Written Answers Nos. 320 - 347
320. Deputy Sean Sherlock asked the Minister for Finance his estimate of the impact the repayment of an AIB contingent capital note of over €1.7 billion will have on the public finances for 2016 and thereafter. [26051/16]
View answerOn July 28th this year, I was happy to welcome the receipt of €1.76 Billion to the State following the repayment of the Contingent Capital Note (CoCo) by AIB. The CoCo was issued by AIB in July 2011 with a set five year maturity; the repayment was a contractual commitment, written into the terms of the instrument. AIB returned the full capital value of the instrument, plus accrued interest of €160m, to the exchequer.
Given the predictable nature of the CoCo instrument's maturity, the return of capital and associated interest payments have been included in the exchequer planning calculations over the last number of years. As a non-recurring income, the payment does not impact the available fiscal space or the ongoing budget process. The capital repayment has reduced the State's borrowing requirements this year and can be seen as an effective reduction in national debt.
321. Deputy Sean Sherlock asked the Minister for Finance the scope that exists within the fiscal rules for additional expenditure in 2016; and if he will make a statement on the matter. [26052/16]
View answer322. Deputy Sean Sherlock asked the Minister for Finance the implications for Ireland’s MTO target and adherence to the expenditure benchmark of the EUROSTAT reclassification of the 2015 AIB share conversion; and if he will make a statement on the matter. [26053/16]
View answerI propose to take Questions Nos. 321 and 322 together.
When reporting the Excessive Deficit Returns for 2015 in April, the CSO highlighted that Eurostat had made a determination during the clarification process that the conversion of the AIB preference shares to ordinary shares was to be treated as a capital transfer (expenditure) rather than a reinvestment of capital. This increased general government expenditure for 2015 on a one-off basis by circa €2.1 billion and worsened the general government deficit for 2015 by about 1% of GDP. Excluding this one-off transaction, the deficit on an underlying basis was 1.3% of GDP.
Compliance with the expenditure benchmark is calculated by comparing the year-on-year change in general government expenditure, excluding certain items such as interest expenditure, and there is no provision for the exclusion of one-off transactions. As a result, the general government expenditure outturn for 2015 does mean that there is a significant buffer now built into the calculation of Ireland's compliance with the expenditure benchmark in 2016.
However, as the Deputy is aware, the expenditure benchmark is only one of the two pillars used to assess compliance with the preventive arm of the Stability and Growth Pact. The second pillar is the balanced budget rule, which requires a Member State to move towards its medium-term budgetary objective or MTO in accordance with its adjustment path. The MTO is set in structural terms, which means it excludes the effects of the economic cycle and one-off transactions, such as the AIB transaction in 2015.
The buffer under the expenditure rule allowed for the additional €540m expenditure detailed in the 2016 Revised Estimate Volume for known spending pressures in the areas of Health and Justice. Based on the assessment at the time and reflected in the fiscal forecast in the Summer Economic Statement, this was largely compatible with our obligations under the balanced budget rule; however, it was estimated to be very much at the limit.
Assessment of compliance with the preventive arm of the Stability and Growth Pact by the European Commission is based on overall assessment, taking account of both the expenditure benchmark and the balanced budget rule. As part of the Budget 2017 process, there will be a detailed re-assessment of these measures; however, our judgement at this time is that there is no scope for further additional voted expenditure above the aggregate level already approved. However, this does not preclude additional expenditure on specific items provided it is matched by savings within the existing level of authorised aggregate expenditure allocations.
323. Deputy Sean Sherlock asked the Minister for Finance when he will publish updated forecasts of growth and fiscal space in advance of budget 2017 in light of the significant economic events of the summer; and if he will make a statement on the matter. [26054/16]
View answerMy Department will prepare a full macroeconomic projection in advance of Budget 2017 in October. In accordance with the endorsement process, officials from my Department will go through the normal procedural steps with the Irish Fiscal Advisory Council required under the Memorandum of Understanding. This requires my Department to provide preliminary forecasts to the Council Secretariat no later than 15 days prior to Budget day. Following an iterative process, during which the forecasts can be further refined as more information becomes available, my Department will formally present the macroeconomic forecasts to the Council on the 4th of October 2016. The Council will make its final decision on endorsement of the forecasts before Budget day. Forecasts provided to IFAC will be published.
The Budget day publication will include updated projections for economic growth and the fiscal space, taking account of developments up to that time, including both the outcome of the UK referendum in June and the GDP revisions for 2015 published in July by the CSO.
Revised fiscal space estimates will also be published on Budget day but, notwithstanding the significant economic developments mentioned above, it is not expected that the estimates of overall fiscal space for 2017 will change substantially from those already published in the Summer Economic Statement, given that most of the inputs needed to calculate the available space under the expenditure benchmark have been fixed following the publication of the European Commission's spring forecasts.
