Written Answers Nos. 67-78
67. Deputy Micheál Martin asked the Minister for Finance if he has written to or spoken to President Juncker since the ruling on a company (details supplied) on 30 August 2016; and if he will make a statement on the matter. [27951/16]
View answerI have not had any formal meetings or correspondence with President Juncker on the Apple case since it was announced that the Commission had concluded their single investigation in Ireland and had issued a negative decision in the Apple State Aid case on 30 August 2016.
The investigation was a priority matter for the State. Over the course of the three year investigation, detailed and comprehensive responses were 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. This engagement included meetings both at political and official level, including a meeting between myself and Commissioner Vestager in July 2016.
The Government remains of the view that there was no breach of State Aid rules in this case and that the legislative provisions were correctly applied. By appealing the Decision the Government is taking the necessary course of action to vigorously defend the Irish position.
68. Deputy Eamon Ryan asked the Minister for Finance his views on whether the support for first-time buyers being mooted will have an inflationary effect on house pricing consequently defeating the purpose of the proposal in the first place. [27879/16]
View answerA key priority for this Government is to develop a fully functioning housing market that responds adequately to the needs of our citizens. To this end the Deputy will be aware that the Government launched 'Rebuilding Ireland - The Action Plan for Housing and Homelessness' last July. Implementation of the plan is being led by the Minister Coveney at the Department for Housing, Planning, Community and Local Government, with cross Departmental support including from my Department.
This comprehensive Action Plan takes a holistic approach in addressing the many interacting structural constraints affecting the housing market in areas such as planning and land use, as well as regulation and skills deficits in the construction sector. While the primary focus of the Action Plan is to tackle structural constraints, fiscal supports can play a supporting and time-bound role in addressing the current problems in the housing sector.
It is in this context that the proposed help-to-buy scheme should be considered. Its role would be to complement the other measures in the Action Plan. The extent to which the scheme could lead to an increase in residential property prices will very much depend on the speed and efficiency with which structural supply constraints are eliminated and residential building activity increases. Therefore, the impact of the help-to-buy scheme on property prices cannot be considered in isolation from the impact of other measures contained in the Action Plan, which are primarily designed to increase supply.
69. Deputy David Cullinane asked the Minister for Finance if he agrees that the fiscal rules are too rigid and inflexible, and that a that one size fits all solution is clearly not working. [19808/16]
View answerThe fiscal rules, which apply under the Stability and Growth Pact (SGP), are intended to promote budgetary discipline. These rules were also given domestic legal effect through the Fiscal Responsibility Act 2012 following the passage of a constitutional referendum in May 2012 in which the Irish people supported accession to the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union.
The rules are designed to ensure that increases in public expenditure are suitably financed and do not rely on cyclical or windfall revenues. The deteriorating international outlook illustrates the need for caution and prudent economic and fiscal policies. These rules do not per se limit spending. They do, however, require that any additional spending is financed through sustainable revenue raising measures. Through adhering to the requirements of the SGP Ireland's economic and fiscal situation has improved as illustrated by the abrogation of the Excessive Deficit Procedure earlier this year.
However an area with limitations under the rules is the harmonised methodology for calculating the economic cycle used in the implementation of the SGP. My Department has secured useful changes to this methodology over the years by consistently raising concerns and objections at European level. These changes have partially compensated for the reality that the harmonised methodology is not suitable for small open economies. My Department continues to advocate for improvements in the harmonised methodology and will continue to engage constructively on this and other relevant technical issues.
Finally I would point out that fiscal sustainability is a pre-requisite for economic growth.
70. Deputy Richard Boyd Barrett asked the Minister for Finance if he has read the Central Statistics Office, CSO, report containing figures of 26% growth in the economy. [22768/16]
View answerThe Central Statistics Office (CSO) published the National Income and Expenditure results for 2015 in July which show that the economy grew by 26.3 per cent.
This substantial upward revision is largely related to the activities of a small number of large multinational firms and reflects a number of exceptional factors which have limited impact on actual activity in the Irish economy.
The main channels through which these factors affect Irish GDP figures include: the effect of 'contract manufacturing' where Irish headquartered multinationals contract the production of goods to third party companies abroad but these products are recorded in Ireland's trade balance; and the relocation of intellectual property-related assets or patents to Ireland. Ceteris paribus, this will reduce the level of royalty imports and as result increase Irish GDP.
It is important to note that these factors do not reflect activity levels we are seeing on the ground. Although these revisions have significantly boosted investment and net export growth, they do not have a direct bearing on employment and wealth creation for Irish citizens.
