Written Answers Nos. 43-57
43. Deputy Brendan Smith asked the Minister for Finance his plans to exempt household fuel products from carbon tax in view of the difficulties for fuel merchants and small businesses in the Border counties; and if he will make a statement on the matter. [17517/16]
View answerI am aware of concerns that fuel traders in the border counties have expressed about the impact the carbon tax is having, and that the price differential with Northern Ireland for solid fuel could give rise to trade distortions.
The introduction of Carbon Tax was about sending a price signal that there is a cost associated with the consumption of fossil fuels to the detriment of the environment. In this regard solid fuels, which have been traditionally favoured by household consumers, have the highest carbon content of all fossil fuels and given the environmental impact it is important they are taxed.
While the carbon tax was introduced for other fuels in 2010, its application to solid fuels did not occur until its phased introduction in 2013 and 2014.
Coupled with the long lead in period to the implementation of carbon tax on solid fuels, the Sustainable Energy Authority of Ireland provide generous grants via Better Energy Homes scheme and also provides home energy upgrades free of charge to vulnerable households via Better Energy Warmer Homes to reduce dependence on combustion of fossil fuels for home heating. The Better Energy Homes Scheme has to date provided over €190m in funding to over 185,000 homes resulting in a reduced energy demand.
These policies have contributed to a reduction of greenhouse gas emissions from the residential sector which were 10.4% lower in 2014 compared with 2013 levels. These reductions are mainly from decreased solid fuel consumption for space and hot water heating in homes in 2014 as well as increases in renewable energy consumption.
Greenhouse gases are contributing to climate change and as a signatory to the UNCOP 21 Paris Agreement, Ireland has committed to play its part in reducing emissions. The carbon tax, as part of the overarching energy strategy, is a key tool towards meeting these commitments. The carbon tax is deemed to be the most cost effective way of reducing overall emissions and therefore plays an important role of providing incentives for emission reduction activities in this regard. It is important therefore that the tax is levied on all fossil fuels fairly to encourage behavioural change.
Accordingly, I do not intend to exempt household fuel products from carbon tax.
44. Deputy Seán Barrett asked the Minister for Finance his plans to increase upwards the limits to inheritance tax; and if he will make a statement on the matter. [17496/16]
View answerCapital Acquisitions Tax (CAT) is the overall title for both Gift and Inheritance Tax. The tax is charged on the amount gifted to, or inherited by, the beneficiary of the gift or inheritance.
For the purposes of CAT, the relationship between the person who provides the gift or inheritance (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary), determines the maximum life-time tax-free threshold known as the "Group threshold" below which gift or inheritance tax does not arise. There are, in all, three separate Group thresholds based on the relationship of the beneficiary to the disponer:
The Group A tax free threshold of €280,000, increased from €225,000 in Budget 2016, applies where the beneficiary is a child (including adopted child, stepchild and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.
The Group B tax free threshold of €30,150, applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.
The Group C tax free threshold €15,075, applies in all other cases.
I raised the Group A tax-free threshold applying to gifts and inheritance from parents to their children from €225,000 to €280,000 in Budget 2016. This represented an increase of about 25%. I did this in recognition of the improving state of the public finances and of the concerns expressed to me by people making and receiving gifts and inheritances, particularly in a context of rising property prices.
I indicated at the time that I saw the change to the Group A tax- free threshold as the start of a process. The extent to which increases in the various tax-free thresholds for CAT purposes can be accommodated in the future will depend, among other things, on the continuing economic recovery and the competing choices for limited resources. The Deputy will be aware of the commitment in the Programme for a Partnership Government to work with the Oireachtas to raise the Group A CAT tax-free threshold (including all gifts and inheritances from parents to their children) to €500,000.
45. Deputy Mick Wallace asked the Minister for Finance if he is satisfied with the work of NAMA to date; and if he will make a statement on the matter. [17483/16]
View answerNAMA's continued progress is evident in the recently published 2015 Annual Report and Accounts.
