Wednesday, 18 Nov 2015

Written Answers Nos. 34-39

Disabled Drivers and Passengers Scheme

Questions (34)

Seán Kyne

Question:

34. Deputy Seán Kyne asked the Minister for Finance with regard to section 92 of the Finance Act 1992, as amended, section 134(3) of the Finance Act 1992, as amended and Statutory Instrument No. 353 of 1994 (Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994), as amended, if he will consider amending the legislation with regard to tax relief on vehicles used to transport persons with a disability to include those with visual impairment; and if he will make a statement on the matter. [40366/15]

Written answers

Minister for Finance

The Disabled Drivers and Disabled Passengers Scheme provides relief from Vehicle Registration Tax and VAT on the purchase of a specially adapted vehicle, a fuel grant related to the running costs of the vehicle and an exemption from Motor Tax to drivers and passengers with disabilities who fulfil the medical criteria required to qualify for the scheme. The Scheme and qualifying criteria were designed specifically for those with severe physical disabilities and are therefore necessarily precise. 

The Scheme represents a significant tax expenditure. Between the Vehicle Registration Tax and VAT foregone, and the assistance with fuel costs used by members of the Scheme, based on provisional figures the Scheme represented a cost of €48.6 million to the Exchequer in 2014, an increase of €5.1 million on the 2013 cost. This figure does not include the revenue foregone to the Local Government Fund in respect of the relief from Motor Tax provided to members of the Scheme.

I recognise the important role that the Scheme plays in expanding the mobility of citizens with disabilities. However, in the still challenging fiscal environment and given the scale and scope of the Scheme, I have no plans to expand the medical criteria beyond those currently provided for in the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994.

Tax Credits

Questions (35)

Dara Calleary

Question:

35. Deputy Dara Calleary asked the Minister for Finance considering he is the lead Minister for the Action Plan for Jobs, why 173,000 self-employed persons will miss out on a new self-employed tax credit in 2016; the effect of this on encouraging entrepreneurism; and if he will make a statement on the matter. [37997/15]

Written answers

Minister for Finance

The Action Plan for Jobs is a whole of government, multi annual initiative which mobilises all Government Departments to work towards the objective of supporting job creation.

The figure of 173,000 quoted by the Deputy appears to be the difference between figures provided in answer to Parliamentary Questions No. 253 and 254 of 20 October 2015 in relation to the number of persons that might benefit from the possible introduction of a tax credit, similar to the PAYE tax credit for self-assessed persons.

I am advised by the Revenue Commissioners that the figure of 284,600 provided in answer to question 253 related to the possible extension of the €1,650 Employee Tax Credit to all non-PAYE cases including cases subject to tax under Schedule D, proprietary directors and assisting spouses and individuals whose primary income consists of investment income.  In addition, due to the manner in which income earners are categorised in Revenue's systems, the estimate included cases classed as Schedule D where most of their gross income is non-PAYE. Some of these cases may have been availing of the PAYE credit. The estimate did not take into account the ability of the credit to be fully absorbed.

The figure of 111,600 provided in answer to question 254, is the estimated number of individuals expected to benefit from the Earned Income Credit as introduced in Budget 2016.  This credit was specifically designed to benefit self-employed individuals who have an active trade or profession, and who do not have access to the PAYE credit.  This is therefore a smaller subset consisting of self-employed individuals having trading or professional income taxable under Cases I, II or III of Schedule D, including proprietary directors, and who do not have another source of PAYE income.

Where a person has both employment and self-employment income, a claim can be made for both credits but the maximum credit value available to each taxpayer is €1,650, being the maximum value of the PAYE credit.  This is in line with the functioning of the existing PAYE credit employees who work in two different employments are not entitled to claim two PAYE credits, for example.

Therefore all self-employed persons with an active trade or profession, who do not have access to the PAYE credit, should be in a position to claim the Earned Income Credit in 2016.

Tax Reliefs Costs

Questions (36)

Paul Murphy

Question:

36. Deputy Paul Murphy asked the Minister for Finance if his Department has estimated the cost to the Exchequer arising from changes to the recently announced reforms to the treatment of tax relief for landlords taking rent supplement tenants. [40385/15]

Written answers

Minister for Finance

As the Deputy will be aware, an overall package of measures has been agreed by Government in relation to the rental sector.

As part of that package, an amendment to the tax code is to be introduced that will allow an increase in the deduction available to landlords in respect of interest paid on qualifying loans when calculating rental profits.  As you are aware, in general a landlord is allowed a deduction of 75% of the interest paid on borrowed money used to purchase, improve or repair rented residential premises when calculating rental income.  It is proposed that the allowable deduction will be increased to 100% where the landlords commits to making the property available to tenants in receipt of social housing supports for a three-year period, subject to certain conditions.

The details of this measure are still being finalised between officials from my Department, the Revenue Commissioners and the Department of Environment, Community and Local Government.  I intend to bring forward the measure as an amendment to the Finance Bill at Report Stage, at which point I will be in a postion to provide an estimate of its cost.

Credit Union Regulation

Questions (37)

Paul Murphy

Question:

37. Deputy Paul Murphy asked the Minister for Finance if consideration has been given to a deferral of the implementation of the Consultation Paper 88 reforms in Credit Unions, given the concerns expressed by the credit union movement; and if he will make a statement on the matter. [40384/15]

Written answers

Minister for Finance

The Credit Union and Co-operation with Overseas Regulators Act 2012 (the "2012 Act" ) was signed into law by the President in December 2012.

