Written Answers Nos. 131-147
131. Deputy Pearse Doherty asked the Minister for Finance the gross and net fiscal space available to the Government for each year from 2016 to 2021 if the structural balance improvement is maintained at 0.6 per cent per year during this period. [2734/16]
View answerUnder the Stability and Growth Pact (SGP), Ireland is obliged to be at or make rapid progress towards its Medium Term Objective (MTO) of a balanced budget in structural terms. This obligation also stems from the Fiscal Compact, to which Ireland acceded following the referendum in 2012, and has also been enshrined in domestic legislation through the Fiscal Responsibility Act 2012.
As Ireland is not yet at its MTO, it must improve its structural balance by more than 0.5% of GDP per annum until the MTO is reached. In the Country Specific Recommendations (CSRs) adopted by the Council on 14th July 2015 an improvement of 0.6% was stipulated for 2016.
The required adjustment for 2017 will be set in the CSRs to be adopted by the Council next July on the basis of a European Commission recommendation. The Commission has clarified over the last year the basis on which it will make its recommendation for an appropriate improvement in the structural balance for each Member State. Its analysis takes account of the debt-to-GDP ratio, the size and sign of the output gap and whether the economy is growing faster than potential. The matrix describing the required structural adjustment based on these criteria has been published by the Commission and is outlined in the following table. The rationale for the differentiated approach is to better align the required fiscal adjustment with the prevailing economic environment.
Matrix for specifying the annual fiscal adjustment towards the Medium-Term Objective (MTO)
|
- |
Required annual fiscal adjustment* |
||
|
% GDP |
Condition |
Debt below 60 and no sustainability risk |
Debt above 60 or sustainability risk |
|
Exceptionally bad times |
Real growth < 0 or output gap < -4 |
No adjustment needed |
|
|
Very bad times |
-4 output gap < -3 |
0 |
0.25 |
|
Bad times |
-3 output gap < -1.5 |
0 if growth below potential, 0.25 if growth above potential |
0.25 if growth below potential, 0.5 if growth above potential |
|
Normal times |
-1.5 output gap < 1.5 |
0.5 |
> 0.5 |
|
Good times |
output gap 1.5 |
> 0.5 if growth below potential, 0.75 if growth above potential |
0.75 if growth below potential, 1 if growth above potential |
Accordingly the minimum level of the required improvement in the structural balance is set for each Member State in the CSRs addressed to them by the Commission and Council in accordance with the above matrix of requirements. So a 0.6% of GDP annual improvement would only be appropriate if Ireland's output gap falls into 'Normal times' in the above table. However, this may not be the case in any given year. The Deputy should also note that the structural balance does not have to be improved each year once the MTO has been achieved.
The fiscal space, as set out in Tables A8 and A9 of the Budget 2016 book, is calculated using the expenditure benchmark as this is a better guide for fiscal planning purposes in Ireland. The walk from gross to net fiscal space, which is set out in Table A9, takes account of planned expenditure on demographics, the Public Capital Plan and the Lansdowne Road Agreement as well as the possibility of not indexing the taxation system, which would count as a discretionary revenue measure if the Government of the day so decided.
The calculation of fiscal space is only affected by the structural balance in two circumstances. The first is if compliance with the expenditure benchmark does not also result in the required annual improvement in the structural balance, as discussed above. If this is the case, then use of the available fiscal space under the expenditure benchmark may have to be adjusted. However, over-achievement of the annual improvement in the structural balance does not change the amount of fiscal space available under the expenditure benchmark.
The second circumstance is that in the year following the achievement of the MTO, the convergence margin used in the calculation of fiscal space under the expenditure benchmark ceases to apply. A document outlining the 'Forthcoming Revisions to the Medium Term Budgetary Objective' was published on my Department's website on the 21st January 2016. This explains that the European Commission is currently updating the minimum Medium-Term Objectives (MTOs) of Member States in line with the three-year evaluation cycle. Due to the improvement in Ireland's debt ratio and other factors, it is likely that the MTO for Ireland (covering the 2017-2019 budgetary cycles) might be slightly less stringent than is currently the case. Staff in my Department estimate that, following technical discussions on the matter, a structural deficit of approximately -0.5 per cent of GDP rather than the current target of 0.0 per cent will need to be attained. Should the MTO be readjusted to such a level, thus making it more likely that the MTO will be achieved earlier than currently projected, there would be additional fiscal space in the year after the MTO is achieved. The resulting increase in fiscal space is estimated to be in the region of €1 to €1.5 billion.