These results highlight the continued achievements of NAMA and the positive impact NAMA is having on Ireland's sustained recovery in carrying out its mandate.
NAMA has reached its the year-end 2016 target, to redeem 80% of debt, 9 months ahead of schedule, in March of this year.
Following yesterday's redemption of €1bn in Senior Bonds, NAMA now has just €4.6bn senior debt to repay, out of the original €30.2bn issued. This continued progress means that the Board's expectation to repay all senior debt by 2018 is firmly on track.
It is also significant that, in October of last year, Moody's reported that it no longer considers NAMA's outstanding debt a contingent liability for the State. Such favourable assessments continue to contribute to the creditworthiness of the Sovereign.
Against the backdrop of strong demand for both new office accommodation and new housing, NAMA's progress in respect of the Dublin Docklands Strategic Development Zone (SDZ) and residential funding is also most welcome.
NAMA's continued strong performance since inception means that Board now expects to achieve a surplus of up to €2.3bn over its life, subject to market conditions, which will be returned to State.
I am encouraged by the Board's confidence and commend NAMA on its work to date.
46. Deputy Maurice Quinlivan asked the Minister for Finance his views on the merits of appointing public interest directors to the boards of banks; and his intention in this regard over the coming years. [17487/16]
View answerIn the Programme for a Partnership Government ('PPG') the Government has committed to, "Cease to appoint new Public Interest Directors to the banks, and reform the procedures for the appointment of bank directors by the State, with a view to increasing transparency in the process". As the Deputy will be aware the rights for the State to appoint public interest directors to the boards of the covered institutions were derived from the terms of the guarantee schemes introduced in 2008 and which are due to expire in 2017 when the last of the guaranteed liabilities in the banks are due to mature.
Given the imminent expiration of the guarantee scheme, the length of time that has passed since the last public process for the appointment of bank directors was conducted in 2011 and also the extensive board renewal that has taken place across AIB, PTSB and Bank of Ireland over the past few years, I believe that now is an appropriate time to review the appointment of these directors and propose further open and procedures for any future appointments to the boards.
It is important to note that the State has extensive rights to appoint directors as a significant shareholder in the banks and not just public interest directors appointed under the guarantee schemes. Legal clarity was provided under Section 48 of the Credit Institutions (Stabilisation) Act 2010 not just to the role of the public interest director but to that of the entire boards of those institutions. It provides that the overriding duty of all directors of the covered institutions relates to the public interest as set out in the Act. Therefore any future appointments by the State to the bank boards will continue to retain this duty notwithstanding the basis for the appointment.
Officials in my Department are currently reviewing options in relation to the appointment procedures for bank directors having due regard to distinct differences which exist from appointments to other State boards, not least the requirements of the Central Bank/SSM Fitness and Probity Regime and the requirement to have a broad set of expertise relevant to large regulated entities in an ever more complex regulatory environment.
47. Deputy David Cullinane asked the Minister for Finance the amount of Exchequer funds that are set aside each year to service debt and-or repayment liabilities associated with public private partnerships for each of the years 2001 to 2015; the amount of Exchequer funds set aside to service debt and-or repayment liabilities associated with public private partnerships for each of the years from 2016 to 2041; and if he will make a statement on the matter. [17480/16]
View answerTo the extent that Exchequer expenditure is not matched by Exchequer revenue, the difference, known as the Exchequer Borrowing Requirement or EBR, is funded through borrowing undertaken by the National Treasury Management Agency (NTMA).
It is worth making the point that singling out the gross EBR implications of a single transaction or group of transactions would represent, at best, a very narrow view and, at worst, be misleading. For example, Public Private Partnership (PPP's) mean that we have vital infrastructure in place that contributes to our economic growth. Aside from the employment involved in its delivery, such infrastructure supports ongoing employment, both directly and indirectly. So the economy and the public finances benefit and this should be borne in mind.