It is important to stress that whilst these headline GDP figures have clearly been distorted and are exaggerated in an Irish context, more concrete indicators of the underlying levels of economic activity point to a continuation of a now firmly-rooted recovery. Specifically, indicators such as consumer spending, tax trends and labour market developments all confirm that Ireland's economic fundamentals remain strong.
It is also important to stress that the figures published by the CSO are compiled in accordance with best international practice and statistical standards. They measure what they are supposed to measure. However, in a small, open and very globalised economy such as Ireland, it is clear that relevance of these figures as a metric by which underlying economic trends and changes in living standards can be assessed is considerably less than elsewhere.
With this in mind, the Central Statistics Office has put together a group of experts to provide guidance on how a more relevant indicator could be produced and published alongside these figures in the future. My Department is represented on this group. It is expected that this group will publish a report detailing their findings later this year.
73. Deputy Michael McGrath asked the Minister for Finance if, in relation to the current rules that apply to the home renovation incentive scheme, in a circumstance where a person has planning permission in place before 31 December 2016, commences the construction work after 1 January 2017 and has the work fully completed and paid for by 31 March 2017, the person can avail of the incentive scheme; and if he will make a statement on the matter. [27812/16]
View answerAs the Deputy will be aware, HRI provides a tax relief by way of an income tax credit on repair, renovation or improvements works on principal private residences or rental properties carried out by tax compliant contractors. HRI came into operation on 25 October 2013, with rental properties being brought within its scope from 15 October 2014. The scheme will run until 31 December 2016.
In circumstances where an individual has been granted planning permission on or before 31 December 2016, commences the construction work after 1 January 2017 and has the work fully completed by 31 March 2017, the work is deemed to be carried out in 2016 and the individual can avail of the relief providing they meet the other qualifying conditions.
I am advised by Revenue that full details on the operation of the HRI scheme are available on their website at http://www.revenue.ie/en/tax/it/reliefs/hri/index.html.
74. Deputy Michael McGrath asked the Minister for Finance the position in relation to the public consultation exercise undertaken in 2015 by his Department on the tax treatment of expenses of travel and subsistence for employees and office holders; his plans to introduce any changes to legislation governing the area; and if he will make a statement on the matter. [27821/16]
View answerMy officials and their Revenue colleagues examined the responses received to this consultation exercise and one particular issue raised by a large proportion of the respondents was that of the non-resident non-executive director whose expenses were taxable. I was given to understand that this created considerable problems for the FDI community, out of proportion to the financial aspects of the matter. Therefore I was satisfied that, while being cognisant of the longstanding principles governing the taxation of expenses of travel, it was appropriate to make an exception in this case and I introduced the relevant change via Finance Act 2015. This Act also included a change to exempt certain expenses of State Examinations Commission examiner staff from taxation.
Following further review of the submissions other legislative changes were not identified as immediately necessary. However I note that a number of new submissions on the tax treatment of expenses have now been received and these are being examined by my officials in the context of the current Budget and Finance Bill process.
75. Deputy Paul Kehoe asked the Minister for Finance if persons (details supplied) qualify for the retirement relief exemption when transferring their land to their son; and if he will make a statement on the matter. [27827/16]
View answerLand which has been let prior to being disposed of can qualify for capital gains tax (CGT) retirement relief in certain situations. One of these situations is where land has been let by an individual at any time in the period of 25 years before the disposal and the disposal is to a child of the individual. In order to qualify for relief, the land must have been owned by the individual and have been used by him or her for the purposes of farming carried on by him or her for a period of not less than 10 years immediately before the letting of the land commenced.
Where the individual is aged between 55 and 65, full relief from CGT applies. Where the individual is aged 66 or over, relief is capped at €3m where the market value of the land disposed of exceeds that amount.
I am advised by the Revenue Commissioners that based on the details outlined by the Deputy, and on the assumption that the father and mother are aged 55 or over, they would qualify for relief in respect of a transfer of their share of the land to their son.
76. Deputy Michael McGrath asked the Minister for Finance if the registrar has received proposals from credit unions for business model changes since the new regulation making powers came into effect; and the number of amendments to the regulations made to facilitate these. [27880/16]
View answerThe provision of regulation making powers to the Central Bank provides flexibility to allow the Central Bank in the future to review and update regulations as appropriate, on a timely basis following consultation. I have been informed by the Central Bank that they are keen to ensure that regulations remain appropriate for the credit union sector and in the future, where credit unions set out a clear path on how they wish to develop, consideration will be given to any amendments to regulations that may be appropriate. The Central Bank informs me that to date no amendments to the regulations have been made.
