Written Answers Nos. 148-171
148. Deputy Michael Healy-Rae asked the Minister for Finance his views on the proposal by the Congress of Trade Unions that the proceeds from the sale of shares in a bank (details supplied) should go towards solving the State's housing and homelessness emergency by diverting these funds into a new social housing programme; and if he will make a statement on the matter. [39048/17]
View answerAs I have stated previously, the sale of shares in AIB held by the Ireland Strategic Investment Fund does not result in a beneficial impact to the General Government Balance under the European System of Accounts 2010. This is due to the fact that it is classified as a 'financial transaction' whereby it is essentially the exchange of one form of asset (shares, equities, loans) for another kind (cash). Consequently the sale of any shareholding in AIB does not count as general government revenue. Thus there is no increased capacity to spend on capital projects as a result of the sale of shares in AIB without affecting the general government balance and compliance with the fiscal rules.
While not improving the deficit, the cash proceeds arising from the sale of AIB shares, which have been transferred to the Exchequer, reduce the Exchequer borrowing requirement and result in lower general government net debt initially and gross debt in time. A lower level of debt is not only beneficial in terms of the fiscal sustainability of the State but will also result in reduced interest payments in future years. The strategy of reducing the national debt is consistent with the Government's policy of repaying the borrowing previously undertaken to finance the recapitalisation of the banking sector during the financial crisis. As previously stated, it is the Government's position that the proceeds from the sale of the State's shareholdings in Irish banks, including AIB, will be used to reduce the outstanding level of public debt.
I have previously acknowledged the need for increased public investment. The current Capital Plan sets a baseline from which this Government intends to increase investment in critical infrastructure, and in areas such as housing and health, as the Deputy has identified into the future. As outlined in the 2017 Estimates, gross voted capital expenditure will increase to €4.5 billion in 2017. This represents an increase of €325 million in comparison to the 2016 outturn. Taking account of the recent decision to increase capital expenditure by €500 million in each of 2019, 2020 and 2021 by lowering the contribution to the Rainy Day Fund, it is envisaged that Gross Voted Capital Expenditure will reach just under €7.8 billion, an increase of over 115 per cent in comparison to its level in 2014.
Furthermore, my colleague the Minister for Housing, Planning, Community and Local Government, earlier this month released his Department’s review of ‘Rebuilding Ireland’ alongside a number of newly announced measures specifically designed to tackle the current issues faced around housing and homelessness in Ireland.
149. Deputy Michael McGrath asked the Minister for Finance the amount of moneys used to recapitalise Irish banks specifically for the purpose of dealing with owner-occupier and buy-to-let mortgage debt; and if he will make a statement on the matter. [39107/17]
View answerIn early 2011, as part of the agreement with the External Partners, the Central Bank commissioned a detailed evaluation of the possible loan losses that would be incurred by banks in a severe stress scenario. All the loan books were examined, including the residential mortgage books in Ireland and the UK. The results of this work were key inputs into the capital requirements identified in PCAR 2011, which totalled €24bn. Total losses modeled under the stress scenario on Irish mortgages were €9bn. This comprised €2bn at Bank of Ireland, €4.4bn at AIB/EBS and €2.6bn at Permanent TSB.
A host of other inputs including forecasts for profits and bank balance sheets contributed to the capital requirement set for each institution. As such it is not possible to break down the capital requirement determined for each institution into individual business lines.
150. Deputy Joan Burton asked the Minister for Finance the studies his Department has undertaken in respect of the changes in residential property values and the re-examination of property taxation in 2019; and if he will make a statement on the matter. [39158/17]
View answerDr. Don Thornhill was engaged by my predecessor in 2015 to consider the operation of the LPT, and in particular, any impacts on LPT liabilities due to property price developments. The terms of reference for the review required that it also have regard to the overall yield from LPT and its contribution to total tax revenue on an ongoing basis and the desirability of achieving relative stability, both over the short and longer terms, in LPT payments of liable persons. Dr. Thornhill’s review was informed by the outcomes of a public consultation which received 51 written submissions.
In a contribution to the review, the Economics Division of the Department of Finance prepared estimates of the potential implications for taxpayer liabilities of price developments as a result of price increases since May 2013. This analysis indicated a large variation across the country in possible changes to tax liabilities and estimated that
- 48% of properties would remain in their original band and thus not generate any increase in tax liability,
- 35% of properties would have moved by one band,
- 10% of properties would have moved by two bands,
- The remainder (6%) would have moved by between three and six valuation bands
This illustrated the hypothetical situation that if a revaluation occurred in 2015 there would be significant increases in tax liabilities for some taxpayers, with the bigger band jumps occurring for properties valued in the higher valuation bands in May 2013. The analysis also indicated a wide degree of regional variation in band changes with the largest band increases, and as a consequence tax liability increases under current legislation, mainly occurring in the Dublin area.
