Written Answers Nos. 90-102
91. Deputy Michael McGrath asked the Minister for Finance the steps his Department and other State agencies are taking to ensure that Ireland is a beneficiary of Brexit in the area of financial services; the strategy designed to ensure this is achieved; the resources that have been allocated to this objective; and if he will make a statement on the matter. [31352/16]
View answerFinancial services is an area that is frequently identified in any discussion of Brexit. Ireland has a successful track record of competing for, and winning, global foreign direct investment. One of the key pillars of that success is the growth of the International Financial Services (IFS) sector, in particular over the past 30 years. Ireland is now recognised internationally as a leading global centre for internationally traded financial services. The appointment of Minister of State for Financial Services, Eoghan Murphy TD, is a clear signal that international financial services play a vitally important role in the Irish economy. In March 2015, the Government launched the lFS2020 Strategy, a whole-of-government approach to driving the growth and development of the IFS sector in Ireland. Following an action plan for 2016, a new action plan for 2017 is being developed in consultation with all key stakeholders which will take on board ongoing developments, both domestically and internationally.
Ireland is in a strong position to build on its successful track record and to compete for future mobile investments in the IFS sector. In a post UK EU referendum environment, the Government will continue to implement the IFS2020 Strategy to drive growth in the IFS sector. The Government will continue to promote the attractiveness of Ireland as a location of choice for mobile international investment and for talented people. There will be opportunities for Ireland arising from the UK's decision to leave the EU. We will of course seek to take those opportunities. The IFS2020 Strategy, which has been in place long before the UK decision to leave the EU, provides a clear roadmap to maximise any opportunities that might arise.
A key IFS2020 milestone is the hosting of the second annual European Financial Forum in Dublin Castle on 24th January 2017. Given the result of the UK referendum and the potential implications for the financial services industry in that country, the Forum is an opportune time to bring more than 600 financial services executives and policy makers from around the world to Dublin. The themes of EFF 2017 will focus on the challenges and opportunities for the European financial system as both a source and a provider of capital. The keynotes and panel sessions will have a focus on Europe relative to the North American and Asian financial systems.
Over the last two months, Minister of State Murphy has undertaken two significant visits to Asia and North America. The main purpose of these visits was to promote Ireland as a destination for financial services investment and to launch the IFS Ireland brand in the Asian and North American markets. Minister of State Murphy will continue to promote Ireland overseas as the perfect European location for financial services investment as the IFS 2020 strategy moves into 2017, including during upcoming visits to the UK in November, and Beijing and Hong Kong in January 2017.
Finally, Budget 2017 is the latest step to make Ireland "Brexit ready". The measures announced in Budget 2017 help protect Irish businesses from Brexit volatility, enable them to compete internationally, and make Ireland increasingly attractive for investment. Specifically in relation to the area of financial services, Budget 2017 included a number of measures to respond to the challenges of Brexit, to mitigate future risks, and to maximise any opportunities that might arise. These include the reduced capital gains tax to help entrepreneurs, the Foreign Earnings Deduction (FED) extension and amendment, and the extension of the Special Assignee Relief Programme (SARP). More information on these measures is available in the Budget documentation.
In addition, Budget 2017 also provides for additional staffing for the Department of Jobs, Enterprise and Innovation and the Enterprise Agencies to help them address the challenges and opportunities arising from Brexit. This will help support the enterprise agencies achieve their growth targets across all sectors of the economy, including the IFS2020 target to create 10,000 net new IFS jobs.
92. Deputy Michael McGrath asked the Minister for Finance the number of persons projected to benefit in 2016 and 2017 from the help to buy tax refund; the average benefit expected; and if he will make a statement on the matter. [31415/16]
View answer93. Deputy Michael McGrath asked the Minister for Finance the projected cost of the help to buy tax refund in 2016; and if he will make a statement on the matter. [31416/16]
View answerI propose to take Questions Nos. 92 and 93 together.
As the Deputy will be aware, the "Help to Buy" initiative announced in the Budget, will provide an income tax rebate to first time buyers to assist them in getting the deposit for their first home, as required under the Central Bank's macro-prudential mortgage rules.