The Registry of Credit Unions at the Central Bank recognises the strategic challenges facing the sector, the need to revitalise business models and to find ways of doing business to better serve members while delivering on their expectations. The Registry is committed to engaging with credit unions on their business model development proposals and is currently engaging with both credit unions and their Representative Bodies in relation to business model development. As part of their engagement process, in November 2015 the Central Bank established Sector Stakeholder Dialogues to facilitate engagement with credit unions. This was done with a view to gaining a better understanding of how credit unions want to develop their business model and to identify any changes that may be required to the regulatory framework to facilitate prudent development. Since the establishment of the Sector Stakeholder Dialogues six meetings have taken place.
While no concrete business model development proposals have yet been received, the Central Bank further informed me that to date the main focus of discussions has been on the following areas: longer term lending; additional services framework; and publication of sectoral data.
77. Deputy Michael McGrath asked the Minister for Finance if, in view of the fact that extensive powers were devolved to the registrar in the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016, he will consider providing for an appeals mechanism; and if he will make a statement on the matter. [27881/16]
View answerMy role as Minister for Finance is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.
The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members.
Since 1 August 2013, under section 14 of the Credit Union and Co-operation with Overseas Regulators Act 2012, part VIIA of the Central Bank Act, 1942 has applied to credit unions. This provides credit unions with the right to appeal certain decisions of the Central Bank to the Irish Financial Services Appeals Tribunal (IFSAT). Appealable decisions include:
- certain decisions in the Credit Union Act, 1997 (1997 Act);
- refusal of approval under the Central Bank Reform Act 2010; and
- findings or orders of an inquiry under the Administrative Sanctions Procedure.
Under section 84A of the Credit Union Act, 1997 the Central Bank, before making regulations, is required to consult with:
- The Minister and the Credit Union Advisory Committee;
- Any other body that appears to the Bank to have expertise or knowledge of credit unions generally; and
- Any other body that the Bank considers appropriate to consult in the circumstances.
The Consultation Protocol for Credit Unions, published by the Central Bank in 2012, indicates that the Central Bank will consult on new regulations that will, in the view of the Central Bank, potentially have a significant impact on the business of credit unions.
Under section 32M of the Central Bank, 1942 the Central Bank is required at least every 4 years to make arrangements for a peer review of the Central Bank's performance of its regulatory functions. A review of the Central Bank performance of its regulatory functions in relation to credit unions was carried out in July 2015 by the International Credit Union Regulators' Network (ICURN).
78. Deputy Michael McGrath asked the Minister for Finance if, in view of the fact that credit unions compete with banks and the State has a declared interest in ensuring that Irish banks remain viable and profitable, he will consider the establishment of an oversight body to ensure that the regulations are being implemented in a proportionate, fair and equitable manner. [27882/16]
View answerMy role as Minister for Finance is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.
The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members.
Credit unions in Ireland operate under credit union specific legislation in the Credit Union Act 1997 and the Credit Union and Co-operation with Overseas Regulators Act 2012, with recommendations of the Commission on Credit Unions forming the basis for the 2012 Act and new regulations implemented.
There are currently a number of measures in place which provide input by relevant stakeholders into new regulations and to provide oversight of the regulatory functions of the Central Bank in relation to credit unions. Before making regulations , under section 84A of the Credit Union Act 1997, the Central Bank must consult with the Minister for Finance and the Credit Union Advisory Committee and any other body the Central Bank considers has credit union expertise or knowledge or that the Central Bank considers appropriate to consult. There is also a Consultation Protocol in place between the Central Bank and credit unions which ensures that the Central Bank consults on new regulations that will, in the Central Bank's view, have a significant impact on the business of credit unions. Also, under section 32M of the Central Bank Act 1942 the Central Bank is required, at least every 4 years, to make arrangement for a peer review of the performance of its regulatory functions in relation to credit unions. The International Credit Union Regulators' Network carried out such a review of the Central Bank in 2015.
In June 2016 CUAC produced a significant report, reviewing the Implementation of the Recommendations of the Commission on Credit Unions fulfiling one of the key credit union objectives as outlined in the Programme for Partnership Government. The Report provides an in-depth analysis of the sector from a financial perspective and includes various stakeholder views, thus ensuring a balanced report. It provides focused and effective recommendations under seven specific headings; tiered regulation, section 35, consultation and engagement with the Central Bank, governance, restructuring, business model development and additional matters. On establishment of an Implementation Gro up consisting of credit union stakeholders, each of those recommendations will be considered in depth prior to implementation in a cohesive manner.
The Government recognises the important role of credit unions as a volunteer co-operative movement in this country. The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall and it is determined to support a strengthened and growing credit union movement.