324. Deputy Sean Sherlock asked the Minister for Finance the impact on the potential fiscal space arising from a greater national contribution to the EU arising from the upwards revision of Ireland’s GDP-GNI; and if he will make a statement on the matter. [26055/16]
View answer325. Deputy Sean Sherlock asked the Minister for Finance if he has determined whether the additional Central Fund allocation to the EU budget arising from the revision to Ireland’s 2015 GDP will detract from the fiscal space available for 2017; and if he will make a statement on the matter. [26056/16]
View answerI propose to take Questions Nos. 324 and 325 together.
The latest estimates of fiscal space available for Budget 2017 were set out in the Summer Economic Statement (SES). These are being reviewed in context of the prepartions for Budget 2017.
Specifically, the significant revision to 2015 GDP by the Central Statistics Office is not expected to impact the fiscal space calculation for 2017. This is because almost all the factors used to calculate the fiscal space for a particular year are fixed on the basis of the European Commission's spring forecasts in the previous year. The Commission adopts this approach to 'fixing' the inputs in order to provide ex ante clarity and certainty to Member States in relation to how their budgetary plans will be assessed.
My Department currently estimates the impact of the CSO revision on our EU Budget contribution for 2017 at around €380m. However, other mitigating factors mean the overall increase in the EU budget contribution is now estimated to be in the order of €280m when compared to the forecast underlying the SES.
It must be emphasised that the final impact depends on a number of variables including the size of the overall EU budget for 2017 (which is not due to be agreed until November 2016), GNI movements in other EU Member States and other EU budget operational developments. My officials will continue to liaise with the European Commission in order to achieve greater clarity on the exact contribution, whether this expenditure will impact on the available fiscal space for new measures and how the Commission's overall assessment of Ireland's compliance with the Stability and Growth Pact requirements may be affected.
326. Deputy Brendan Ryan asked the Minister for Finance the list of all vacancies that existed on 26 February 2016 and all positions that have arisen since, including the date it became vacant, for State boards or governing bodies under his control; the names of those appointed since the Government was formed; if the position was advertised and a short-list provided to him by the Public Appointments Service; if the appointments were approved by the Cabinet; the positions under his control which are not subject to the PAS system; and if he will make a statement on the matter. [26083/16]
View answerIn response to the Deputy's query, please find in tabular form a list of all vacancies that existed on 26 February 2016 and all positions that have arisen since, including the date it became vacant for State Boards or governing bodies under his control; the names of those appointed since the Government was formed; if the position was advertised and a short-list provided to him by the Public Appointments Service; if the appointments were approved by the Cabinet; the positions under his control which are not subject to the PAS system. All appointments to State Boards are made in conjunction with the State Board Appointment process.
|
Body |
Vacancies that existed on 26 Feb 2016 |
Positions that have arisen since & the date position became available |
Names of those appointed since 6th May 2016 |
Was the position advertised & a short list provided to the Minister from PAS |
If the appointment were approved by cabinet |
Positions which are not subject to the PAS system |
|
C&AGs |
Nil |
Nil |
N/A |
N/A |
N/A |
N/A |
|
Central Bank Commission |
2 existing vacancies; Section 18CA(1)(b) of the Central Bank Act 1942, as amended, provides that the Central Bank Commission comprises of at least 6, but no more than 8, members appointed by the Minister. The Commission currently comprises of 6 members appointed by the Minister. The Minister has the discretion to appoint 2 additional members. |
Nil |
N/A a PAS 'State Boards' selection process is underway at present |
Yes (in progress position was advertised, PAS selection process is underway at present to shortlist candidates for the Minister) |
N/A |
Under Section 18CA(1)(a) of the Central Bank Act 1942, as amended, the Commission comprises of the persons for the time being holding or performing the duties of the following offices: (i) Governor; (ii) Head of Central Banking; (iii) Head of Financial Regulation; (iv) Secretary General of the Department of Finance. [In addition to at least 6, but no more than 8, members appointed by the Minister.] |
|
Credit Reviewer |
Nil |
Nil |
N/A |
N/A |
N/A |
Appointment of Credit Reviewer is made by Government |
|
Credit Union Advisory Committee |
Nil |
Nil |
N/A |
N/A |
N/A |
N/A |
|
Credit Union Restructuring Board (ReBo) |
Nil |
Nil |
N/A |
N/A |
N/A |
N/A |
|
Disabled Drivers Medical Board of Appeal |
Nil |
Nil |
N/A |
N/A |
N/A |
N/A |
|
Financial Services Ombudsman Bureau |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
|
Financial Services Ombudsman Council |
Nil |
Nil |
N/A |
N/A |
N/A |
N/A |
|
Investor Compensation Company Limited |
Nil |
2 positions Irish Association of Investment Managers(IAIM) 23/5/16 Banking and Payment Federation Ireland (BPFI) 31/7/16 |
IAIM Mr Brendan Bruen (11/7/16) BPFI Ms Amy Walsh (12/9/16) |