Dr. Thornhill’s review report was published on Budget Day 2015. His central recommendation was for a revised system whereby a minimum level of LPT revenues in each local authority area would be determined by Government, ideally having regard to the apportionment between local authority areas of the historic yield. This in turn would allow for the estimation of LPT rates for each local authority area and the application of these by taxpayers and Revenue. Local authorities could adjust this rate upwards by a factor of up to 15%. This new system was recommended by Dr. Thornhill with a possible interim deferral of the next valuation date until November 2018 or November 2019.
The Finance (Local Property Tax) (Amendment) Act 2015 gave effect to the postponement of the revaluation date of residential property for LPT purposes, and also to two other recommendations in Dr. Thornhill's report, involving LPT relief for properties affected by pyrite and relief for properties occupied by persons with disabilities.
I have consistently stated that my Department will consider issues relating to the implementation of other recommendations in the Thornhill Report in due course in line with the 2019 timeline. I can assure the Deputy that this work will be done in good time and that the Government will make its position clear so that households will know well advance what its plans are for LPT. In that regard I consider it very important that the principle that formed a central part of the terms of reference for the 2015 review of LPT i.e., achieving relative stability in LPT payments of liable persons both over the short and longer terms, will inform our consideration of this matter.
151. Deputy Niamh Smyth asked the Minister for Finance the measures he is taking to help persons who are experiencing high motor insurance premiums; his views on whether these measures are seeing positive results; and if he will make a statement on the matter. [39180/17]
View answerAs the Deputy is aware, the problem of rising motor insurance premiums was the main impetus for the establishment of the Cost of Insurance Working Group in July 2016. Its report titled the Report on the Cost of Motor Insurance was published in January 2017. The Report makes 33 recommendations with 71 associated actions to be carried out in agreed time-frames, which are set out in an Action Plan.
Work is ongoing on the implementation of the recommendations by the relevant Government Departments and Agencies and there is a commitment within the Report that the Working Group will prepare quarterly updates on its progress. The second such update was published on the Department's website on 21 July 2017 and shows the progress to date on the overall implementation of the recommendations, with a particular focus on the 17 action points which were due for completion in the second quarter of 2017. All 17 of these action points have been completed by this deadline. Overall, all but one of the 27 action points due in the first two quarters of the year have been completed. Substantial work has also been undertaken in respect of the nine action points categorised as “ongoing”. The third quarterly update will issue in the coming weeks.
I believe that the implementation of the Report on the Cost of Motor Insurance will make a difference to the pricing of insurance premiums over the next 12-18 months. It is envisaged that the implementation of all the recommendations cumulatively, with the appropriate levels of commitment and co-operation from all relevant stakeholders, will achieve the objective of delivering fairer premiums for consumers. I also believe that the Setanta judgment, by finding that MIBI is not liable to meet third party claims, removes a major uncertainty from industry, which I would expect to be reflected in pricing in the short to medium term.
In relation to the recommended measures yielding positive results, it should be noted that the most recent CSO data (for August) indicate that private motor insurance premiums have reduced by 14% year-on-year. While the CSO statistics indicate a greater degree of stability on an overall basis, these figures represent a broad average and therefore there are many people who may still be seeing increases. However, I am hopeful that this greater stability in pricing will be maintained with the result that premiums should continue to fall from the very high level of last year.
152. Deputy Thomas P. Broughan asked the Minister for Finance if he has given consideration to establishing special savings schemes in State financial institutions and credit unions whereby older persons would be encouraged to invest in funds which might be used exclusively for affordable mortgages for younger persons as suggested by many senior persons. [39182/17]
View answerIt is the responsibility of credit institutions (including those in which as Minister for Finance I have a shareholding interest) and other commercial lenders to raise the funds required for their lending operations, including the provision of residential mortgage loans. Deposits continue to be the most important source of funding for the provision of mortgage and other loans by commercial and non-government lending entities and these entities have to compete in the market for that finance.
Regarding credit unions, they can, subject to Central Bank regulatory provisions, provide mortgages to members and some do. However, credit unions are currently under-lent and are looking at ways to grow their loan book rather than savings.