As regards the cost to the Exchequer from unitary payments arising from PPP's, this is a matter, in the first instance, for my colleague, the Minister for Public Expenditure and Reform, Paschal Donohoe.
However, my officials have been advised by the Department of Public Expenditure and Reform that the Exchequer paid out about €225 million of PPP unitary payments in 2015. This relates to the significant infrastructure projects that have been completed using the PPP model since the late 1990s.
I also understand that a range of PPP's in the health, justice, transport and education areas are due to begin operations over the coming years, while work is also progressing on Phase 2 of the PPP programme (social housing) announced by the Government in Budget 2015, which will also be delivered over the coming years. The unitary payment charges in respect of these new PPPs will, as they come into service, add to the existing annual cost of unitary payments.
When all of the current planned PPPs are delivered, the Department of Public Expenditure and Reform forecast that the total cost of unitary payments is expected to climb to a peak at c.€380m in 2021.
The cost of unitary payments beyond 2021 depends on whether additional projects are added. If not, the c. €380 million level in 2021 will continue annually until about 2035 (indexed for inflation) before declining as PPP contracts are completed and drop out of the payments.
Furthermore, PPP costs are published in the Revised Estimates Volume each year, in the relevant subheads of the relevant Departments.
48. Deputy Pearse Doherty asked the Minister for Finance the progress made in providing a solution to those persons in areas that have recently flooded whereby they can access flood insurance at affordable prices; and if he will make a statement on the matter. [17537/16]
View answerI am aware of the difficulties that the absence or withdrawal of flood insurance cover can cause to homeowners and the flooding crisis last winter has raised issues in relation to insurance and flooding. However, the provision of insurance cover is a commercial matter for insurance companies and is based on an assessment of the risks they are willing to accept and adequate provisioning to meet those risks.
In my role as Minister for Finance, I have responsibility for the development of the legal framework governing financial regulation. Neither I, nor the Central Bank of Ireland, can interfere in the provision or pricing of insurance products or have the power to direct insurance companies to provide flood cover to specific individuals or businesses.
To examine the issue of flooding, an Inter-Departmental Flood Policy Co-ordination Group has been established to ensure a whole of Government approach in the area of Flood Policy. The OPW are the lead agency and have responsibility for submitting the final report of the group to Government. Each Department on the Group will submit a report to the OPW with policy proposals in their own area which can directly improve preparation for and response to flooding or strategic policies which impact on people's risk and experience of dealing with flooding.
The Department of Finance is carrying out a review of flood insurance with a particular focus on the strategies that other jurisdictions have implemented to increase the availability of flood insurance cover. This work is examining a number of policy options and within the coming weeks will feed into the final report of the Inter-Departmental Group, chaired by Seán Canney TD, Minister of State with special responsibility for the Office of Public Works and Flood Relief.
49. Deputy Michael McGrath asked the Minister for Finance his plans to address the inability to complain of customers who become aware of difficulties with a financial product more than six years after they initially purchased it, in particular long-term products such as endowment mortgages, certain investments and pensions; and if he will make a statement on the matter. [17528/16]
View answerThe Financial Services Ombudsman's Bureau was established under the Central Bank and Financial Services Authority of Ireland Act 2004. The legislation provides for an independent, impartial investigation and resolution of disputes between consumers and financial service providers.
This legislation also provides the Financial Services Ombudsman with various powers in order to determine jurisdiction on a complaint. Included in this is a statutory timeframe, section 57BX (3)(b) of the Act provides:-
"A consumer is not entitled to make a complaint if the conduct complained of - occurred more than 6 years before the complaint is made."
The legislation prohibits the Financial Services Ombudsman from examining any aspect of a complaint where the conduct being complained of occurred more than 6 years from receipt of the Complaint in his Office. The Financial Services Ombudsman has no discretion in relation to the 6 years rule.
As the Deputy may be aware, the Department is progressing the development of legislation to underpin the amalgamation of the Financial Service Ombudsman and the Pensions Ombudsman. The Government agreed outline Heads of a Bill to provide for the amalgamation of offices in 2015 and both offices have been physically merged in one location. Recent legislative changes have enabled the appointment of the Financial Services Ombudsman as Pensions Ombudsman.