N/A Both directors are nominated by prescribed bodies in accordance with section 18(3) of the Investor Compensation Act, 1998 |
N/A |
N/A |
|
Irish Bank Resolution Corporation |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
|
Irish Financial Services Appeals Tribunal |
NIL |
NIL |
N/A |
N/A - Given the limited and specific statutory requirements for the position of Chairman (e.g. a retired judge), and given that DPER has confirmed that IFSAT falls outside the new Guidelines on Appointments to State Boards, potential nominees will be identified outside of an advertisement process |
N/A |
Given the limited and specific statutory requirements for the position of Chairman (e.g. a retired judge), and given that DPER has confirmed that IFSAT falls outside the new Guidelines on Appointments to State Boards, potential nominees will be identified outside of an advertisement process |
|
Irish Fiscal Advisory Council |
Nil |
Nil |
N/A |
N/A |
N/A |
N/A |
|
National Asset Management Agency |
2 vacancies existed on NAMA Board as of Feb 2016 |
Nil |
N/A |
Positions will be filled in line with the State Board process |
N/A |
N/A |
|
National Treasury Management Agency |
Nil |
Nil |
N/A |
N/A |
N/A |
3 board positions are ex-officio. They are held by Secretaries General Finance and PER & NTMA CEO |
|
National Pensions Reserve Fund Commission |
Nil |
Nil |
N/A |
N/A |
N/A |
N/A |
|
Office of the Revenue Commissioners |
Nil |
Nil |
N/A |
N/A |
N/A |
N/A |
|
Social Finance Foundation |
Nil |
Vacancy on Board of Directors; May 2016 |
Mr Pat Horgan |
No - As SFF is not a State Body it has not availed of the services of the Public Appointments Service and Stateboards.ie |
Consent was given by the Minister on 20 July 2016 for the appointment of Mr Pat Horgan to the Board of Directors |
The appointment of members of the Board of Directors is not subject to the PAS system. The appointment of such a position normally follows the PAS process but in this case, the process was not followed. It was deemed that sourcing an individual through the Banking Payments Federation Ireland (BPFI) was the most appropriate and effective mechanism to employ |
|
Strategic Banking Corporation of Ireland |
NIL |
NIL |
N/A |
N/A |
N/A |
N/A |
|
Tax Appeals Commission |
Nil |
The Minister for Finance has approved the recruitment of a number of temporary Appeal Commissioners to the Tax Appeals Commission. It is hoped that the recruitment process will commence during Autumn 2016 |
n/a |
n/a |
n/a |
The Finance (Tax Appeals) Act 2015 does not stipulate that temporary Appeal Commissioners be recruited through a process conducted by the PAS. However, it is intended that these temporary Appeal Commissioner positions will be filled through such a process. |
327. Deputy Fergus O'Dowd asked the Minister for Finance the position of his Department regarding any EU funded cross-Border projects once Article 50 is enacted by the Government of the United Kingdom. [26109/16]
View answerResponsibility for EU Structural and Investment Funds including cross Border programmes is a matter for the Minister for Public Expenditure and Reform
Until it formally withdraws from the Union, the UK remains a full EU Member, with all of its existing rights and obligations including in relation to the EU budget. As regards future EU-UK and Ireland-UK negotiations, I can assure the Deputy that the Government will work to ensure protection of Irish interests, including issues related to the border and EU funding.
328. Deputy Thomas P. Broughan asked the Minister for Finance the estimated yield to the Exchequer from the introduction of a third rate of income tax at 48% on incomes of over €100,000; and if he will make a statement on the matter. [26115/16]
View answerI am advised by Revenue that the estimated first & full year yield to the Exchequer from a new third rate of Income Tax at 48% on incomes of over €100,000 would be in the order of €531 million and €687 million respectively.
These figures are estimates from the Revenue tax forecasting model using latest actual data for the year 2014, adjusted as necessary for income, self-employment and employment trends in the interim. They are estimated by reference to projected 2017 incomes, they are provisional and may be revised.
330. Deputy Thomas P. Broughan asked the Minister for Finance the estimated yield to the Exchequer from corporation tax in 2017; and if he will make a statement on the matter. [26117/16]
View answerThe position is that my Department's latest official forecast of €7,545 million for corporation tax receipts in respect of 2017 was projected as part of the overall forecasts contained in the recent Summer Economic Statement 2016. However, as the Deputy will appreciate, all tax-heads will be reviewed as part of annual budgetary process. Therefore, the next official forecast for 2017 in respect of corporation tax receipts will be contained in Budget 2017, which will take account of the most up to date economic and fiscal information.
331. Deputy Thomas P. Broughan asked the Minister for Finance when Ireland became a net contributor to the European Union; if he will outline the net beneficiary figures for Ireland from 1973; and if he will make a statement on the matter. [26118/16]
View answerIreland became a net contributor to the EU budget in 2014, the first time since accession in 1973. The Budget Statistics, which go back to 1973, can be found on the Departart of Finance website at: http://www.finance.gov.ie/what-we-do/economic-policy/publications/data-statistics/budget-economic-statistics.