In terms of raising debt finance to fund the provision of public services, including the provision of local authority residential mortgages, such finance is raised by the NTMA and other relevant bodies and the State is currently in a position to raise debt finance at very competitive interest rates. There are, therefore, no plans at present to introduce a hypothecated savings scheme specifically to finance the provision of mortgage loans.
153. Deputy Noel Grealish asked the Minister for Finance if public sector pension contributions are included in the calculation of item three in table three of the tax expenditure review headed "employees contribution to approved superannuation schemes"; if item two in table three entitled "exemption of employers' contributions from employee BIK" encompasses the exemption from employee benefit-in-kind from pension accruals granted by the public employer; and if he will make a statement on the matter. [39262/17]
View answerI understand that the Deputy has clarified that his question relates to Table 1 of Section 3 of the Report on Tax Expenditures 2016.
I am advised by Revenue that regarding the first item, the employee contributions to approved superannuation schemes does include contributions by employees in the public sector, though this contribution does not include amounts paid in relation to the PRD.
Regarding the second item, employers' contributions to approved superannuation schemes excludes public sector employers as the State does not pay contributions to an employee superannuation scheme in the way that it is carried out in the private sector. So, it follows that as the employers' contributions are nil then the cost of exemption of the employers' contributions from BIK is also nil. Public sector employers do not fill this section out for public sector employees.
154. Deputy Danny Healy-Rae asked the Minister for Finance his plans to implement measures to protect local manufacturers in view of the adverse effects of Brexit on the economy (details supplied). [39269/17]
View answerSince the referendum in the UK in June 2016, the euro-sterling bilateral exchange rate has appreciated significantly. I am conscious of the challenges which this is posing for the exporting sectors of the economy, especially those in the more traditional sectors of manufacturing.
With regard to the specific concerns raised by the Deputy, the Irish Vehicle Registration Tax (VRT) system has a number of policy objectives. Firstly, VRT is an important source of revenue for the State. In addition, it also seeks to reflect the negative externalities caused by using the vehicle in the State. These externalities are the costs to society and to the environment that, without the tax, would not otherwise be reflected in the price of the vehicle and for which the consumer would not otherwise have to pay.
In the case of motor vehicles, these include environment externalities such as air pollution, which is why one of the bases for imposing VRT is the vehicle's carbon emissions. Other externalities which VRT seeks to reflect include the costs to society of providing and maintaining the road infrastructure, traffic control, relevant emergency services, and vehicle registration and licensing. The funds raised through VRT go towards compensating the Irish State for these significant costs.
I wish to assure the Deputy that the Government is fully cognisant of the challenges which Brexit presents and the need for policy actions. As we cannot control the international environment or exchange rate developments, it is important that we continue to focus on the factors which we can control, in order to enhance our competitiveness and boost our productivity. Ensuring a sustainable path for the public finances is also of fundamental importance.
Greater market diversification must be part of the policy response, so that dependence and exposure to the UK market is reduced. As part of the Government’s trade strategy, Ireland Connected, a number of measures have been set out to specifically address Brexit related issues, including diversification of markets for indigenous exporters.
In addition, my Department continues to work with the Department of Business, Enterprise and Innovation, SBCI, Enterprise Ireland, and the Department of Agriculture to develop potential supports in response to the future needs of businesses impacted by Brexit. Development of these proposed responses is subject to resources being agreed as part of the annual budgetary process.
Advisory supports in relation to business planning, such as those provided by the Local Enterprise Offices and Enterprise Ireland, will also be particularly important in assisting viable but vulnerable SMEs that may be adversely affected due to Brexit. These supports will help raise awareness of both private market financial supports and existing State supports.
155. Deputy Michael McGrath asked the Minister for Finance the status of resolving the outstanding claims associated with a company (details supplied); and if he will make a statement on the matter. [39279/17]
View answerSetanta Insurance was placed into liquidation by the Malta Financial Services Authority on 30 April 2014. Setanta Insurance was a Maltese incorporated company and therefore, the Setanta liquidation is being carried out under Maltese law.
The Supreme Court delivered its judgment on 25 May 2017 and overturned the previous decisions of the High Court and the Court of Appeal that the Motor Insurers’ Bureau of Ireland (MIBI) is liable in respect of third party motor insurance claims made against the policyholders of Setanta Insurance. The consequence of this is that the Insurance Compensation Fund (ICF) has been deemed responsible for the payment of such third party claims.
