Wednesday, 18 Nov 2015

Written Answers Nos. 28 - 33

Tax Credits

Questions (28)

Thomas Pringle

Question:

28. Deputy Thomas Pringle asked the Minister for Finance his plans to address the issue of single parents who reside in this jurisdiction, who are not in receipt of child benefit and whose families reside in Northern Ireland, but who cannot access the single person child carer tax credit; if he will recognise the value and costs of shared parenting across the Border in Ireland by extending the scheme to parents living here; and if he will make a statement on the matter. [40374/15]

Written answers

Minister for Finance

The Single Person Child Carer Credit (SPCCC) is provided for in Section 462B of the Taxes Consolidation Act 1997 and is available to a parent or a person, defined as the "primary claimant", who has custody of and maintains a child who is living with him or her. The primary claimant may, if he or she so wishes, relinquish it to a "secondary claimant" with whom the child resides for at least 100 days in the year.

In relation to families living in Northern Ireland, I would draw the Deputy's attention to the fact that, in order to qualify for any credit provided for in the tax code of the State, an individual has to be within the charge to tax in the State. A person who is resident in Northern Ireland will not, in general, have an entitlement to the tax credit in question and as a consequence will not be in a position to relinquish such a credit to any secondary claimant who may be resident in the State.

In the majority of cases entitlement to the single person child carer credit is not in any way dependent on the payment of child benefit under Part 4 of the Social Welfare Consolidation Act, 2005. In allocating the SPCCC, the person who receives the child benefit payment was used as the initial indicator by the Revenue Commissioners to identify the individuals most likely to qualify for the new credit, but it is important to point out that in the majority of cases the child benefit payment is not the determining fact in deciding who can claim the new credit. The credit will in the first place go to the person who cares for the child for most of the year. However, subsection 2(a) of section 462B provides for the particular circumstance where a child is the subject of a court order relating to custody and under that order the child resides with each parent for an equal part of the year of assessment. In those circumstances the subsection provides that the primary claimant is determined as the parent who is in receipt of a child benefit payment.

However, as I have already noted, where the primary claimant is outside of the charge to Irish tax the question of entitlement to the credit does not arise.

Rent Controls

Questions (29)

Richard Boyd Barrett

Question:

29. Deputy Richard Boyd Barrett asked the Minister for Finance his role and input in the recent discussions around controls, regulations and new initiatives in the rental and housing market; and if he will make a statement on the matter. [40379/15]

Written answers

Minister for Finance

On Tuesday 10 November last, Minister Kelly and I announced the Rent Certainty and Housing Supply package. The policies that we announced were the culmination of analysis on the part of our two Departments as well as other Departments, including the Department of Public Expenditure and Reform. The time taken in formulating the package reflects the complexity of the issues affecting the housing market and importance of developing effective policy interventions.

The package includes a number of targeted and time-bound initiatives that seek to overcome some of the bottlenecks that are inhibiting housing supply. Given the pressing need to tackle these problems, the set of measures included in the package will be in place by January 2016.

In terms of specific actions intended to increase housing supply, the package includes:

- A targeted rebate of development contributions for housing supplied under certain price levels in Dublin and Cork;

- An agreement by the Irish Strategic Investment Fund (ISIF) to examine funding for housing infrastructure on a case-by-case basis;

- The introduction of New National Apartment Planning Guidelines which should reduce the cost of apartment buildings in Dublin by around €20,000 per unit; and

- A review of the operation of Strategic Development Zones to enable swifter adjustments that meet market requirements.

To address the issue of rent stability, rent reviews will be extended from 12 months to 24 months for a period of 4 years. In developing these proposals, officials were cognisant of the international evidence on the effects of rent controls and their potential impact on investment. In this regard, the measure as set out ensures rents continue to be set by the market but will also provide a degree of rent stability for tenants in the short term as the market returns to equilibrium and housing supply increases. 

Another important measure contained in the package is the increase in the deduction available to landlords for mortgage interest repayments from 75% to 100% where they let to tenants in receipt of rent supplement or social housing assistance payments. 

This package complements those actions seeking to improve the housing market that have been implemented through Construction 2020 and the Social Housing Strategy, as well as the recent announcement by NAMA to target the delivery of 20,000 additional residential units before the end of 2020.

Credit Union Regulation

Questions (30)

Joan Collins

Question:

30. Deputy Joan Collins asked the Minister for Finance the impact the proposals from the Irish League of Credit Unions to invest €2 billion for social housing will have on the balance sheets of the banks; and if he will make a statement on the matter. [40351/15]

Written answers

Minister for Finance

The credit union sector is aware of the need to consider ways of increasing its income and developing its business model. I am pleased that this topic is being seriously considered by the sector and that various options are being explored. My Department has received a number of such proposals. While the Department of the Environment, Community and Local Government is the Department primarily responsible for the formulation and implementation of policy and for the preparation of legislation in relation to housing, the proposal recently received from the Irish League of Credit Unions in relation to social housing funding is currently being examined by my officials. This proposal is at a very early stage of analysis. I understand however, that the proposal contains various examples of investment levels, of which the amount of €2bn is one example.

