directive') of a draft law to provide for the aforementioned taxes. Upon notification, the Commission and other Member States may raise concerns as to whether the draft law is a potential barrier to trade. In addition, such taxes may give rise to State aid concerns. While not insurmountable, these are matters which policy makers must be cognisant of when designing a new tax or levy.
The Deputy may be aware that Norway, France, and Finland currently impose a volumetric tax on sugar sweetened drinks. A number of other non-European Economic Area states impose special ad valorem taxes on soft drinks, including Norway, Australia, and Mexico.
At this time, there is not enough publically available information to estimate the yield from a volumetric tax on added sugar, added salt, and saturated fats.
72. Deputy Eric Byrne asked the Minister for Finance the impact for Ireland’s economy generally, and in terms of reducing Ireland’s debt-to-gross-domestic-product ratio, and the Government’s deficit, if public expenditure had been increased in budget 2016 by €12.8 billion and taxes had been raised by €16.4 billion instead of the measures adopted in budget 2016; and if he will make a statement on the matter. [39827/15]
View answer73. Deputy Eric Byrne asked the Minister for Finance the impact for Ireland’s economy generally, and in terms of reducing Ireland’s debt-to-gross-domestic-product ratio, and the Government’s deficit, if public expenditure had been increased in budget 2016 by €8.7 billion and taxes had been raised by €8.8 billion instead of the measures adopted in budget 2016; and if he will make a statement on the matter. [39828/15]
View answerI propose to take Questions Nos. 72 and 73 together.
The general government deficit and debt figures for 2016, as per Budget 2016, are currently projected to be -€2.8 billion (-1.2% of GDP) and €207.1 billion (92.8% of GDP) respectively. The Deputy is asking what would be the impact should alternative levels of revenue and expenditure be introduced rather than the measures announced per Budget 2016. In order to assess the potential implications my Department has used data based on the no policy change figures published in the White Paper on Estimates of Receipts and Expenditure for the year ending 31 December 2016. The resultant impact on a purely iterative/accounting basis of the proposed alternative measures submitted by the Deputy in this Parliamentary Question are outlined in the table below.
|
- |
Option 1 |
Option 2 |
|
- |
2016 |
2016 |
|
White Paper 2016 General government balance (% of GDP) |
-0.8% |
-0.8% |
|
White Paper 2016 General government balance (€m) |
-1,858 |
-1,858 |
|
Proposed additional Expenditure (€m) |
-12,800 |
-8,700 |
|
Proposed additional Revenue (taxation) (€m) |
16,400 |
8,800 |
|
Projected General government balance (€m) |
1,742 |
-1,758 |
|
White Paper 2016 GDP (€m) |
222,514 |
222,514 |
|
Projected General government balance (% of GDP) |
0.8% |
-0.8% |
|
Difference in balance compared to Budget 2016 |
2.0% |
0.5% |
|
Estimated GG Debt based on White Paper (€bn) |
206.2 |
206.2 |
|
Projected GG Debt based on Options 1 & 2 (€bn) |
202.6 |
206.1 |
Source: Department of Finance
From this table it is apparent that option 1 would improve the general government balance (GGB) in 2016 compared to Budget 2016 by 2.0% of GDP while option 2 would improve the GGB by 0.5% of GDP. Assuming that the improvement to the balance did in fact arise as indicated, there would, all other things being equal, be a reduction in the borrowing requirements for the year leading to a comparable decrease in overall general government debt. Under option 1, no borrowing would be required to fund the Exchequer, and, assuming the surplus is used to repay debt, projected debt levels would be reduced by €4.5 billion compared to the Budget 2016 forecast. Under option 2, there would be a reduction in the deficit of approximately €1 billion compared to Budget 2016, thus reducing the projected debt by a similar amount. The nominal debt for 2016 under option 1 would then be circa €202.6 billion and approximately €206.1 billion for option 2 compared with €207.1 billion forecast in Budget 2016. Based on the GDP levels in the White Paper, the debt levels would represent an improvement on the Budget 2016 forecasts of the order of 2.0% of GDP and 0.5% of GDP respectively.