New fiscal space projections which will take account of updated assumptions, as well as any update to the MTO, will be in the Stability Programme Update 2016 which will published in April 2016.
132. Deputy Charlie McConalogue asked the Minister for Finance when he will issue a further reply to an earlier reply (details supplied); and if he will make a statement on the matter. [2773/16]
View answerA reply to the correspondence in question is in hand and I expect that it will be issued very shortly.
133. Deputy Michael Healy-Rae asked the Minister for Finance the status of a levy and retired staff (details supplied) of the Electricity Supply Board; and if he will make a statement on the matter. [2776/16]
View answerIt is not the case, as suggested in the details supplied, that any part of the stamp duty levies on private pension funds will be due for payment in 2016. The payment date for the final part of the final 0.15% levy was the 25th of September 2015.
In the details supplied it is suggested that the State should return money collected through the levies "in line with the return of money to retired public servants". While public service pensions are not fund-based and so have not been subject to the pension fund levies, serving and retired public servants have been subject to the Pension Related Deduction (PRD) and Public Service Pension Reduction (PSPR) as appropriate, reducing, respectively, salaries and pension payments. While changes to the PRD and PSPR are proposed to start from this year which will result in reductions in the PRD and the PSPR, particularly affecting public servants on low and middle incomes and retired public servants in receipt of low pensions, there is no provision for the repayment of PRD or PSPR deductions which have already been made.
It is not necessary, as suggested, to rescind the legislation which enabled the levies as it is explicitly time-bound and no longer applies.
134. Deputy Pearse Doherty asked the Minister for Finance if his reply to Parliamentary Question No. 208 of 17 November 2015 is still accurate or if the figures contained within it have in any way been recalculated; and if he will make a statement on the matter. [2733/16]
View answerFurther to the reply provided to parliamentary question 208 of the 17th of November 2015 I can confirm that the information contained within this response, which can be found in Tables A8 and A9 on pages C.50 and C.51 of the Budget 2016 book, is still accurate and the figures have not been re-calculated by my Department. However as explained in parliamentary question 208 of the 17th of November 2015 these amounts are not final and are underpinned by a number of assumptions which are likely to change over time.
The Deputy should note that since the publication of this document, the end-2015 Exchequer position has been published and there have been some developments concerning ongoing discussions with the European Commission regarding the States obligations in relation to attaining fiscal targets.
While the end-December 2015 Exchequer returns show that 2015 tax revenue was €3.3 billion ahead of expectations, there will be no consequent impact on the fiscal space available since it was generated by overall economic growth and buoyancy rather than through additional income generated via discretionary measures. Exchequer spending, which is the largest component of expenditure, was in line with Budget day projections and will have little impact on the availability of fiscal space.
A document outlining the 'Forthcoming Revisions to the Medium Term Budgetary Objective' was published on my Department's website on the 21st January 2016. This explains that the European Commission is currently updating the minimum Medium-Term Objectives (MTOs) of Member States in line with the three-year evaluation cycle. Due to the improvement in Ireland's debt ratio and other factors, it is likely that the MTO for Ireland (covering the 2017-2019 budgetary cycles) might be slightly less stringent than is currently the case. Staff in my Department estimate that, following technical discussions on the matter, a structural deficit of approximately -0.5 per cent of GDP rather than the current target of 0.0 per cent will need to be attained. Should the MTO be readjusted to such a level, thus making it more likely that the MTO will be achieved earlier than currently projected, there would be additional fiscal space in the year after the MTO is achieved. The resulting increase in fiscal space is estimated to be in the region of €1-€1.5 billion.
New fiscal space projections which will take account of updated assumptions, as well as any update to the MTO, will be included in the Stability Programme Update 2016 which will published in April 2016.