It was agreed at that time that it would be neither practical nor feasible to commence the 2012 Act in its entirety in one fell swoop. Following on from that, an implementation timetable for the 2012 Act was devised in consultation with stakeholders, including credit union representative bodies.

Commencement of all sections of the 2012 Act has been aligned with the credit union financial year and the introduction of the underpinning Central Bank regulations, with a view to implementation of the 2012 Act in a coherent and cohesive manner. This has provided credit unions with the time necessary to ensure that the required processes and procedures are in place prior to implementation of each tranche.

I have met with the three credit union representative bodies and the perceived impact of the new regulations was discussed. It is my intention to commence the remaining sections of the 2012 Act on 31 December 2015 in line with the introduction of the regulations by the Registrar of Credit Unions.  These sections of the 2012 Act, when commenced will replace, amend or supplement existing sections of the 1997 Act.

As outlined in the Central Bank's feedback statement on CP88, as part of the consultation process I proposed that in the interests of clarity and fairness, credit unions are provided with details of the process of applying for a retention of savings above the limit amount of €100,000.  I have been informed by the Registry of Credit Unions that all credit unions have been contacted giving further information on its application criteria for the retention of savings in excess of €100,000.  The Registry of Credit Unions intends to engage with the representative bodies and to invite comments from them prior to finalisation of the application process. When the application process is finalised, the Registry will provide an application form and explanatory notes in order to assist credit unions. It is anticipated that application forms will be available during December 2015.  It is envisaged that applications will be accepted in the first quarter of 2016 and that applicant credit unions will be informed by the end of the second quarter of 2016 on the outcome of the process, which is well within the 12 month transitional period. Where a credit union has demonstrated that it meets the criteria, it will be in a position to retain members' savings in excess of €100,000 held at the commencement of the regulations.

I welcome the steps that have been taken to provide clarity for credit unions on the criteria for the retention of savings over €100,000 and also welcome the Central Bank proposed engagement with the representative bodies to seek their comments on the application process. 

The Central Bank has also informed me that it is committed to undertaking a review of the continued appropriateness of the savings limit, once the impact of the restructuring process can be assessed. It is envisaged that this review will commence within three years of the introduction of the regulations. My officials have asked the Central Bank to consider accelerating this review and this is under consideration by the Central Bank. The Central Bank has agreed to provide regular updates to my Department on developments in this matter.  

The Central Bank has further informed me that it has contacted all credit unions inviting them to attend upcoming information seminars being held around the country from 17 to 30 November. These seminars will provide credit unions with the opportunity to engage with the Central Bank  on the new regulations and to discuss development of the credit union business model, including any changes to the regulatory framework that might be required to facilitate those developments. 

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.

Credit Union Regulation

Questions (38)

Pearse Doherty

Question:

38. Deputy Pearse Doherty asked the Minister for Finance his plans to engage with the credit union movement before the commencement of the remaining element of the 2012 Credit Union and Co-operation with Overseers Regulators Act. [40340/15]

Written answers

Minister for Finance

The Government recognises the distinct and important role that credit unions play in Irish society and in the financial sector and it is committed, with the Central Bank, to achieving our vision of financially strong, well governed credit unions providing appropriate services to current and to future members.

I have met with the three main credit union representative bodies and have discussed with them their issues of concern surrounding the  perceived impact of implementing the regulations.  While I am very aware of  concerns raised by the credit union sector in relation to the proposed regulations, the implementation of regulations is a matter for the Registrar of Credit Unions at the Central Bank, in her role as independent regulator for credit unions. However, I have asked the Registrar of Credit Unions to consider the views of the credit union movement as regards the draft regulations and their implementation and come back to me before I commence the remaining sections of the Credit Union and Co-operation with Overseas Regulators Act 2012 on 31 December 2015, in line with the introduction of the regulations. These sections of the 2012 Act, when commenced, will replace, amend or supplement existing sections of the  Credit Union Act 1997.

Corporation Tax Regime

Questions (39)

Peadar Tóibín

Question:

39. Deputy Peadar Tóibín asked the Minister for Finance the specific causes of the large increase in the intake of corporation tax in 2015. [40345/15]

Written answers

Minister for Finance

The performance of Corporation Tax receipts has been unexpectedly strong in 2015. At end-October, cumulative receipts were €2.0 billion or just under 74 per cent higher than expected and up €1.8 billion or over 60 per cent in year-on-year terms.  

As the Deputy may be aware, approximately 80 per cent of Corporation Tax receipts are received from the multinational sector with the top ten tax paying groups accounting for over a third of corporation tax receipts. 

I am advised by the Revenue Commissioners that the over-performance is a result of a combination of reasons.  For example, around half of the €2.0 billion surplus against profile is attributable to a small number of large multinational companies.  The companies involved have advised the Revenue Commissioners that the strong performance in 2015, is primarily associated with improved trading conditions.  There are also some positive currency effects but these are not substantial in overall terms.  In addition, there has also been some timing factors.  For example, a number of payments profiled for November and December were received early and a number of large repayments that were expected to be made in October are still outstanding.    

While Corporation Tax receipts are concentrated in the multinational sector, it should be noted that the improvement is relatively broad based. In this regard, I am further advised by the Revenue Commissioners that there has been an increase of over 20 per cent in the number of companies paying between €100,000 and €5 million up to the end of October this year versus the same period last year.  This is reflected in the receipts which were also up by over 20 per cent from this category.