As the judgment has been delivered, the process of making payments in accordance with the provisions of the Insurance Act, 1964, as amended, has commenced. Payments can only be made out of the ICF, with the approval of the High Court and only if it appears to the High Court that it is unlikely that the claim can be met otherwise than from the ICF. If satisfied, the High Court can order payments out of the ICF up to 65% (or €825,000, whichever is the lesser) due to relevant claimants.
In this regard, an Order was granted in the High Court on Monday 24 July 2017 in relation to 324 claims which were subsequently paid by the Office of the Accountant of the Courts of Justice. The Liquidator has informed the Department that, as of 31 August 2017, there are 1,576 active claims, of which 573 claimants have been paid compensation from the ICF subject to the 65% €825,000 limits. The Liquidator is currently working on the next batch of claims to be included in the next application to the High Court scheduled to be made in February 2018 in accordance with the legislation.
Over and above the 65% ICF payment, it is expected that a proportion of the balance of money due to third party claimants will be met from the proceeds of the distribution of Setanta’s assets on completion of the liquidation process. However, it is not possible to say definitively at this stage what proportion of the claims this will amount to. In this regard, a preliminary assessment was carried out by Towers Watson in 2014 who indicated that the Liquidator would not be in a position to meet more than 30% of claims out of the assets of the liquidation. The Liquidator has subsequently informed the Department that as the Supreme Court has now made its judgment, a new actuarial report is being commissioned. This is expected to be completed in Q4 2017.
156. Deputy Pearse Doherty asked the Minister for Finance the revenue that would be raised if a cap was introduced for companies to allow for a maximum write off of depreciation against income of percentages (details supplied) per annum regarding capital allowances on intellectual property. [39306/17]
View answer157. Deputy Pearse Doherty asked the Minister for Finance the revenue that would be raised if the 2014 rules of taxation for capital allowance of intellectual property were reinstated with regard to capital allowances on intellectual property. [39307/17]
View answer174. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be raised if a cap was introduced for companies to allow for a maximum write off of annual depreciation of intangible assets of percentages (details supplied) of annual income. [39521/17]
View answerI propose to take Questions Nos. 156, 157 and 174 together.
The Review of Ireland’s Corporation Tax Code, which was undertaken by an independent expert, Mr. Seamus Coffey, was published on Tuesday, 12 September 2017. In the Review, Mr. Coffey makes a number of recommendations in respect of Ireland’s corporation tax code, including a recommendation that a cap of 80% should apply to the amount of capital allowances for intangible assets, and any related interest expense, that may be deducted from income arising from intangible assets in an accounting period. The use of such capital allowances and related interest expenses are already ring-fenced under current legislation - they can only be offset against relevant income arising from the intangible assets. However, Mr. Coffey has recommended that a cap should also apply, in line with the treatment that applied prior to 2015, with the objective of ensuring some smoothing of corporation tax revenues over time.
Of note, the reintroduction of a cap would affect the timing of relief in the form of capital allowances and related interest expenses for intangible assets but would not affect the overall quantum of relief. This is because any amounts restricted in one accounting period as a result of a cap would be available for carry forward and utilisation in a subsequent accounting period, subject to the application of the cap in that period.
As the Deputy will be aware, changes to tax law are generally made on a prospective basis such that they apply only from the date on which they have legal effect. This would mean that intangible assets acquired prior to the date on which any cap is introduced in law would be ‘grandfathered’ and claims made by reference to those intangible assets would not be subject to a cap.
I requested my Department and Revenue to look at the costings associated with the introduction of a cap on capital allowances for intangible assets and related interest expenses. However, given the complexities involved, further analysis is required to quantify the tax revenues that might be generated as a result of introducing such a cap. Any change in law will be prospective and, therefore, any increase in tax revenues as a result of a restriction on the timing of the reliefs will depend on the scale of claims made in respect of future acquisitions of intangible assets, including any claims made as a consequence of the on-shoring of intangible assets currently held in other jurisdictions.
158. Deputy Pearse Doherty asked the Minister for Finance his views on recent EU tax proposals backed by France, Germany, Spain and Italy which would see big multinationals taxed on turnover as opposed to the current system which taxes them on profits, particularly in view of Ireland's economic reliance on US multinationals with their European headquarters here. [39308/17]
View answerIreland remains committed to global tax reform and believes that global solutions are needed to ensure tax is paid by companies where value is created. That is why Ireland has been a committed participant in, and strong supporter of, tax reform efforts led by the OECD through the BEPS process.