The question of the timeframe under which complaints can be reviewed is a policy matter which will be considered as the legislation to effect the amalgamation is being developed further. I am of course mindful of the need to provide the necessary protection to the consumer over the longer term. However, the issues in this regard are complex involving a range of considerations including the interface with the statute of limitations, existing consumer protection laws, complaints mechanisms and the availability of records.
As the Deputy will be aware, this piece of legislation is currently on the second list of the current legislative programme that is, Bills that are expected to undergo Pre-Legislative Scrutiny this session.
50. Deputy Marc MacSharry asked the Minister for Finance his plans for the future development role of Permanent TSB in the personal and consumer banking sectors; and if he will make a statement on the matter. [17535/16]
View answerOur strategy envisages Permanent TSB ("PTSB") playing an important role in the future of Irish retail banking ( including personal and consumer banking) as a retail bank bringing competition to the marketplace which has consolidated significantly since 2008. PTSB is an important bank in a highly concentrated Irish market lending approximately €460 million in 2015.
PTSB has fundamentally de-risked its balance sheet under the intensive oversight of various authorities since 2011 through deleverage, improved funding profile and increased capital levels (fully loaded CET1 of 15.4% at Q1, 2016). It has made positive progress on arrears reductions, with great than 90 day arrears in Homeloans c. 46% below peak levels in 2013. PTSB returned to underlying profitability in 2015 for the first time since 2007 and it announced that it was profitable and capital generative in Q1, 2016 (€39m Profit Before Tax).
This year the bank has launched a new brand proposition ("Keep Going"), a new mortgage product (the 3-in-1 mortgage) and a new current account ("Explore"), all are innovative and the two product initiatives are competitive and indications to date suggest the campaigns are being well received.
The current account product in particular represents an entirely new way of operating a current account in Ireland and features cash back for card usage (where other banks charge for card transactions), discounts from partners and rewards each week based on the actual patterns of account usage shown by the individual customers.
The bank has also launched a consumer finance campaign and has indicated that it is developing plans in the digital space for the coming months.
Permanent TSB is also in the midst of writing again to its existing residential mortgage customers to encourage them to move to the bank's new Managed Variable Rate products, c.15,000 customers have taken up this offer since last September and they are availing of reductions on their variable rate mortgages of a minimum of 0.20% and a max of 0.80%.
On the 21 December 2015 permanent tsb launched a new business banking offering which has been specially designed for small businesses of fewer than 50 employees and with a turnover of less than €10 million. This is the first comprehensive suite of business banking products launched by the bank since the financial crisis and reflects its strategy of focussing on the smaller end of the business banking market where there is considerable overlap between personal and small business accounts.
Notwithstanding the positive progress made PTSB in many areas there are various challenges facing PTSB, including, but not limited to, the lower interest rate environment, the delayed disposal of CHL due to the UK referendum, increasing regulatory costs, the Central Bank tracker mortgage review, extension of the Bank Levy and higher provisions and lower growth in new lending than the market anticipated.
I am of the view that the best way to protect the value of the State's shareholding is to ensure PTSB continues the progress it has made with a view to reaching sustainable operating profitability and an adequate Return on Equity (ROE) as soon as possible while striving to meet the terms of the European Commission restructuring plan.
While I am strongly supportive of Permanent TSB in the delivery of their strategy I cannot discount the possibility that a strategic transaction could arise opportunistically at any time involving PTSB which could be in the best interests of the State. As part of their day-to-day role officials in the Shareholding Management Unit will consider all credible proposals and develop strategic options relating to our banking investments and will also consider from time to time whether the sale of shares by way of placing would be beneficial for the State. Having said that I have no current plans to sell shares in PTSB, notwithstanding the flexibility to do so within the Programme for Government.