It should be noted that the Gross Domestic Product presented in the table is the same as that utilised in the White Paper and consequently does not take into account the potentially numerous second round economic effects that would arise from the alternative expenditure and revenue aggregates proposed by the Deputy in his two questions. Forecasting the overall impact on GDP, which could be significantly negative, would be a major task, which my Department is not in a position to carry out. For instance, much would depend on the precise composition of the revenue and expenditure measures, and these have not been clarified.
74. Deputy Pearse Doherty asked the Minister for Finance the amount paid by each eligible bank under the bank levy to date; and if he will make a statement on the matter. [39842/15]
View answerSection 126AA of the Stamp Duties Consolidation Act 1999 applies to holders of banking licences and building societies in 2011 that were obliged to collect and pay over more than €100,000 in Deposit Interest Retention Tax (DIRT) in that year. The section provides for a bank levy, in the form of a stamp duty, equal to 35% of the amount of DIRT (known as the "assessable amount") paid in 2011. The bank levy applies for a three year period covering the years 2014 to 2016.
The due dates for the submission of a statement showing the assessable amounts and for the payment of the bank levy on the assessable amounts are as follows:
2014: 20th October 2014
2015: 20th October 2015
2016: 20th October 2016
The total amount of the bank levy paid in respect of 2014 and 2015 is €308,789,486.
For reasons of taxpayer confidentiality, I am unable to provide details of payments made by individual financial institutions.
I announced in my Budget 2016 statement that I propose to extend the bank levy to 2021, subject to a review taking place of the methodology used to calculate the levy. This measure will bring in an additional €750 million over the period; a very significant additional contribution to the Exchequer.
75. Deputy Michael McGrath asked the Minister for Finance the number of completed mortgage switches undertaken in the Irish market in each month in 2015 to date; and if he will make a statement on the matter. [39876/15]
View answerI am informed by the Central Bank that it does not publish information on the basis sought by the Deputy.
However, the Banking and Payments Federation Ireland (BPFI) publishes a quarterly report on the Irish Mortgage Market. The latest report covers the periods up to Q2 2015. It contains the following data in relation to re-mortgages which it defines as "a loan which is drawn down by one lender to refinance an existing mortgage with another lender. This may or may not include further equity release".
Q1 2015- 172
Q2 2015- 240
This report is available at http://www.bpfi.ie/wp-content/uploads/2015/08/BPFI-Mortgage-Market-Profile-Q2-2015-FINAL.pdf.
The BPFI estimates that the data in the report covers well in excess of 95% of the mortgage market.
I have said before that I would encourage borrowers to contact their bank to see what is available to them in their circumstances or consider moving to another bank if the offer is not satisfactory. I would also point out that lenders have put measures in place to attract new customers who might switch from existing lenders.
76. Deputy Michael McGrath asked the Minister for Finance if he has formally communicated to Bank of Ireland his views on restrictions it plans to place on in branch cash transactions; and if he will make a statement on the matter. [39972/15]
View answerThe Deputy will be aware that I, in my role as Minister for Finance, have no direct function in the relationship between the banks and their customers. I have no statutory function in relation to the commercial decisions made by individual institutions at any particular time and these are taken by the board and management of the relevant institution.
Notwithstanding this, I have expressed my dissatisfaction in relation to the recent changes that Bank of Ireland intends to implement. I have made a public statement in this regard the full text of which is:
The changes announced by Bank of Ireland today around in-branch lodgements and withdrawals is a commercial decision for the bank. However, I consider these changes surprising and unnecessary. I note that the bank have given a commitment to assist more vulnerable customers in their branches. I expect the bank to fully honour this commitment and ensure that customers will be facilitated through the existing arrangements where required. I would welcome a clarification form Bank of Ireland on the issue.
Following this, Bank of Ireland made the following press statement:
Bank of Ireland has always worked to support the evolving banking needs of our customers, developing online and telephone banking services to complement our nationwide branch network. Bank of Ireland also continues to maintain the most extensive network of branches in Ireland, whilst competitors have reduced and continue to reduce their branch footprint.
In addition, the Bank has always worked to support the needs of our diverse customer base including vulnerable customers.
Bank of Ireland would like to confirm that vulnerable customers, together with those elderly customers who are not comfortable using self-service channels or other technology solutions, will be assisted by branch staff to use the available in-branch services.