The OECD is already carrying out important research into the digital economy, with the publication of its interim report expected in Spring 2018. This will provide important input into the ongoing consideration of where value is created in digital business.
It would be premature to take action without considering the OECD analysis and for that reason I do not support the recent proposal to move ahead of the OECD process through the introduction of an equalisation tax based on turnover.
A consistent global approach is needed, as these digital companies are global in nature. Any solution must build on a shared understanding of where value is actually created by digital business. Applying different rules within the EU to what is being applied globally is likely to result in double taxation and greater uncertainty.
Multinationals will always want to have operations in the EU, and Ireland will remain very competitive and attractive as an EU location to invest in and do business from.
159. Deputy Pearse Doherty asked the Minister for Finance the procedure for membership involvement in credit union mergers; and if he will make a statement on the matter. [39323/17]
View answer160. Deputy Pearse Doherty asked the Minister for Finance if members voted on the merger of two credit unions (details supplied); the way this vote took place; the way this vote was advertised to members of a credit union; and the way members of a credit union were informed of this merger. [39324/17]
View answer161. Deputy Pearse Doherty asked the Minister for Finance if members voted on the merger of two credit unions (details supplied); the way this took place; the way this vote was advertised to members of a credit union; and the way members of a credit union were informed of this merger. [39325/17]
View answerI propose to take Questions Nos. 159 to 161, inclusive, together.
A transfer of engagements is a voluntary process whereby all assets, liabilities and undertakings of one or more credit unions are transferred to another credit union. Sections 129 – 132 of the Credit Union Act 1997 set out requirements relating to a transfer of engagements between credit unions. This is a matter for the Registrar of Credit Unions at the Central Bank.
The Central Bank has informed me that it is subject to strict confidentiality requirements and cannot comment on individual credit unions. However, the Central Bank confirmed that the credit unions to which the Deputy refers remain as separate registered credit unions and at this point in time, no transfer of engagements has been undertaken.
In order to transfer its engagements or to undertake to fulfill the engagements of another credit union, a credit union shall resolve to do so by a Special Resolution of their members, or if the Registrar of Credit Unions considers it expedient to do so, by a resolution of the board of directors.
Prior to any transfer of engagements process completing, every member of each credit union concerned must be sent all relevant information in line with the requirements of Section 130 of the Credit Union Act 1997, which includes:
- Notice of a general meeting of the credit union, or where applicable, notice of the resolution passed by the board of directors; and
- A copy of the annual accounts for each credit union concerned for the most recent financial year.
All information in relation to the transfer of engagements process can be found on the Central Bank of Ireland website at the following link: www.centralbank.ie/docs/default-source/Regulation/industry-market-sectors/credit-unions/credit-union-handbook/cu-handbook--transfers.pdf?sfvrsn=10.
162. Deputy Pearse Doherty asked the Minister for Finance his views on whether a margin of compliance (details supplied) is appropriate; and his plans to alter this margin of compliance in advance of budget day. [39330/17]
View answer163. Deputy Pearse Doherty asked the Minister for Finance his views on whether over-adhering to the fiscal rules for 2018 would be counterproductive in respect of a matter (details supplied); and if he will make a statement on the matter. [39331/17]
View answerI propose to take Questions Nos. 162 and 163 together.
Fiscal space is calculated, in the first instance, using the expenditure benchmark. The projected fiscal space from this calculation is then incorporated into the fiscal forecasts, in accordance with Government policy, in order to calculate the resulting general government balance and, in turn, the projected structural balance. My Department can then determine if the outcome complies with the balanced budget rule. Compliance with the debt reduction rule is also examined.
The outcome from the expenditure benchmark calculation, as set out in the 2017 Summer Economic Statement (SES), resulted in the identification of additional fiscal space of about €150 million above the previous estimate. However, using this additional fiscal space from the expenditure benchmark would result in non-achievement of the medium-term budgetary objective (MTO) next year. In order to ensure achievement of the MTO next year, my Department calculated that it would not be possible to use the additional €150 million of fiscal space in 2018 and this is reflected in the fiscal forecasts in the SES.
This "margin of compliance", referred to by the Deputy in his questions, has not been factored into minimum compliance with the expenditure benchmark. Not using the additional €150 million will result in over-compliance with the minimum level required by the benchmark. However, this is necessary to help ensure achievement of the MTO in 2018.