As the initiative is demand-led, it is not possible to forecast the numbers of first-time buyers that will choose to avail of it on an annual basis or the average benefit that these individuals will receive. However, initial forecasts of the potential costs by my Department for the coming years, as outlined in Budget 2017, are based on figures in relation to the number of new homes built in recent years and the proportion of which that are purchased by first-time buyers. The scheme will become operational in January 2017, and will be backdated to 19th July 2016, with the first payments being made in 2017. Therefore, there will be no cost in 2016.
94. Deputy Michael McGrath asked the Minister for Finance the yield from non-indexation of the tax bands and credits in 2017; the number of taxpayers impacted by the decision not to change the bands and credits; and if he will make a statement on the matter. [31417/16]
View answerAs part of the preparation for Budget 2017, it was estimated that the Exchequer yield from non-indexation of the income tax system would be in region of c. €385 million in 2017 and €450 million on a full year basis. Of this, non-indexation of income tax credits and bands accounts for c. €345 million in a first year and €400 million on a full year basis.
I am advised by the Revenue Commissioners that it is estimated that around 1.6 million tax cases were impacted by the decision not to index income tax credits and bands in 2017.
95. Deputy Michael McGrath asked the Minister for Finance the change in the monetary value of the PAYE and personal tax credits in 2017, if they had been indexed in line with expected earnings growth and inflation; and if he will make a statement on the matter. [31418/16]
View answer96. Deputy Michael McGrath asked the Minister for Finance the change in the entry point to the top income rate for a single person, currently at €33,800, if it had been indexed in 2017 based on expected earnings growth and inflation; and if he will make a statement on the matter. [31419/16]
View answerI propose to take Questions Nos. 95 and 96 together.
The following table sets out the estimated nominal change in relation to the PAYE and personal tax credits in 2017. This is based on a technical assumption of indexation in line with expected earnings growth of 2.7% and inflation (HICP) of 1.3%. These were set out in my Department's Autumn forecasts in Budget 2017.
|
Tax Credits |
2016 Monetary Value |
Value in 2017 if indexed in line with expected earnings growth |
Value in 2017 if indexed in line with expected Inflation (HICP) |
|
PAYE Credit |
€1,650 |
€1,695 |
€1,670 |
|
Personal Credit |
€1,650 |
€1,695 |
€1,670 |
|
Married Credit |
€3,300 |
€3,390 |
€3,345 |
|
Widowed Persons Credit |
€1,650 |
€1,695 |
€1,670 |
|
Lone Parent Credit |
€1,650 |
€1,695 |
€1,670 |
|
Earned Income Credit |
€550 |
€565 |
€555 |
|
Home Carer Credit |
€1,000 |
€1,025 |
€1,015 |
|
Dependent Relative Credit |
€70 |
€70 |
€70 |
|
Incapacitated Child Credit |
€3,300 |
€3,390 |
€3,345 |
|
Blind Persons Credit |
€1,650 |
€1,695 |
€1,670 |
|
Age tax Credit |
€245 / €490 |
€250 / €505 |
€250 / €495 |
Figures are rounded to nearest €5.
In addition, the following table sets out the change in the single personal standard rate tax band, if it had been indexed in 2017, based on a technical assumption in line with the expected earnings and inflation (HICP) developments.
|
Standard Rate income tax band |
2016 Monetary Value |
Value in 2017 if indexed in line with expected earnings growth |
Value in 2017 if indexed in line with expected Inflation (HICP) |
|
Single persons standard rate tax band |
€33,800 |
€34,715 |
€34,240 |
Figures are rounded to nearest €5.
It is important to point out that the above calculations are prepared on a Pre-Budget 2017 basis, using the Revenue Commissioners Pre-Budget 2017 Income Tax ready reckoner.