As I have stated previously I would like to see more competition in the domestic banking system to provide the lending required for our growing economy and this could be achieved through new entrants or the continued growth of our domestic banks.
51. Deputy Richard Boyd Barrett asked the Minister for Finance in the context of the budget 2017 process, if he is considering abolishing the local property tax and reverting to the direct funding of local authorities through progressive taxation; and if he will make a statement on the matter. [17504/16]
View answerThe Deputy will be aware that in 2015, Dr. Don Thornhill, who chaired the 2012 Inter-Departmental Group which designed the Local Property Tax, conducted a review at my request to consider, and make recommendations, on the operation of the LPT, and any impacts on LPT liabilities due to property price developments.
The Finance (Local Property Tax) (Amendment) Act 2015 gave effect to the postponement of the revaluation date of residential property for LPT purposes from 2016 to 2019. This postponement means that home owners will not be faced with significant increases in their LPT in 2017 as a result of increased property values. The postponement arose from one of the recommendations of the review.
The postponement also gives sufficient time for the remaining recommendations in Dr Thornhill's report to be considered in full. Local authorities receive income from a variety of sources including grants from Central Government, Local Property Tax allocations, commercial rates and other locally raised charges.
Local Property Tax was introduced to provide an alternative, stable and sustainable funding base for the local authority sector, providing greater levels of connection between local revenue raising and associated expenditure decisions and making the taxation system less dependent on other taxes.
The Government decided that no local authority would receive less income from LPT in 2015 and 2016 than they received as General Purpose Grants from the Local Government Fund in 2014. This provides a level of certainty and stability in a time of significant change for the sector and will ensure that citizens will continue to receive an appropriate level of services from their local authorities.
It is a positive outcome from the policy of local retention of LPT that local authorities can use LPT proceeds to pay for local services which were funded by the Central Government in the past. This facilitates further implementation of the overall objective of the local government reform programme, which is greater devolution to the local government sector, through supporting enhanced local decision making on spending priorities.
My Department will be considering issues relating to the implementation of other recommendations in the Thornhill Review in due course. I also note that the Programme for a Partnership Government provides for the preparation of a report by mid-2017 for Government and for the Oireachtas, on potential measures to boost local government leadership and accountability.
I have no plans for the abolition of the Local Property Tax.
52. Deputy Jackie Cahill asked the Minister for Finance to bring forward proposals to extend the exemption on capital gains tax which currently operates for farmers who consolidate their family farm holding to farmers who, due to the economic circumstances in the industry at this time, need to sell parcels of land to consolidate their bank loans and secure their family farm for the future; and if he will make a statement on the matter. [17493/16]
View answerIn Budget and Finance Act 2013, I introduced a capital gains tax (CGT) relief to cover situations where the proceeds from the sale of agricultural land by farmers are used to reinvest in other farmland for farm restructuring purposes. The rationale behind the relief is to enable farmers to consolidate disparate holdings of farmland in order to make their farming business more productive and efficient. To amend the relief, as proposed in the question, to cover discrete sales of parcels of land unconnected to farm consolidation would run completely counter to the reasons behind the introduction of the restructuring relief.
While I appreciate the concerns behind the Deputy's proposal, I do not intend, for the reasons outlined, to extend the relief in the manner proposed. It would also be invidious to introduce a new CGT relief in respect of asset disposals by farmers which did not apply to other taxpayers in similar situations. Aside from any other considerations, current resources would not allow for such a broad-based tax concession.
The Government is fully aware of the pressures on farmers right now and my colleague the Minister for Agriculture, Food and the Marine, Mr Michael Creed TD, has committed to working with all players in the sector, both at national and EU level, to address these issues and ensure that we continue to have a sustainable and resilient sector. I understand that Minister Creed recently met with the CEOs of the main banks and stressed the need for them to be flexible in the context of increased income volatility. The banks told the Minister that they recognise and are responding to the challenges facing farmers in this regard.