Achieving the MTO has been the anchor for fiscal policy since correcting the excessive deficit in 2015. We are on-track to balance the books next year.
At the same time, it is clear that the economy is now on a path towards full-employment. In these circumstances, the focus must increasingly shift towards the appropriate stance of fiscal policy so that policy does not contribute to over-heating the economy. In other words, the focus must be on what is right for the economy and not solely what is legally permissible under the rules. I want to assure the Deputy that the Government will not repeat the mistakes of the past by adopting inappropriate taxation and spending policies.
164. Deputy Pearse Doherty asked the Minister for Finance the number of properties which are currently liable for the property tax; and if he will make a statement on the matter. [39332/17]
View answerI am advised by Revenue that statistics relating to Local Property Tax (LPT) can be found on the statistics webpage of the Revenue website at www.revenue.ie/en/corporate/information-about-revenue/statistics/local-property-tax/index.aspx.
Taking the end 2016 statistics (the most recent year for which complete data are available), www.revenue.ie/en/corporate/information-about-revenue/statistics/local-property-tax/end-of-year-reports/local-property-tax-2016.aspx, these statistics show that 1.886 million properties were returned for the year. This includes properties for which rollover payment instructions were received, new payment instructions, Local Authority owned properties and properties where mandatory deduction at source has been applied. It also includes liable properties where an exemption or deferral is an operation.
It is estimated that this represents a compliance rate of 97% for the 2016 liability year. This rate is calculated from an approximate base of 1.95 million liable properties, extrapolated from Central Statistics Office Census 2011/2016 information and data collected from the administration of LPT since 2013.
The most recent statistics published by Revenue (June 2017) show 1.883 million properties returned and a compliance rate estimated at 96% for the current year and further updates will be published in due course.
165. Deputy Pearse Doherty asked the Minister for Finance the number of transactions that have been reported to the Revenue Commissioners by obliged promoters since the introduction of the Mandatory Disclosure of Certain Transactions Regulation 2011; and the type of entities from which the reports were received, the form of transaction reported and the criteria under which the reporting was triggered per annum. [39337/17]
View answer1. Number of Transactions Reported to Revenue
Revenue has received eleven disclosures from promoters of tax schemes under the Mandatory Disclosure regime.
Subsequent to receipt of the disclosures, Revenue received from the promoters associated client lists containing the names of 494 taxpayers. While a taxpayer may be listed on a client list this, in itself, is not evidence that the taxpayer actually participated in and implemented the tax scheme disclosed. In the case of each individual listed an inquiry has to be carried out to determine if, and to what extent, the scheme was implemented by the individual concerned.
2. Types of Entity
The disclosures have been received from the following types of entity:
- Large General Accountancy and Tax Firms (4)
- Specialist Tax Advisory Practices (4)
- Financial/Wealth Management Practices (2)
- Corporate Trustee (1)
3. Form of Transaction Reported and Criteria Under which the Transaction was Reported (per annum)
Eleven schemes have been disclosed under the mandatory disclosure regime. Four relate to employee benefit trusts (these are arrangements designed to deliver tax-free benefits to employees). Three relate to various artificial loss schemes. Two relate to share transactions. The remaining two schemes relate to assets and liabilities of a partnership transferred to a limited company (in these cases the transaction described was found to be in order).
All disclosures have been examined and, where appropriate, inquiries have been opened in respect of those who have been identified as participants in the schemes. In addition, where appropriate, Revenue has recommended amendments to the legislation being exploited.
166. Deputy Catherine Murphy asked the Minister for Finance the breakdown of local property tax, LPT, which is deferred on the basis of inability to pay by local authority; the total income from interest in 2015, 2016 and 2017 that arises from deferred LPT; the rate of interest applied; and if he will make a statement on the matter. [39368/17]
View answerPart 12 of the Finance (Local Property Tax) Act 2012 (as amended) provides for a deferral or partial deferral (50%) of LPT where certain specified circumstances exist. These circumstances include ‘Income Level’, ‘Hardship’, ‘Personal Insolvency’ and ‘Personal Representative of a Deceased Person’.
Once granted, a deferral normally remains in place for the duration of the ‘Valuation Period’, which is currently 1 May 2013 to 31 October 2019. Where a deferral is in place, the outstanding liability automatically attaches as a charge on the property and must be paid before a sale or transfer can be completed. Interest is also charged on the deferred amount at a rate of 4% per annum.