135. Deputy Michael McGrath asked the Minister for Finance the amount paid to date in professional fees to named professional firms relating to the liquidation of the Irish Bank Resolution Corporation, including the amount paid to KPMG, in tabular form; the agreed rate charges by KPMG; how many KPMG staff are working on the liquidation; if the rates provide good value for money to the taxpayer; when the liquidation will conclude; and if he will make a statement on the matter. [2824/16]
View answerSlide 61 of the Special Liquidators Progress Update Report dated 12 March 2015 (which is available on the Department of Finance website at http://www.finance.gov.ie/sites/default/files/DOF_IBRC_Progress%20update%20report%20to%2031%20Dec%2014.pdf) details the costs of the liquidation for the period 7 February 2013 to 31 December 2014.
Total fees of €76m were paid to KPMG (KPMG Special Liquidator team: €71.4m and KPMG migration team: €4.6m) to 31 December 2014 of which approximately €4.5 million was recovered from NAMA. In addition a rebate of €5 million was agreed with KPMG following discussions at the request of the Minister.
KPMG rates are based on NAMA rate cards for the relevant services. This rate card was put in place following a competitive tender conducted by NAMA.
The NAMA rate card applicable for insolvency services is as follows:
Rate per hour (excluding VAT)
- Partner €295
- Director €260
- Associate Director €220
- Manager €190
- Senior Accountant €165
- Semi senior accountant €165
- Junior accountant €95
The number of staff working on the assignment has fluctuated over the course of assignment given various activity volumes as the loan sales progressed. The headcount requirement peaked at 330 staff from KPMG while there are currently c.100 full time equivalents from KPMG working on the special liquidation.
The Special Liquidators intend to provide an update on the winding up of Irish Bank Resolution Corporation Limited (in Special Liquidation) by way of their third progress update report in the first quarter of 2016. An update in respect of the fees paid to KPMG will be included in this report.
I am advised by the Special Liquidators that they have sought to minimise legal fees to the greatest extent possible. Irish Bank Resolution Corporation Limited (in Special Liquidation) conducted a competitive tender process in order to establish a panel of legal firms. Reduced and/or capped fees were included in the tenders. The Special Liquidators can confirm that the rates per the NAMA rate cards are reduced hourly rates or fixed costs for specific pieces of work. The Special Liquidators can also confirm that they have successfully negotiated fee rebates from many of the legal firms. The Special Liquidators cannot disclose information on the particular rates being charged as this is confidential to each of the legal firms.
While it is too early at this stage to advise on the likely timeframe for conclusion of the liquidation of IBRC, I can confirm that the liquidation of IBRC can only be concluded once all assets are realised, all creditor claims have been resolved (including those subject to litigation) and all surplus funds have been distributed to creditors. This process is ongoing.
136. Deputy Michael McGrath asked the Minister for Finance the amount paid by the National Treasury Management Agency and the National Asset Management Agency for public relations in 2015; the amount paid to each firm; the rates that apply; when the main public relations contracts for the two agencies are up for renewal; if the contract provides value for money for the two agencies; and if he will make a statement on the matter. [2825/16]
View answerThe National Treasury Management Agency (NTMA) have advised me that the overall amount paid for PR services by the NTMA and all of its associated business areas in 2015 (ex VAT) was €177,959 (of which €79,750 was charged to NAMA).
The NTMA's communications team is supported by an external service provider, Gordon MRM, (appointed following a public procurement process). This service, which includes out-of-hours contacts for the media, provides support across all of the NTMA's business areas: Funding and Debt Management, Ireland Strategic Investment Fund, National Development Finance Agency, State Claims Agency and NewERA. It also provides support to the National Asset Management Agency (NAMA).
In September 2012 the NTMA tendered for the provision of these services. Following the tender evaluation process the NTMA awarded a contract to Gordon MRM.
The current contract, which commenced in January 2013, is based on a fixed fee (rates do not apply). The contract was for a three year period with the option to extend by two years. The contract is up for renewal in January 2018.
NAMA draws on the NTMA's shared services in a number of areas including its outsourced press function. NAMA reimburses the NTMA in respect of the costs of these services attributable to NAMA.