Finally, I also believe that, in response to the current market difficulties, the Minister for Agriculture, Food and the Marine has this week launched the 'Financial Management Initiative', as recently agreed by the Dairy Forum (comprising farm organisations, co-ops and processors, the Department and its agencies, as well as the banking sector). It is a programme of cash flow and financial management training and advice for dairy farmers.
53. Deputy Frank O'Rourke asked the Minister for Finance if he is aware of significant vacancies in the Central Bank enforcement division, including at very senior roles; the manner in which these vacancies are impacting on the delivery of the Central Bank’s mandate; the manner in which he can assist in addressing this issue; and if he will make a statement on the matter. [17533/16]
View answerI am informed by the Central Bank that at the end of April 2016, the Enforcement Division had 53.8 active staff. Its target staff level is 71.5. The Central Bank is currently in the midst of a recruitment campaign aimed at filling vacancies at varying levels of experience. The Bank has informed me that it keeps its resource allocation under constant review and will be flexible as it moves to recruit additional staff.
While the vacancy rate of approximately 25% might appear high, it should be borne in mind that it is largely attributable to a significant increase in the staff complement of the Enforcement Division rather than a loss of existing experienced personnel.
The operational independence of the Central Bank is enshrined in statute and as such I have no role to play in staffing matters at the Bank. The issues of staffing and remuneration are matters for the Central Bank Commission.
54. Deputy Pearse Doherty asked the Minister for Finance when, as per the programme for Government, he will move to provide greater protection for mortgage holders, tenants and SMEs, whose loans have been transferred to non-regulated entities, that is, vulture funds; and if he will make a statement on the matter. [17538/16]
View answerAs the Deputy will be aware, the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted on 8 July 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated entity. The 2015 Act introduced a regulatory regime for a new type of entity called a 'credit servicing firm'. Credit Servicing Firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'. This ensures that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the various statutory codes, such as the Consumer Protection Code, the Code of Conduct on Mortgage Arrears and the Code of Conduct for Business Lending to Small and Medium Enterprises.
The Central Bank is now the competent authority for the authorisation and supervision of credit servicing firms. Credit servicing firms must comply with all relevant requirements of financial services legislation, including the various codes mentioned already and Fitness and Probity Standards (including minimum competency requirements).
In addition to compliance with Central Bank codes of conduct, credit servicing firms will have to demonstrate to the Central Bank that they have:
- Robust governance and adequate resources to ensure compliance;
- Agreements with loan owners that enable the credit servicing firm to fully comply with its obligations under Irish financial services legislation; and
- Adequate and effective control of loan servicing in the State to enable Central Bank oversight.
New owners must either become regulated as credit servicing firms themselves or use a regulated credit servicing firm to service their loans. My Department will continue to keep all relevant legislation under review in order to ensure that borrowers whose loans have been sold to non-regulated entities are properly protected and do not lose any protections which they previously enjoyed.
55. Deputy Thomas P. Broughan asked the Minister for Finance his views on the measures the Central Bank should introduce to address access to finance for first-time buyers, in particular those persons who have been renting for significant periods; and if he will make a statement on the matter. [17485/16]
View answerThe Central Bank, which has an independent mandate to preserve and protect financial stability, introduced mortgage lending regulations to increase the resilience of the banking and household sectors to the property market and to reduce the risk of bank credit and house price spirals from developing in the future. The current regulations, as introduced in February 2015, provide for a lower deposit requirement for first time buyers of a primary home property compared to other residential mortgage borrowers. For first time buyers, a 90 per cent LTV limit applies on the first €220,000 value of a property and an 80 per cent LTV limit applies on any value of the property thereafter. For non-first time buyers of a primary home, a flat 80% LTV threshold applies and for buy to let borrowers a 70% LTV threshold applies. However, lenders also have a certain limited flexibility to, at their discretion, to exceed these thresholds when lending to credit worthy borrowers.