EU Budget payments and public sector receipt data are published annually by the Department of Finance in the Budget Statistics bulletin. The latest edition from October 2015 contains the data up to 2014. The public sector receipt measure captures funds under 'shared management' between national and EU authorities. In addition, the EU also pays some additional receipts directly to private beneficiaries under 'centralised direct management', most notably under the EU research funding programme.
For ease of reference, Ireland's receipts from and contributions to the EU Budget for the years 2010 to 2015 are set out in the following table.
|
YEAR |
Public Sector Receipts €m |
Direct Management Receipts* €m |
Total receipts |
Payments to EU Budget €m |
Net Receipts €m |
|
2010 |
1885.3 |
80.4 |
1965.7 |
1352.4 |
613.3 |
|
2011 |
1950.2 |
80.2 |
2030.4 |
1349.7 |
680.7 |
|
2012 |
1837.7 |
108.8 |
1946.5 |
1393.2 |
553.3 |
|
2013 |
1672.9 |
113.0 |
1785.9 |
1726.2 |
59.7 |
|
2014 |
1419.7 |
83.9 |
1503.6 |
1685.5 |
-181.9 |
|
2015 |
1770.9 (p) |
147.7 |
1918.6 (p) |
1952.1 |
-33.5 (p) |
Source: Department of Finance.
(p) provisional.
*Direct Management - funds which are awarded and spent directly by the Commission. These are primarily research receipts.
332. Deputy Thomas P. Broughan asked the Minister for Finance if consideration will be given to introducing a site value tax and its possible yield; and if he will make a statement on the matter. [26120/16]
View answerThe 2012 report of the Inter-departmental Group on the Design of a Local Property Tax (the "Thornhill Group") comprehensively examined the basis of assessment for the Local Property Tax (LPT), including both the taxable value of the property option and a site value tax (SVT). The report favoured the use of market value of residential properties as the basis of assessment and this recommendation was accepted by the Government.
The Thornhill Group concluded that the arguments for SVT were outweighed by the likely difficulties in ensuring acceptance by taxpayers, i.e., arriving at values that were evidence based, understandable and acceptable to the public in addition to complexities and uncertainties in the valuation effort necessary to put an SVT in place. In contrast, the Group considered that under a market value approach applied to housing, the market value of a residential property would be related to the characteristics of the building itself, the site on which it was located and the characteristics and amenities of the neighbourhood. There would be a relationship between the market value of a house and benefits to the owners in terms of enjoyment of the amenity value of the properties.
At the request of the Minister for Finance, the operation of the LPT was reviewed in 2015 by Dr. Thornhill. A number of submissions to the review favoured changing the basis of determination of LPT liabilities to site value, floor area or variations thereof. Dr. Thornhill considered these but remained of the view that market value is the most appropriate and equitable basis on which to determine LPT liabilities.
Both Commissions on Taxation in 1985 and 2009 favoured property taxation based on market value citing inter alia significant difficulties in communicating to home-owners and land-holders the nature of the taxation charge that is involved and the benefits that would accrue from that change.
I have no plans to introduce a Site Value Tax.
333. Deputy Thomas P. Broughan asked the Minister for Finance the work being completed by his Department to increase taxes paid by landlords who own two to five rental properties, five to ten rental properties, ten to 20 rental properties and 20 or more properties, in tabular form; the projected yield to the Exchequer of any increases to such tax; and if he will make a statement on the matter. [26121/16]
View answerIt is widely accepted that the residential rental property market is currently under strain, with rents in many areas now exceeding the previous pre-financial crisis peak. The Programme for a Partnership Government contains a range of tax and non-tax measures aimed at boosting supply of social and private housing in order to alleviate the housing shortage, and thereby improve sustainability for both tenants and home owners.
Residential landlords are an important element of a functioning property market. Landlords are liable to tax on the rental profits earned. A landlord may claim a deduction for costs incurred in respect of the property such as maintenance, repairs, insurance, management of the property and any goods provided or services rendered to the tenant. A deduction for 75% of the interest paid on borrowed money used to purchase, improve or repair the rented premises is also allowed. This deduction may increase to 100% of interest paid where the terms of the incentive for landlords who make their property available for a minimum of three years to tenants in receipt of social housing supports are met.
The method for calculating a landlord's net rental profit does not vary in proportion to the number of rental properties a landlord has. My Department is not undertaking an analysis of such a proposal, and nor do I see a policy rationale for doing so. Income tax rates and bands are generally applicable and are determined by factors such as a taxpayer's personal circumstances and taxable income from all sources. To impose a higher rate of tax in respect of a number of sub-sets of taxpayer with income from a particular source would be highly unusual, and could be open to challenge under state aid rules. In addition, it is likely that the charging of higher taxes of the nature contemplated by the Deputy would ultimately be passed on to tenants in the form of further increases in rents.