137. Deputy Patrick O'Donovan asked the Minister for Finance if a paper application for tax relief on health expenses for a person (details supplied) in County Wexford will be processed following correspondence dated 10 December 2015; if the correct name will be used; when the relief will be processed; and if he will make a statement on the matter. [2902/16]
View answerI am advised by the Revenue Commissioners that while an on-line application is a quicker, easier and more secure way of making a claim for tax relief, a paper application from the person concerned will be processed if it is sent to Revenue.
The correspondence dated 10 December 2015 was an information letter to advise individuals that they could avail of an online facility to make future claims. Revenue has no record of any current claim for medical expenses relief from the person concerned.
If the person concerned wishes to have any aspect of her personal details as recorded by Revenue changed, she should make contact with, and provide the specific details to her local Revenue District.
138. Deputy Pearse Doherty asked the Minister for Finance why a document (details supplied) was not furnished the Banking Inquiry; and if he will make a statement on the matter. [2923/16]
View answerThe Department deployed significant resources in order to meet its obligations arising from the Banking Inquiry. The Department received 2 Directions covering 74 separate categories of records. Over a hundred thousand records were searched and almost 8,000 records were provided to the Inquiry.
The record referred to by the Deputy was identified as part of this search process, however, it was considered that it did not fall within the terms of the Directions.
139. Deputy Róisín Shortall asked the Minister for Finance to rectify an anomalous tax situation for a person (details supplied) in Dublin 9. [3011/16]
View answerI am advised by the Revenue Commissioners that section 114 of the Taxes Consolidation Act 1997 provides for a tax deduction in respect of travel expenses necessarily incurred in the performance of the duties of an office or employment. Subject to certain exceptions explicitly provided for in legislation, expenses incurred in travelling to or from work do not qualify for a tax deduction as such travel is not part of the performance of the duties of the employment or office. Expenses incurred in travelling from one place of work to another place of work in the course of the duties of an office or employment may, subject to the particular circumstances, be deducted for tax purposes. This approach to the tax treatment of expenses of travel for office holders and employees is long established and there was no change to this treatment in 2015.
The specific scenario referred to by the Deputy was included in one of the submissions made to my Department in 2015 in response to the Consultation on Expenses of Travel and Subsistence for Employees and Office Holders. The matter will be considered as part of the ongoing review of those submissions.
140. Deputy Clare Daly asked the Minister for Finance if he has considered the Local Property Tax being levied at a lower rate for single occupants of homes, given that in Britain, for example, single persons pay 25 per cent less in Property Tax in recognition of the fact that their living expenses are not hugely less than a two-person household, although they are surviving on a single income; and if he will make a statement on the matter. [3049/16]
View answerThe Government decided a universal liability to the Local Property Tax (LPT) should apply to all owners of residential property. Limiting the exemptions available allows the rate to be kept low for those liable persons who do not qualify for an exemption. The current central rates, of 0.18% on values up to €1 million, where LPT applies at the midpoint of a valuation band, and 0.25% on any portion of the value over €1 million, where no banding applies, are significantly lower than the rates of property tax in most other countries.
There is no relief or adjustment to the charge to LPT based on the number of occupants in a property. As a matter of Government policy, and in order to keep the rate of the tax low, the Government agreed that reliefs should be targeted at owner occupiers where there is inability to pay the tax.
The system of deferrals provided for in the Finance (Local Property Tax) Act 2012 (as amended) is more targeted at cases of need than a relief based on single occupancy of the property. A deferral is a relief in that it enables persons who are not currently in a position to pay the tax to postpone payment until such time as their circumstances change, or until the property is sold or transferred. There is particular provision for deferral of LPT for income stressed households who are meeting high levels of mortgage interest. This applies to single occupancy households as well as those with multiple occupants.
141. Deputy Terence Flanagan asked the Minister for Finance the number of small self-administered pension arrangements (details supplied) in existence; and if he will make a statement on the matter. [3070/16]
View answerA pension scheme is generally regarded as a Small Self Administered Scheme (SSAPS) where it has less than 12 members and its fund is not fully administered and insured by a life office. Irrespective of the number of members involved, a scheme will also be regarded as small at any time when 65% or more of the value of the investments of the scheme relate to the provision of benefits for "20% directors" of the sponsoring employer(s) and their spouses, civil partners and dependants. A "20% director" is someone who, directly or indirectly, at any time in the preceding 3 years owned or controlled more than 20% of the voting rights in the employer company or in the parent company of the employer company.