77. Deputy Michael McGrath asked the Minister for Finance the current status of a proposal by credit unions to offer mortgages, payment cards, and other banking services; and if he will make a statement on the matter. [39973/15]
View answerMy role as Minister for Finance is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.
The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members.
The Credit Union Act, 1997 (the 1997 Act) and related statutory instruments (which set out services exempt from additional services regulations) set out the services that a credit union may provide to its members. Where a credit union wishes to provide services to its members, in addition to the services that are provided for under the 1997 Act, an application may be made to the Central Bank for approval to provide such additional services in accordance with the provisions set out in sections 48-52 of the 1997 Act.
The Central Bank has informed me that since 2010 it has received less than 10 applications for approval of additional services under sections 48-52 of the 1997 Act. These have all been received in the last 15 months and are currently at various stages in the approval process, with a number having been fully approved.
I have been further informed by the Central Bank that it is, in principle, supportive of credit unions developing additional services and is open to working with the credit union sector to ensure that prudent and appropriate development can be facilitated within the regulatory framework. In its role of supporting the sustainable and prudent development of the sector, the Central Bank wants to ensure that proposed changes to the business model are prudently structured and implemented. Given a number of areas identified in feedback received on CP88 and through other engagements with sector stakeholders the Central Bank will engage with interested parties to participate in focused dialogue in the coming months. Dialogue will initially focus on:
- the services credit unions wish to develop in the areas of card services and payment accounts; and
- credit unions' aims regarding longer term lending including further developments on the provision of mortgages to members.
Also, the Annual Information Seminars for 2015 will also take place from mid to late November and these will also provide an opportunity for the Central Bank to engage with individual credit unions and hear their views on business development.
The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall and it is absolutely determined to continue to support a strengthened and growing credit union movement.
78. Deputy Michael McGrath asked the Minister for Finance his plans to remove the restriction on credit unions banning them from lending more than 10% of their loan books for more than ten years; and if he will make a statement on the matter. [39974/15]
View answerMy role as Minister for Finance is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.
The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members. The imposition and removal of lending restrictions is a matter for the Central Bank.
Section 35 of the Credit Union Act, 1997 contains lending limits that apply to all credit unions, including a limit on the maximum outstanding liability to an individual member, and limits on the percentage of the loan book that can be outstanding for periods exceeding both five years and ten years. Under these provisions credit unions can lend up to 30% of their loan book over five years and up to 10% of their loan book over 10 years and may apply to the Central Bank for an extension to their longer term lending limits.
I have been informed by the Central Bank that as set out in the Feedback Statement on CP88 under the Credit Union Act 1997 (Regulatory Requirements) Regulations 2015, credit unions will continue to be allowed to lend up to 30% of their loan book over five years and up to 10% of their loan book over 10 years, subject to a maximum maturity of 25 years. In addition, credit unions can apply to the Central Bank for an extension to their longer term lending limits (up to 40% of their loan book over 5 years and up to 15% of their loan book over 10 years). Approval will be subject to conditions set by the Central Bank. As indicated in CP88, the Central Bank is reviewing the conditions that currently apply for credit unions to be approved to extend their longer term lending limits. Data from the September 2015 Prudential Return indicates that lending over 10 years in credit unions accounts for 2.18% of total loans in the credit union sector.
In February 2015 the Central Bank commenced a lending restriction review initiative, whereby credit unions that are subject to a lending restriction, but are satisfied that they have made the necessary improvements and have embedded these improvements in robust risk sensitive lending practices, could apply for a review of their lending restriction. The closing date for receipt of applications to review lending restrictions under this initiative was 30 September 2015. 59% of applications received have been reviewed by the Central Bank. Of those which have been fully reviewed, 83% have had their lending restriction lifted and are now operating under the board's stated credit risk appetite. Approximately 40% of credit unions that applied, submitted their application in September and these applications are currently under review.
Given a number of areas identified in feedback received on CP88 and through other engagements with sector stakeholders the Central Bank will engage with interested parties to participate in focussed dialogue in the coming months. One area of initial focus will be credit unions' aims regarding longer term lending including further developments on the provision of mortgages to members.
The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall and it is absolutely determined to continue to support a strengthened and growing credit union movement.