Furthermore, Ireland's residential property market has traditionally been characterised by a multitude of part-time private landlords owning an average of 1 to 2 properties. This concentrates risk for both landlords and tenants, and in my view a rental market which includes more professional, full-time, landlords should help to standardise and improve management standards across the rental property sector and, in the longer term, lead to a more sustainable and secure residential property market for both investors and property tenants.
334. Deputy Thomas P. Broughan asked the Minister for Finance the measures being taken to assist first time buyers into the housing market; if his Department has made a submission to the Central Bank to reform the macro prudential rule; and if he will make a statement on the matter. [26122/16]
View answerAs 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. The Government is conscious that there is a supply shortage of housing and of the challenges faced by first-time buyers. Therefore, building upon the range of structural actions outlined in the Action Plan for Housing and Homelessness, I will also outline details of a new tax-based "Help-to-Buy" scheme in the forthcoming Budget in October. Full details of the incentive, including eligibility criteria and implementation method, will be provided on Budget day. Subject to the approval of the Oireachtas, eligibility for the scheme will be back-dated to take effect from the date of publication of the Action Plan for Housing and Homelessness (19 July).
As the Deputy will also be aware, the Central Bank has now commenced its review of the macro prudential regulations for residential mortgage lending. As part of this process, I can confirm that the Department has made a submission to the Central Bank and this is now available on the Department's website at the following link: http://www.finance.gov.ie/what-we-do/banking-financial-services/consultations/departments-submission-central-banks-review-0. The Department's submission recognises the overall importance of macro prudential controls on the extension of credit for housing purposes but considers that it would be appropriate at this time to make some adjustment to the existing position; in particular, it asks the Central Bank to consider the adoption of a "capacity to pay" test (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), an increase in the allowance for lending for PDHs in excess of the LTV and LTI caps to 20% and 25% respectively and that the first time buyer LTV limit of 90 per cent be applicable to the first €320,000 value of a property. It is also the recommendation of the Department that the above adapted measures be directed primarily towards first time buyers.
The Central Bank has advised that its review of the impact and effectiveness of the measures is due to be completed by the end of November and that all submissions to the call for evidence will be published in due course.
335. Deputy Thomas P. Broughan asked the Minister for Finance the measures he is taking to assist accidental landlords, owners of one or two properties who may have been affected by negative equity mortgages and are renting a property to assist with mortgage payments; the reliefs that can be applied to such cases; the cost of such an initiative to the Exchequer; and if he will make a statement on the matter. [26123/16]
View answerIn referring to "accidental landlords" I understand the Deputy is referring to property owners in negative equity who have moved to alternative accommodation as a result of factors such as a growing family or change in work location, while letting out their own mortgaged property to other tenants.
Some accidental landlords may not have felt in a position to sell their property because they were in negative equity and a sale would crystallise the loss. However, I would point out that the number of mortgages in negative equity is reducing. As noted in the Spring Quarterly Economic Commentary published by the ESRI, the numbers of mortgages in negative equity has fallen below 100,000 for the first time since 2008. This figure had been above 300,000 in 2011.
With regard to the taxation of rental income, the Deputy will be aware that landlords are liable to tax on their net rental profit after deduction of allowable letting expenses, and not on the gross rental income received. A landlord may be allowed a deduction of 75% of the interest paid on borrowed money used to purchase, improve or repair rented premises when calculating rental income. This deduction may be increased to 100% of mortgage interest where the property is let to a tenant in receipt of social housing supports, under the terms of the incentive I introduced in Finance Act 2015. A number of other allowances and deductions are also available to reduce the taxable rental profit, including the cost of maintenance, repairs, insurance and management of the property, and the cost to the landlord of any goods provided or services rendered to a tenant.
To extend relief further to allow a deduction for the full interest and capital cost of a mortgage repayment in addition to other allowable letting expenses, as appears to be suggested in the Deputy's question, would in effect see the State further subsidise the purchase by a private individual of a residential rental investment property. I do not believe that this would be an appropriate use of State resources at this time.
It should also be noted that as the taxation of all rental property in the State is dealt with under the same legislation, an attempt to carve out a cohort of 'accidental' landlords would prove problematic. There are many reasons why individuals might choose, or feel obliged, to let out a property which they own while also renting a separate property for their own accommodation, and all are treated equally by the tax system. The provision of additional tax deductions to one sub-set of landlords could also create difficulties in the rental marketplace as a result of the advantage obtained over other landlords of similar residential property.
336. Deputy Thomas P. Broughan asked the Minister for Finance if consideration will be given to increasing the threshold on VAT for self-employed service providers from €37,500, in view of the fact that the equivalent VAT threshold in the UK is £83,000; the cost to the Exchequer to raise the threshold to €50,000; and if he will make a statement on the matter. [26124/16]
View answerI am advised by Revenue that VAT is governed by the EU VAT Directive (Council Directive 2006/112/EC), with which Irish VAT law must comply. The EU VAT Directive provides that VAT exemption limits may only be raised by Member States to maintain their value in real terms, that is, they may only be increased in line with inflation. The VAT thresholds were increased to their current values on 1 May 2008. As the Central Statistics Office figures show the consumer price index is below the level it reached in 2008, it is not possible to increase the services threshold to €50,000. I would point out, however, that Ireland's VAT exemption for small enterprises supplying services is the seventh highest in the EU while the goods threshold is the third highest.