In order for the SSAPS to be an exempt approved scheme it must appoint a Revenue approved Pensioner Trustee who has to give certain undertakings to Revenue in the prescribed form. These include a commitment not to consent to any action which is contrary to Revenue regulations; to supply annual accounts, periodic actuarial reports and any other information required by Revenue; and not agree to the termination of any scheme of which they are a Pensioner Trustee otherwise than in accordance with the terms of the approved winding up provisions.
In relation to the investment in property by a SSAPS, once the proposals meet certain conditions imposed by Revenue an investment of this nature is allowed. The Pensioner Trustees are fully aware of the conditions and these include the following:
- The vendor is at arm's length from the scheme and the employer including its directors and associated companies,
- The purpose of the acquisition is not for disposal or letting to the employer, including its directors and associated companies,
- Disposal of the property is on an arm's length basis,
- The scheme has sufficient liquid investments to ensure that the requirement to provide benefits, including ill-health and early retirement benefits can be met,
- Purchase of overseas property will only be permitted where there are appropriate arrangements in place to enable the Pensioner Trustee to maintain control of the asset to ensure that Revenue rules are complied with,
- A transaction which involves the scheme trustees directly in the acquisition and development of property with a view to its disposal will mean this investment will not constitute an investment exempt from taxation granted under the provisions of section 774 (2), Taxes Consolidation Act, 1997. In addition to these rules, there are also rules regarding self investment, which is the investment by the scheme in its sponsoring employer. In the case of a SSAPS the acquisition of property or other fixed assets from an employer is not allowed. Revenue does not hold specific information as to how many of these SSAPS have invested in property, however, once the conditions outlined above have been fulfilled the SSAPS can invest in commercial property. To date there are a total of 13,758 approved Small Self Administered Pension Schemes in existence.
142. Deputy Maureen O'Sullivan asked the Minister for Finance further to the announcement contained in his budget day speech on 14 October 2014, the date that Permanent TSB Bank will come within the remit of the Credit Review Office; if decisions made by Permanent TSB dating back to 14 October 2014 will be accepted and pursued by the office in respect of Permanent TSB; and if he will make a statement on the matter. [3131/16]
View answerI am informed by Permanent TSB (PTSB) that it formally launched its lending products for SMEs on 21 December 2015, having completed recruitment, training, development and pilot work over the period since the Minister's announcement on 14th October 2014. PTSB is working with the Credit Review Office (CRO) to put in place systems necessary to participate in the CRO appeals procedure which it expects to finalise by 31 March 2016. Once finalised, applications rejected from that date by PTSB will be eligible for review by the CRO.
I am also informed by PTSB that a borrower who has had their credit application previously rejected by the bank can formally reapply with relevant additional and up to date information. This will be considered as a new application and make it eligible for CRO assessment if refused after 31st March.
143. Deputy Michael McGrath asked the Minister for Finance the annual cost of indexing tax bands, credits and allowance across all tax headings in tabular form; and if he will make a statement on the matter. [3159/16]
View answerIt is not clear at what rate the Deputy is suggesting indexation, or to what extent this would apply across all taxes and duties. However, I am advised by the Revenue Commissioners that the Deputy may be interested to note the following in relation to indexation.
A Post-Budget 2016 Ready Reckoner is available on the Revenue Statistics webpage at http://www.revenue.ie/en/about/statistics/index.html. This Ready Reckoner shows a wide range of information, including the cost to the Exchequer of a 1% indexation of certain key elements of Income Tax and Universal Social Charge, as also set out in the following table. The following table looks at a number of different options with regard to indexation.
|
Cost of Indexation |
|
€ Million |
|
|
First Year |
Full Year |
||
|
Indexation at 1% |
Personal Tax Credits (incl. Home Carer's Credit) with rate bands |
76 |
103 |
|
Exemption limits, Personal Tax Credits with rate bands |
80 |
110 |
|
|
Earned Income Credit |
0.2 |
0.6 |
|
|
PAYE Credit, Exemption limits, Personal Tax Credits with rate bands |
101 |
136 |
|
|
USC rate bands |
11 |
16 |
These figures are estimates from the Revenue tax forecasting model using latest actual data for the year 2013, adjusted as necessary for income, self-employment and employment trends in the interim. They are estimated by reference to 2016 incomes and are provisional and may be revised.