97. Deputy Michael McGrath asked the Minister for Finance the full year impact of the tax measures announced in budget 2017, in tabular form; and if he will make a statement on the matter. [31420/16]
View answerThe full year costs for the tax measures announced in Budget 2017 are set out in the following tables.
|
1. REVENUE RAISING MEASURES |
Yield Full Year €m |
|
EXCISE |
|
|
Tobacco Products Tax Excise duty on a pack of 20 cigarettes is increased by 50c, with a pro-rata increase on other tobacco products. It will raise the price of cigarettes in the most popular price category to €11.00 per pack of 20 cigarettes. |
65 |
|
COMPLIANCE MEASURES |
|
|
Section 110 Draft amendments to Section 110 will be made in the Finance Bill to address unintended uses of the section. Further amendments will address other issues arising in relation to Funds and property. |
35 |
|
Tackling offshore tax evasion A comprehensive programme of targeted compliance interventions against those engaged in offshore tax evasion. (2017 yield estimated at €30m). |
_ |
|
Increase resources to confront non-compliance Increasing Revenue staff resources on audit and investigation activities as well as enhancing ICT systems capacity. |
50 |
|
2. REVENUE RELIEVING MEASURES |
Cost Full Year €m |
|
USC |
|
|
Incomes of €13,000 or less are exempt. Otherwise, €0 to €12,012 @ 0.5% €12,013 to €18,772 @ 2.5% €18,773 to €70,044 @ 5% €70,045 to €100,000 @ 8% PAYE income in excess of €100,000 @ 8% Self-employed income in excess of €100,000 @ 11% Medical card holders and individuals aged 70 years and over whose aggregate income does not exceed €60,000 will now pay a maximum USC rate of 2.5%. |
-390
|
|
INCOME TAX |
|
|
An increase in the Home Carer Tax Credit from €1,000 to €1,100 |
-8 |
|
An increase in the Earned Income Credit from €550 to €950 |
-58 |
|
Interest Relief Rented Residential Property The deduction available for qualifying interest payments on monies borrowed to purchase, improve or repair residential rental property is being increased from 75% to 100% over the next 5 years. The deduction will be increased by 5 percentage points each year, with the first increase from 75% to 80% to take effect from 1 January 2017. This measure will apply to both new and existing mortgages. The full-year cost of €70 million, being the cost for full restoration to 100%, will be reached in 2022. |
-70 |
|
Deposit interest retention tax (DIRT) Reduced rate of DIRT: The rate of DIRT will be decreased by 2% each year for the next 4 years until it reaches 33%. The costs shown are in relation to the first 2% reduction. Each subsequent reduction is currently costed at the same amount. (The full year cost will be reached in 2020) |
-36 |
|
OTHER INCOME TAX MEASURES |
|
|
Foreign Earnings Deduction (FED) FED is being extended until the end of 2020. Colombia and Pakistan are being added to the list of qualifying countries. The minimum number of days required to be spent in the qualifying countries is being reduced from 40 to 30 per annum. This will help smaller businesses to access the relief to identify trading opportunities in non-traditional markets for Irish goods and services. |
-3 |
|
Special Assignee Relief Programme To provide certainty to the FDI sector, SARP, which was due to expire at the end of next year, is being extended for an additional 3 years until the end of 2020. |
-8 |
|
HOUSING |
|
|
Help to Buy A rebate of Income Tax paid is being introduced to assist first time buyers of newly built homes to fund the deposit required under the Central Bank macro-prudential rules. Income Tax paid over the previous four years will be available for rebate, up to a total value of 5% of the purchase price, up to a maximum of €400,000. Where the new home is valued between €400,000 and €600,000 the maximum relief (i.e. €20,000) will continue to be available. Homes valued at greater than €600,000 will not qualify for any relief. This scheme will run until the end of 2019. |
-40 |
|
Capital acquisitions tax Changes to tax-free thresholds: The Group A lifetime tax-free threshold applying to gifts and inheritances from parents to children is being raised from €280,000 to €310,000, The Group B lifetime tax-free threshold applying to gifts and inheritances made to parents, siblings, nieces, nephews or grandchildren is being raised from €30,150 to €32,500. The Group C lifetime tax-free threshold applying to gifts and inheritances made to all others (except spouses and civil partners who are exempt) is being raised from €15,075 to €16,250 |
-25 |
|
Rent a Room The ceiling for the rent-a-room scheme is being increased from €12,000 to €14,000 for 2017 and subsequent years. This scheme provides that where a homeowner rents out a room or rooms in their principle private residence they can earn up to €14,000 tax free. The increase will allow homeowners to rent out an additional room at standard rental rates without breaching the new ceiling. |