337. Deputy Pearse Doherty asked the Minister for Finance if the Revenue Commissioners or any other State body has been contacted by any person offering to sell information related to the Panama papers leak; and if he will make a statement on the matter. [26152/16]
View answerI am advised by the Revenue Commissioners that they have not purchased any information related to the Panama Papers leak and have not been approached concerning the purchase of Panama Papers data. I am not aware of any other State body being approached about such a purchase. The Revenue are aware that some foreign tax administrations may have purchased the leaked Panama Papers data.
Revenue are, through their participation in the OECD JITSIC (Joint International Taskforce on Shared Intelligence and Collaboration) Network continuing to monitor developments with a view to obtaining access to the full documentation.
Revenue has also advised me that they requested access to any elements of the Panama Papers that could be of relevance to their work against tax evasion and avoidance. A significant volume of information was published by the International Consortium of Investigative Journalists (ICIJ) on 9 May and Revenue are examining this data. I understand that it is their intention to make the fullest possible use of any relevant information that becomes available in pursuing any cases where it appears that tax liabilities have not been addressed.
Revenue has advised me that it will continue to engage fully with the JITSIC Network to agree concrete actions that tax administrations can take in response to the ICIJ evidence of tax avoidance and evasion, leading to a multilateral and co-ordinated approach to the data.
338. Deputy Pearse Doherty asked the Minister for Finance if he will outline the system in operation by the Revenue Commissioners to determine the tax payable on cars imported for resale and the way this tax relates to the eventual selling price; and if he will make a statement on the matter. [26180/16]
View answerVehicle Registration Tax (VRT) is charged at the time of registration of a car. In general, it is based on CO2 emissions at the time of manufacture and charged at a percentage of the Open Market Selling Price (OMSP). The OMSP is Revenue's opinion of the price that the car might reasonably be expected to realise, inclusive of all taxes, if sold by retail.
I am advised by Revenue that it forms its opinion of the OMSP using market information such as trade guides, advertisements, expert advice, and OMSP declarations made by local distributors in respect of their models. Revenue has published a booklet setting out the methods applied to arrive at OMSP and the VRT chargeable at http://www.revenue.ie/en/about/foi/s16/vehicle-registration-tax/vrt-manual-section-08.pdf.
Revenue provides VRT estimates for a wide range of models via the VRT calculator at www.revenue.ie and provides advice at http://www.revenue.ie/en/tax/vrt/faqs-vrt.html#question4 for customers who require estimates for unlisted models.
A person who has paid VRT, and who believes that the charge was excessive, has rights of appeal. Information on the appeal procedures is available at http://www.revenue.ie/en/tax/vrt/leaflets/vrt-appeals.html.
339. Deputy Pearse Doherty asked the Minister for Finance the types of residential property sales that are included as cash purchases in figures released by the Central Bank; and if he will make a statement on the matter. [26189/16]
View answerIn its Quarterly Bulletin 3 of 2016, the Central Bank of Ireland published an article estimating the level of cash buyers in the Irish residential property sector since 2000 (link:Estimating Cash Buyers and Transaction Volumes in the Residential Property Sector in Ireland, 2000-2014). I am advised by the Central Bank that this was a once-off research exercise to improve information on housing transactions not financed through bank mortgages.
For the purposes of that article, cash sales are defined as all residential property transactions where there is no recourse to mortgage finance from an Irish resident bank. This would include purchases 'downsizing' and using cash to re-purchase, private investors, domestic and international institutional investors (e.g. REITS) and some social and voluntary housing providers.
340. Deputy Pearse Doherty asked the Minister for Finance if non-mortgage purchases of residential property here exceeds the average across Europe; and if he will make a statement on the matter. [26190/16]
View answerIn terms of recent developments in Ireland, the share of non-mortgage purchases in total annual residential transactions increased from less than 20 per cent at the start of 2011 to close to 55 per cent at the end of 2013. The most recent data relates to the second quarter of 2016, when non-mortgage purchases accounted for approximately 50 per cent of residential property transactions.
As the Deputy is aware, the Central Bank has recently published relevant analysis on this subject and have found that the proportion of non-mortgage transactions in the Irish housing market is cyclical in nature, increasing when the volume of mortgage transactions is low and contracting during periods of expansionary credit.
There does not appear to be any data series available to directly compare the share of non-mortgage purchases in the Irish property market with a European average. However, data is available for the UK - a relevant comparator country - and recent analysis indicates that the proportion of non-mortgage transactions has followed a broadly upward trend since 2007, increasing from approximately 24 per cent to a rate of 36 per cent in the first quarter of 2016.