There are currently 62,500 properties with LPT deferrals in place, most of which are in respect of the entire ‘Valuation Period’ (2013-2019). The following table sets out the value of the deferrals broken down by Local Authority. The total accumulated interest to date is €5m of which €2.6m relates to the years specified by the Deputy (2015, 2016 and 2017).
|
Local Authority |
No of properties |
Deferral Liability 2013 € |
Deferral Liability 2014 € |
Deferral Liability 2015 € |
Deferral Liability 2016 € |
Deferral Liability 2017 € |
|
Carlow |
885 |
45,324 |
111,780 |
138,830 |
153,815 |
153,230 |
|
Cavan |
1149 |
51,231 |
125,775 |
155,925 |
175,410 |
171,000 |
|
Clare |
1650 |
78,582 |
200,340 |
210,426 |
247,765 |
284,535 |
|
Cork City |
1719 |
133,889 |
298,935 |
305,505 |
330,644 |
362,745 |
|
Cork County |
4367 |
309,681 |
741,727 |
772,889 |
931,189 |
972,304 |
|
Donegal |
3586 |
151,865 |
392,040 |
487,381 |
570,240 |
554,580 |
|
Dublin City |
7526 |
1,089,802 |
2,418,250 |
2,238,771 |
2,372,884 |
2,325,032 |
|
Dun Laoghaire Rathdown |
1775 |
356,505 |
794,747 |
746,601 |
806,495 |
789,312 |
|
Fingal |
3129 |
369,754 |
861,616 |
817,949 |
880,687 |
865,555 |
|
Galway City |
769 |
68,397 |
160,920 |
184,140 |
205,470 |
199,170 |
|
Galway County |
2241 |
108,242 |
270,810 |
342,855 |
400,545 |
435,555 |
|
Kerry |
1806 |
96,152 |
232,650 |
297,135 |
361,170 |
355,545 |
|
Kildare |
2498 |
198,260 |
488,610 |
512,406 |
572,917 |
611,775 |
|
Kilkenny |
1127 |
59,812 |
151,560 |
179,640 |
205,740 |
205,965 |
|
Laois |
1162 |
50,204 |
129,375 |
155,880 |
180,675 |
179,775 |
|
Leitrim |
456 |
18,072 |
45,675 |
56,475 |
65,385 |
63,990 |
|
Limerick |
2834 |
161,691 |
389,295 |
445,265 |
513,038 |
549,748 |
|
Longford |
614 |
22,344 |
53,505 |
65,149 |
79,948 |
77,972 |
|
Louth |
2313 |
128,999 |
313,741 |
366,393 |
423,662 |
421,690 |
|
Mayo |
1702 |
73,614 |
188,235 |
231,112 |
282,683 |
274,770 |
|
Meath |
2695 |
196,505 |
470,925 |
551,745 |
627,120 |
622,665 |
|
Monaghan |
882 |
37,315 |
99,315 |
125,865 |
132,458 |
142,605 |
|
Offaly |
1182 |
55,060 |
140,760 |
174,150 |
203,490 |
198,540 |
|
Roscommon |
877 |
33,434 |
84,690 |
108,270 |
123,255 |
120,555 |
|
Sligo |
845 |
40,931 |
101,070 |
121,497 |
142,425 |
136,890 |
|
South Dublin |
3322 |
374,776 |
864,650 |
815,024 |
885,664 |
878,339 |
|
Tipperary |
2159 |
106,553 |
261,764 |
314,954 |
369,841 |
368,177 |
|
Waterford |
1775 |
98,139 |
232,020 |
274,657 |
318,870 |
308,430 |
|
Westmeath |
1203 |
65,019 |
156,915 |
181,420 |
215,903 |
214,335 |
|
Wexford |
2499 |
138,886 |
341,595 |
408,269 |
464,220 |
473,310 |
|
Wicklow |
1809 |
165,735 |
402,060 |
385,891 |
515,955 |
513,030 |
|
Total |
62,556 |
4,884,773 |
11,525,350 |
12,172,469 |
13,759,563 |
13,831,124 |
167. Deputy Fiona O'Loughlin asked the Minister for Finance the affordability criteria that are considered by banks for a person buying their second home; and if he will make a statement on the matter. [39399/17]
View answerThere are certain legislative and regulatory provisions governing the provision of residential mortgage credit to consumer borrowers. One of the key measures is the Central Bank of Ireland macro-prudential measures which apply proportionate loan-to-value and loan-to-income limits to mortgage lending by regulated financial service providers. For principal dwelling home mortgages, the loan-to-income limit is set at 3.5 times gross income though lenders have the flexibility to exceed that threshold each year in respect of up to 20 per cent of housing credit. More generally the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 places an obligation on lenders to assess the creditworthiness of residential mortgage borrowers and it also provides that credit shall only be made available where the assessment indicates that the borrower is likely to be able to meet the obligations of the proposed credit agreement. The Central Bank Consumer Protection Code also places a requirement on lenders to assess the affordability of credit, including a consideration of the personal consumer's ability to repay the mortgage on the basis of a 2 per cent increase in the mortgage rate above that offered to the borrower. (However, this test does not apply where the interest rate is fixed for a period of five years or more). Subject to complying with these legislative and regulatory requirements it is a matter for lenders to set their own mortgage credit policies and to make their own individual mortgage lending decisions. Ultimately, the decision on whether or not to provide credit, or the amount of credit to offer, in any particular case is a commercial decision for the individual lender. As Minister for Finance, I would not have a role in such commercial decisions.