I am further advised by Revenue of the following:
- A 1% indexation of CAT thresholds would imply a full year cost of approximately €3 million.
- A 1% indexation of the CGT annual exemption would imply a full year tax cost of approximately €0.1 million.
- A 1% indexation of VAT thresholds would imply an estimated €3.4m cost per annum.
144. Deputy Jim Daly asked the Minister for Finance if the Revenue Commissioners will cease pension deductions when the 0.6 per cent pension levy is discontinued; and if he will make a statement on the matter. [3160/16]
View answerI announced in my Budget 2014 speech that the original 0.6% stamp duty levy on private pension funds introduced in 2011 to fund the Jobs Initiative would be abolished after 2014 and that levy no longer applies. I did, however introduce an additional levy on pension funds at 0.15% for 2014 and 2015. I did this to, among other things, continue to help fund the Jobs Initiative. I confirmed in my Budget 2015 speech that the additional 0.15% levy would expire at the end of last year and this has now happened. As both levies have ceased no more payments will be due in respect of them.
The details supplied include correspondence outlining the assertion that the reduction made to an individual's pension cannot be reversed. The chargeable persons for the pension fund levies are the trustees or other persons (including insurance companies) with responsibility for the management of the assets of the pension schemes or plans. The payment of the levies is treated as a necessary expense of a pension scheme and the trustees or insurer, as appropriate, are entitled, where they decide to do so, to adjust current or prospective benefits payable under a scheme to take account of the levies.
It is up to the trustees to decide whether and how the levies should be passed on and who should be impacted and to what extent, given the particular circumstances of the pension schemes for which they are responsible. While the final levy expired at the end of 2015 the manner in which the trustees choose to pass it on may entail a longer term but lesser reduction in pension payments to retired members than would have been the case if the reductions were made over the temporary period when the levies applied. However, should the option of reducing scheme benefits be taken, in no case may the reduction in an individual member's or class of member's benefits exceed the member's or class of member's share of the levies.
145. Deputy Jim Daly asked the Minister for Finance in the lifetime of this Government, the number of proposals managerial staff in any agency or managerial body under his remit put forward, to alter the roll-out of public services which were delayed, postponed or abandoned as a result of non-cooperation by trade union representatives; and if he will make a statement on the matter. [3173/16]
View answerIn response to the Deputy's query, I am informed by the bodies under the aegis of my Department that during this period their managerial staff did not put forward proposals resulting from the non-cooperation by trade union representatives to alter the roll-out of public services which were delayed, postponed or abandoned.
146. Deputy Patrick O'Donovan asked the Minister for Finance the cost of increasing the Home Carer's Tax Credit from €1,000 to €1,650 per year, and of increasing the Home Carer's income threshold to €10,500 per year; and if he will make a statement on the matter. [3185/16]
View answerI am informed by the Revenue Commissioners that the estimated first and full year cost to the Exchequer of increasing the Home Carers credit to €1,650 and at the same time increasing the Home Carer's income threshold to €10,500 is in the region of €33 million and €46 million respectively.
These figures are estimates from the Revenue tax forecasting model using latest actual data for the year 2013, adjusted as necessary for income, self-employment and employment trends in the interim. They are estimated by reference to 2016 incomes and are provisional and may be revised.
147. Deputy Patrick O'Donovan asked the Minister for Finance the cost of abolishing the Universal Social Charge on incomes below €80,000, per year, and of applying a 5.5 per cent rate on incomes in excess of €80,000 per year; and if he will make a statement on the matter. [3187/16]
View answerI am informed by the Revenue Commissioners that the estimated first and full year cost to the Exchequer of abolishing the Universal Social Charge (USC) on all incomes under €80,000 and of applying a single USC rate of 5.5% on all gross income in excess €80,000 per annum is in the order of €2,176 million and €3,115 million respectively.
These figures are estimates from the Revenue tax forecasting model using latest actual data for the year 2013, adjusted as necessary for income, self-employment and employment trends in the interim. They are estimated by reference to 2016 incomes and are provisional and may be revised.