As the Deputy is aware, the new Programme for a Partnership Government (PfPG) provides for a range of measures which seeks to improve the supply of housing and to protect and promote home ownership. In particular, it states that the Government will work with the Central Bank as part of its review of its mortgage lending limits to develop a new "Help to Buy" scheme to ensure availability of adequate, affordable mortgage finance or mortgage insurance for first time buyers as new housing output comes on stream. It also indicates that the Government submission to the Central Bank will include a request to consider a "capacity to pay" (e.g. the payment capacity of potential purchasers based on rent paid over a five year period to be off set against the current deposit rules).
The Central Bank has now commenced this macro prudential review process and my Department will engage with the Central Bank on this. In addition, as Minister for Finance, I will also need to be consulted in due course on any new revised macro prudential regulations that the Central Bank may decide to be put in place arising from this review. However, in this process it should also be recognised that the Central Bank has a mandate to promote and protect financial stability and that it has an independence in the formulation of macro prudential measures towards the achievement of that objective.
56. Deputy David Cullinane asked the Minister for Finance the amount of Government debt that is deemed to be off-balance sheet for accounting purposes; the amount of Government debt that is deemed to be off-balance sheet for accounting purposes expressed as a percentage of total Government debt; the yearly cost of servicing off-balance sheet debt in each of the years from 2001 to 2015 in each case, in tabular form; and if he will make a statement on the matter. [17479/16]
View answerThe General Government sector consists of what are typically thought of as Government units in Ireland's case these would include Departments of State and their associated Offices and Local Authorities. However, other units may also be classified to the government sector if they are controlled by Government and if they are classified as "non-market producers". The General Government sector thus encompasses both Central and Local Government, non-commercial state owned bodies and extra budgetary funds.
All borrowing by this general government sector, regardless of the way it is used, is included in general government debt (GGD). The yearly cost of servicing GGD is detailed in the Central Statistics Office (CSO) Government Finance Statistics April 2016 and forecasts out to 2021 are included in my Department's Stability Programme Update April 2016 - see interest expenditure in Table A2.2 in Annex 1.
Other bodies that are considered "market" institutional units but are controlled by Government (e.g. ESB, AIB) are classified in the 'commercial Public Sector'. The borrowing of these entities is not government debt and is serviced by these bodies from their own commercial activity. Similarly borrowings by the private partner related to a PPP or other similar project in partnership with government is not government debt and the yearly cost of servicing these borrowings is the responsibility of the private partner.
57. Deputy Richard Boyd Barrett asked the Minister for Finance what he will do if the European Commission decides in the next month, as is being reported, that a company's tax dealings (details supplied) breached state aid rules; if he will recover the estimated €17 to €19 billion in unpaid corporation tax; and if he will make a statement on the matter. [17501/16]
View answerIn June 2014, the Competition Directorate of the European Commission announced its intention to open formal State Aid investigations into tax rulings provided to a number of companies in various Member States of the European Union. Since October 2015, investigations in three other Member States have concluded. In each of these cases the Commission found that the Member States granted an illegal State Aid to the companies in question.
While the Commission has opened a formal investigation in relation to one particular case involving Ireland, it has not made a final determination in the matter. While there is no formal timeline for a when the final decision will be made in our case, I am aware of speculation about a possible decision in July.
This a priority matter and Ireland has co-operated fully with the process to date and will continue to do so. My Department has engaged closely with the Commission throughout this process. Detailed and comprehensive responses have been provided to the Commission demonstrating that the appropriate amount of Irish tax was charged in accordance with the relevant legislation, that no selective advantage was given and that there was no State Aid.
I remain of the view that there was no breach of State Aid rules in this case and that the legislative provisions were correctly applied. In the event that the Commission forms the view that there was State Aid, Ireland is entitled to challenge this decision in the European Courts. As the Government has already indicated, we will take that course of action, if necessary, to continue to vigorously defend the Irish position. Ireland is obliged to comply with any order for recovery pending the outcome of an appeal. As there is no indication at this point as to what decision the Commission may make, it is not possible to speculate regarding any recovery amount.