-1 |
|
Living City Initiative The Living City Initiative is being amended to encourage an increase in the take-up of the scheme. This initiative is being extended to landlords in respect of rented residential property. In addition, the restriction on the maximum floor size of the property is being removed, along with the requirement that the property must have been previously used as a dwelling. |
-3 |
|
Home Renovation Incentive The HRI is being extended until 31 December 2018. |
-38 |
|
ENTREPRENEURS/SELF-EMPLOYED |
|
|
Accelerated Capital Allowances for energy efficient equipment The existing scheme of accelerated capital allowances for energy efficient equipment is being made available to sole traders and non-corporates. |
-3 |
|
Start Your Own Business Relief The Start Your Own Business relief provides a limited income tax exemption for individuals who are long term unemployed who set up their own business. It is being extended for a further 2 years until the end of 2018 to encourage additional new start-up businesses. |
-10 |
|
Revised CGT entrepreneur relief: A reduced CGT rate of 10% will apply to the disposal in whole or in part of a business up to an overall limit of €1 million in qualifying chargeable gains. |
-14 |
|
RURAL ECONOMY |
|
|
Fishers Tax Credit A new tax credit is being introduced for fishers to assist the viability of the fishing sector. Fishers who have fished for at least 80 days in a tax year will be entitled to an income tax credit of €1,270 per annum. |
-6 |
|
Agri-Taxation The Income Averaging regime allows a farmer's taxable profit to be averaged out over a 5-year period. It is being amended to allow a farmer to "step out" of averaging in a year where income is low. This will be available immediately for farmers who will be paying their preliminary tax towards the end of this month. |
_ |
|
Increase in Farmer's Flat-Rate Addition from 5.2% to 5.4% (VAT) The farmer's flat-rate addition will be increased from 5.2% to 5.4% with effect from 1 January 2017 |
-11 |
|
Bog restoration (€2m one-off cost) |
_ |
|
Farm restructuring |
-1 |
|
Fishing vessel decommissioning |
-2 |
|
MISCELLANEOUS OTHER TAXATION MEASURES |
|
|
EXCISE |
|
|
High Efficiency Combines Heat and Power A full carbon tax relief is being provided to incentivise the uptake of HE CHP for fuel inputs used in highly efficient electricity generation |
-2 |
|
Microbreweries Relief The special relief reducing the standard rate of Alcohol Products Tax by 50% on beer produced in microbreweries which produce not more than 30,000 hectolitres per annum is being extended to apply to microbreweries which produce not more than 40,000 hectolitres per annum. The amount of hectolitres upon which a brewery can claim relief remains at 30,000 hectolitres. This increase is an interim measure to allow for a review of the relief with a view to introducing a tapered relief. |
_ |
|
Vehicle Registration Tax (VRT) The VRT reliefs available for the purchase of hybrid electric vehicles and plug-in hybrid electric vehicles, are being extended to 31 December 2018. Electric vehicles, and electric motorcycles are being extended to 31 December 2021. |
_ |
98. Deputy Michael McGrath asked the Minister for Finance the expected yield from the exit tax on life assurance polices in 2016 and 2017; and if he will make a statement on the matter. [31421/16]
View answerI am informed by Revenue that the expected yield from Life Assurance Exit Tax (LAET) in 2016 and 2017 is estimated to be in the order of €228 million and €238 million respectively. Collection to date in 2016 is €228 million and no further significant receipts are expected this year. The forecast for 2017 is based on the 2016 collection, increased in line with Department of Finance growth projections for 2017.
99. Deputy Michael McGrath asked the Minister for Finance if the proposed change to the rate of DIRT tax will also apply to the exit tax on life assurance policies; and if he will make a statement on the matter. [31422/16]
View answerDeposit Interest Retention Tax (DIRT) is deducted by Irish financial institutions from deposit interest paid to the accounts of Irish residents. The basic rate at present is 41%.
DIRT is a "final liability tax" that is, it satisfies the individual's full liability to Income Tax in respect of deposit interest. The individual may still be liable to PRSI on the interest. Deposit interest subject to DIRT is not subject to the Universal Social Charge.
As you are aware, in my Budget speech last week, I announced that the rate of DIRT will be cut by two percentage points for each of the next four years, so that it will be reduced to 33% by 2020.