As per their respective H1 2015 financial statements, the combined funding from all sources at AIB and BOI totalled c. €186bn. Any outflows that may arise as a result of implementing such a proposal would therefore not significantly impact on the balance sheets of those banks.

Credit Union Regulation

Questions (31)

Joan Collins

Question:

31. Deputy Joan Collins asked the Minister for Finance his views on lifting the crude and inflexible lending restrictions imposed on credit unions. [40386/15]

Written answers

Minister for Finance

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

The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members. As such the imposition of lending restrictions is a matter for the Registrar who recognises the need for credit unions to grow income as a requirement for sector viability and for the need for credit unions to ensure that they are in a position to grow their income from their traditional lending business.

I have been informed by the Central Bank that it has been necessary to put lending restrictions in place in credit unions where there are regulatory concerns and resultant risk to members' savings.

The majority of lending restrictions in place still enable credit unions to lend amounts in the range of €10,000 to €30,000 and the lending restrictions are reviewed on a regular basis to determine whether or not they are still set at appropriate levels.

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.

The Central Bank further informs me that 59% of applications received have been reviewed. Of the applications which have been fully reviewed, 83% have had their lending restriction lifted and are now operating under the board's stated credit risk appetite. c.40% of credit unions that applied made their application in September. These applications are currently under review.

This review has reduced the number of credit unions with lending restrictions as currently approximately 39% of credit unions have a lending restriction compared with 52% at the start of the review process.

As indicated in the Central Bank consultation paper CP88, where credit unions can demonstrate improvements in their credit risk management practices in line with strengthened regulatory framework, it is anticipated that the use of credit union specific lending restrictions as a regulatory tool will reduce over time.

Mortgage Arrears Proposals

Questions (32)

Robert Troy

Question:

32. Deputy Robert Troy asked the Minister for Finance how he will tackle the high number of residential mortgages in arrears for more than two years; and if he will make a statement on the matter. [40358/15]

Written answers

Minister for Finance

Strenuous efforts have been made by this Government to deal with the issue of mortgage arrears. Central Bank data for Q2 2015 which was published on 2 September 2015 shows just how much progress has been made - the number of Principal Dwelling Home mortgages (PDH) in arrears continued to fall in Q2 2015, marking the eighth consecutive quarter of decline and a 22% reduction since Q2 of last year. PDH mortgage accounts in arrears over 90 days also continued to fall in Q2, the seventh consecutive quarterly decrease and also a reduction of 22% since Q2 2014.

In addition, the Central Bank September data shows the impact that has been made when borrowers engage with their lenders. Almost 120,000 PDH mortgages were classified as restructured at the end of June 2015 meaning that families can, by working with their financial institution, find a mechanism to make their mortgage commitments affordable.  Of these restructured accounts, 86.5% were deemed to be meeting the terms of their current restructure arrangement.

However the number of accounts in arrears for more than 720 days at 38,041 remains the biggest challenge. It is important to note, however, that the pace of increase in this category has reduced significantly in recent quarters with the increase in Q2 of this year being the smallest increase in this category to date.

The Deputy will be aware of the Code of Conduct on Mortgage Arrears (CCMA), which provides a strong consumer protection framework for co-operating borrowers to ensure that they are treated in a fair and transparent manner by their lender. Last May the Government also announced further measures to help indebted borrowers and to increase awareness of, and access to, the Insolvency Framework.  Building on action previously taken, the measures include:

- Reform of the Personal Insolvency framework to give Courts the power to review, and where appropriate, to approve insolvency deals that have been rejected by creditors;

- Enhancement of the role of the Money Advice and Budgeting Service (MABS).  Representatives of MABS and the Insolvency Service are now present at Court sessions to offer support and advice to borrowers who are the subject of repossession proceedings.

These new measures in conjunction with schemes which are already in place such as Mortgage to Rent can assist borrowers in their efforts to agree restructure arrangements with their lenders.

In conclusion, I must reiterate that active engagement by indebted borrowers with their lender is key to achieving a sustainable resolution, and I would urge borrowers in arrears, who have not already done so, to take that first step by contacting their lender directly or MABS for an independent assessment of their situation and advice on available resolution options.

Tax Code

Questions (33)

Denis Naughten

Question:

33. Deputy Denis Naughten asked the Minister for Finance the current processing time for a value added tax number; if he will address delays within the Revenue Commissioners in issuing these numbers; and if he will make a statement on the matter. [40349/15]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that in general applications for VAT registrations are processed within their ten day service standard for such applications. 

The Deputy will be aware that VAT registrations, used inappropriately, can represent a significant risk to the Exchequer. In that context, it is appropriate that Revenue carries out due diligence checks on the authenticity of all VAT registration applications. In those circumstances, I am advised that the service standard may not always be attained where follow-up inquiries on an application are required.