341. Deputy Sean Sherlock asked the Minister for Finance the potential cost of extending the capital gains tax restructuring relief beyond 31 December. [26237/16]
View answerI am advised by Revenue that information is not available on tax returns to facilitate the costing of the extension of the Capital Gains Tax Relief for Farm Restructuring. The Deputy may be interested to note, however, that it was estimated at the time of Budget 2015 that the extension of the relief for a further year would cost approximately €2.5 million.
342. Deputy Sean Sherlock asked the Minister for Finance the potential cost to the Exchequer on extending income tax relief on land leases to family members in budget 2017 subject to strict criteria regarding farm transfer. [26238/16]
View answerI am advised by Revenue that it is not possible to provide an estimated cost to the Exchequer of extending Income Tax Relief on land leases to family members. Information on Income Tax returns are not furnished in a manner which would enable the identification of taxpayers who would qualify under such a scheme or the amount of rental income to which relief would be applicable.
343. Deputy Sean Sherlock asked the Minister for Finance the potential cost of allowing farmers to write off capital expenditure on farm buildings and plant and machinery over a period of three and eight years with a floating allowance of up to 50% allowable in any one year in order to facilitate maximum utilisation. [26240/16]
View answerI am advised by Revenue that the cost to the Exchequer associated with the measure suggested would depend on the amount of expenditure over the years in question and the extent to which the claimants are able to use the additional relief in each year.
On the basis of certain assumptions regarding potential expenditure, the cost to the Exchequer associated with an eight year capital allowance regime, with up to 50 per cent allowable in a year, for claims for plant and machinery and buildings by farmers, could be up to €40 million for the first year of claim, rising to €66 million in the second and third years, before the cost starts reducing.
On the same basis the cost to the Exchequer associated with a three year write off period, with up to 50 per cent allowable in a year, could be €40 million in the first year of claim, rising to €83 million in the second year, €118 million in the third year and fourth years, before the cost starts to reduce.
344. Deputy Thomas Pringle asked the Minister for Finance the timeline of the ISIF investment strategy review planned for the second half of 2016; when the review will commence; and if he will make a statement on the matter. [26289/16]
View answerGiven the new and unique mandate of the Ireland Strategic Investment Fund (ISIF) as a sovereign development fund, and because of the uncertainty regarding the investment opportunities in Ireland, it was agreed that a formal review of the ISIF investment strategy would take place after 18 months. This allows for a sufficient period of time having elapsed before considering the operations and impact of the Fund.
The ISIF's unique mandate refers to its double bottom line which comprises of investing: (i) on a commercial basis; and (ii) in a manner designed to support economic activity and employment in Ireland. In addition, at the time of publishing the investment strategy in July 2015, the full nature and size of the investment opportunity in Ireland were not known.
I am informed by ISIF that preparatory work in respect of the formal review of the ISIF investment strategy has commenced and the review is due to be completed by end-2016. The review will include an appraisal of the success of ISIF's mandate to date, and there will be interactions with both the Department of Finance and the Department of Public Expenditure and Reform as part of the review process.
345. Deputy Brendan Smith asked the Minister for Finance his plans to change the criteria for the primary medical certificate; if his attention has been drawn to the concerns expressed by the Ombudsman about the inadequacy of this scheme as operated at present; and if he will make a statement on the matter. [26323/16]
View answerThe Disabled Drivers and Disabled Passengers (Tax Concessions) Scheme provides relief from VAT and VRT (up to a certain limit) on the purchase of an adapted car for transport of a person with specific severe and permanent physical disabilities, payment of a fuel grant, and an exemption from Motor Tax.
To qualify for the Scheme an applicant must be in possession of a Primary Medical Certificate. To qualify for a Primary Medical Certificate, an applicant must be permanently and severely disabled within the terms of the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994 and satisfy one of the following conditions:
- be wholly or almost wholly without the use of both legs;
- be wholly without the use of one leg and almost wholly without the use of the other leg such that the applicant is severely restricted as to movement of the lower limbs;
- be without both hands or without both arms;
- be without one or both legs;
- be wholly or almost wholly without the use of both hands or arms and wholly or almost wholly without the use of one leg;
- have the medical condition of dwarfism and have serious difficulties of movement of the lower limbs.
The Senior Medical Officer for the relevant local Health Service Executive administrative area makes a professional clinical determination as to whether an individual applicant satisfies the medical criteria. A successful applicant is provided with a Primary Medical Certificate, which is required under the Regulations to claim the reliefs provided for in the Scheme. An unsuccessful applicant can appeal the decision of the Senior Medical Officer to the Disabled Drivers Medical Board of Appeal, which makes a new clinical determination in respect of the individual. The Regulations mandate that the Medical Board of Appeal is independent in the exercise of its functions to ensure the integrity of its clinical determinations. After six months a citizen can reapply if there is a deterioration in their condition.