It is estimated that the overall cost of each 2% reduction in the rate of DIRT is some €9 million in a full year, so that by the time the full reduction is in effect in 2020, the annual full year cost (allowing for rounding) is estimated to be approximately €36 million.
I am aware that in the past the rates payable on a series of other taxes, including Exit Tax on life assurance policies, have tended to move in line with DIRT, however on this occasion I took a decision that those other rates would not be reduced. I decided on that change for the following reasons.
The cost of reducing the rates of other taxes (where the rates payable have tended to move in line with the rate of DIRT) by two percentage points was tentatively estimated by the Revenue Commissioners to be (allowing for rounding) €14m per annum or (allowing for rounding) about €56 million per annum by 2020 the period over which DIRT is to be reduced. It was therefore too costly to the Exchequer to reduce the rates applying to these taxes in the same manner as the reduction in DIRT.
When the rate of DIRT was originally increased, it was aimed at revenue raising and at encouraging consumer spending to boost economic activity. As consumer expenditure has now increased significantly it is now possible to reduce DIRT rates to encourage saving and improve the return to the small saver. I am conscious of the impact of DIRT rates on the small saver who invests in retail savings and where there has been a long period of low interest rates and consequently a low rate of return on such products.
In common with all taxes. Exit Tax is subject to ongoing review, and in this process the rate of tax as well as all reliefs and exemptions are carefully considered.
100. Deputy Michael McGrath asked the Minister for Finance the fiscal space available in 2018 if tax bands and credits are indexed and if they are not indexed; and if he will make a statement on the matter. [31424/16]
View answerAdditional revenue generated from a policy decision to not to proceed with indexation is included in the discretionary revenue measures set out in Table A7 Application of Expenditure Benchmark on a no policy change from 2018 onwards in Annex 2 of the Budget 2017 book.
The amount arising from non-indexation of the estimated €1.2 billion net fiscal space is c.€450 million. This is made up of €65 million carryover from non-indexation in 2017 and c. €385m in the first year yield that should arise from proceeding with non-indexation in 2018. Please note the estimates for 2018 are based on 2017 figures and the cost of non-indexation in 2018 will be reassessed in the preparation of Budget 2018.
Should taxpayers benefit from indexation of the tax system then the net fiscal space would be reduced by c. €385 million in 2018 as the decision to proceed with non-indexation in 2017 was confirmed in Budget 2017.
101. Deputy Peter Burke asked the Minister for Finance the date the changes in the threshold for capital acquisitions tax will increase from €280,000 to €310,000; and if he will make a statement on the matter. [31430/16]
View answer102. Deputy Peter Burke asked the Minister for Finance if a person inherits €260,000 now, whether they will be entitled to inherit a further €50,000 without being liable for capital acquisitions tax after the date when the threshold rises from €280,000 to €310,000; and if he will make a statement on the matter. [31431/16]
View answerI propose to take Questions Nos. 101 and 102 together.
I am advised by Revenue that the relationship between the person who provides the gift or inheritance (i.e. the disponer) and the beneficiary determines the maximum tax-free threshold known as the 'Group threshold' below which gift or inheritance tax does not arise. There are, in all, three separate Group tax-free thresholds based on the relationship of the beneficiary to the disponer. The Group A tax-free threshold applies where the beneficiary is a child (including adopted child, step-child 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. As part of Budget 2017, I announced the raising of the Group A tax-free threshold from €280,000 to €310,000. This higher threshold will take effect for all gifts and inheritances that are received on or after 12 October 2016. The increased Group A threshold will be provided for in the Finance Bill.
Any prior gift or inheritance received by a beneficiary since 5 December 1991 from within the same Group threshold is aggregated for the purposes of determining whether any tax is payable on a current benefit. Tax at the rate of 33% is payable on any excess received over the relevant tax-free threshold. As regards the scenario put forward by the Deputy, the position is that once the Finance Bill is passed into law, an individual who had already received aggregate benefits under the Group A category since 5 December 1991 of €260,000 and who then receives a further benefit of €50,000 under that same category on or after 12 October 2016 would not have exceeded the amended Group A tax-free threshold applicable at the date of the latest benefit (i.e. €310,000) and would have no CAT liability. Any further gift or inheritance from a Group A disponer which brings the aggregate above this threshold sum would be subject to CAT at 33%.