The Scheme represents a significant tax expenditure. Between the Vehicle Registration Tax and VAT foregone, and the repayment of excise on fuel used by members of the Scheme, the Scheme represented a cost of €50.3 million to the Exchequer in 2015, an increase from €48.6 million in 2014. These figures do not include the revenue foregone to the Local Government Fund in the respect of the relief from Motor Tax provided to members of the Scheme.
I am aware that the Ombudsman has made comments regarding the eligibility criteria of the Disabled Driver and Disabled Passengers Scheme. The Ombudsman stated that, in his opinion, the criteria were narrowly focused and prescriptive. The Scheme and qualifying criteria were designed specifically for those with severe physical disabilities and are, therefore, necessarily precise.
I recognise the important role that the Scheme plays in expanding the mobility of citizens with disabilities. I have managed to maintain the relief at current levels throughout the crisis despite the requirement for significant fiscal consolidation. From time to time I receive representations from individuals who feel they would benefit from the Scheme but do not qualify under the six criteria. While I have sympathy for these cases, given the scale and scope of the Scheme, I have no plans to expand the medical criteria beyond the six currently provided for in the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994.
346. Deputy Róisín Shortall asked the Minister for Finance the projected fiscal space on which he is basing budget 2017. [26336/16]
View answerThe Summer Economic Statement (SES), published by my Department in June of this year, projected, in Table A2, that the net fiscal space available for 2017 would be around €1 billion and planning for Budget 2017 is being based on this figure.
347. Deputy Róisín Shortall asked the Minister for Finance the status of each of the working streams in respect of addressing the cost of insurance. [26339/16]
View answerThe Cost of Insurance Working Group, chaired by Minister of State Eoghan Murphy TD, is undertaking a review of the factors which are influencing the increased cost of motor insurance. The Working Group brings together all the relevant Departments and Offices involved with the process. Its objective is to identify immediate and longer term measures which can address increasing costs, while bearing in mind the need to maintain a stable insurance sector.
The core areas to be examined by the Working Group in this first phase are:
- The motor insurance sector generally, at present and in recent years
- The effects of legal costs and litigation processes on insurance costs
- The current claims compensation arrangements and the cost of claims
- Insurance data and information
- The impact of accident rates
- The impact of unlawful activity on the insurance sector, and
- Other market issues.
Because the issue of the cost of insurance is complex and in order to get to the heart of these issues as soon as possible, Minister of State Eoghan Murphy has established four sub-groups to review them in detail. Chairs have been appointed to these sub-groups and work has commenced. The sub-groups will be holding their second meeting in the coming days and it is expected that they meet regularly. The outputs of these sub-groups will feed into the meetings of the Working Group which will meet every 2-3 weeks.
Sub-group 1: Understanding motor insurance market
This sub-group met on Thursday 8 September to finalise a work programme which it has commenced working on. An update was provided to Minister of State Murphy at a meeting of Chairs and Vice Chairs on Friday 9 September.
A further sub-group meeting will be held on 15 or 16 September. It is proposed to meet on weekly basis thereafter.
The sub-group will meet relevant stakeholders. Contacts are ongoing in relation to arranging sub-group engagement with relevant stakeholder groups such as the Irish Road Haulage Association and the Irish Taxi Drivers' Federation.
Sub-group 2: Improved data availability
Sub-group 2 met on Friday 9 September and will hold its next meeting on Tuesday 13 September. An update was provided to Minister of State Murphy at a meeting of Chairs and Vice Chairs on Friday 9 September.
In addition, a member of sub-group 3 will attend certain sub-group 2 meetings, and vice versa, to ensure proper coordination across the work of the two sub-groups.
A CSO official will be invited to participate in and contribute to this sub-group's work.
Sub-group 3: Cost of Claims
In recognition of the overlapping factors which will be examined by sub-group 2 (improved data availability) and sub-group 3, it has been agreed that a member of sub-group 2 will attend meetings of sub-group 3 and vice versa.
Sub-group 3 held its first meeting in the Department of Jobs, Enterprise and Innovation on Tuesday 6 September. At this meeting, an outline structure table of contents for the chapter on 'Cost of Claims' was agreed following consultation amongst all members. Drafting tasks were also allocated.
The preliminary views of sub-group 3 were relayed to Minister of State Murphy at his meeting with Chairs and Vice Chairs of all sub-groups on Friday 9 September.
Sub-group 3 will proactively engage with stakeholders when appropriate at both steering group and sub-group level.
Sub-group 4: Other public policy issues
This group will examine, amongst other things, insurance fraud and uninsured drivers.
This group met on Tuesday 6 September where it agreed its broad work plan. As part of this, it will meet with members of Insurance Ireland's Fraud Committee and the Motor Insurers' Bureau of Ireland's Committee at its next meeting on 14 September. It is proposed to meet on weekly basis thereafter.
By the end of October, the Working Group will provide me with an update report which will set out the priority actions required. From November to December, the Working Group will put in place an action plan to enable the relevant Government Departments and Offices to commence the implementation of these priority actions. In this regard, Minister of State Murphy will be consulting regularly with Government colleagues.