168. Deputy Pearse Doherty asked the Minister for Finance the number of persons who on receipt of a lump sum at retirement exceeded their tax free lump sum threshold of €200,000 in each of the years 2014 to 2016 in tabular form; the number of persons who were taxed at 20% reduced income tax and no USC on the portion of their lump sum between €200,001 and €500,000; and the number of persons who were subject to full taxation on their sum on the amount in excess of €500,000. [39454/17]
View answerSection 790AA of the Taxes Consolidation Act 1997 provides for the taxation of retirement lump sums, paid under various pension arrangements that are above the specified tax-free limit of €200,000.
The following table sets out the total number of relevant retirement lump sum payments (i.e. greater than €200,000) and the associated tax collected for the years 2014 to 2016. Revenue has advised me that its records are not maintained in a manner that facilitates extracting the individual tax rates or USC amounts involved.
Revenue has also advised me that the portion of a retirement lump sum in excess of €500,000 is regarded as profits or gains arising from an office or employment and is taxed under PAYE along with the taxpayers other PAYE income. Accordingly, it is not separately distinguished from other income from the employment in the relevant year, and therefore it is not possible to provide statistics in relation to this portion of lump sum income.
|
Year |
Total number of retirement lump sum payments greater than €200,000 |
Total tax paid (millions) |
|
2014 |
888 |
€12.2 |
|
2015 |
883 |
€14.8 |
|
2016 |
910 |
€13.2 |
169. Deputy Ruth Coppinger asked the Minister for Finance the estimated full year cost of abolishing the USC for all income earners earning under €100,000 in 2018 while maintaining it as it is for all income over €100,000 (details supplied). [39461/17]
View answerI am advised by Revenue that the estimated full year cost of abolishing the Universal Social Charge (USC) in 2018 on all income less than €100,000 is €2,924 million. This costing includes the abolition of USC on all income up to €100,000, i.e., those earning in excess of €100,000 only pay USC on the portion of their earnings in excess of €100,000. This costing includes the retention of the 3% USC surcharge for those income earners deemed to be self-employed.
This estimate has been generated by reference to 2018 incomes as calculated on the basis of actual data for the year 2015, the latest year for which returns are available, adjusted as necessary for income, self-employment and employment trends in the interim. The estimate is provisional and may be revised.
170. Deputy Catherine Connolly asked the Minister for Finance the reason special needs assistants are not entitled to claim flat rate expenses; his plans to extend flat rate expenses to cover persons such as special needs assistants in budget 2018 in view of the fact that flat rate expenses are available as a tax write-off for a number of professions, including teachers; and if he will make a statement on the matter. [39466/17]
View answerThe legislation governing the deductibility of expenses incurred in employment is contained in section 114 of the Taxes Consolidation Act 1997. The provision dictates that for an expense to qualify as a deduction against income from an office or employment, the expense must be wholly, exclusively and necessarily incurred in the performance of the duties of the office or employment.
For ease of administration, where a large number of employees incur broadly identical expenses which are not reimbursed by their employer, a standard flat rate expenses allowance may be agreed between Revenue and representatives of groups or classes of employees. The agreed deduction is then applied to all employees of the class or group in question.
It should be noted that any employee who is obliged to defray expenses incurred wholly, necessarily and exclusively in the course of their employment may make a claim to Revenue to deduct such expenses from their taxable emoluments irrespective of the existence or otherwise of a Flat Rate Expenses agreement.
If a representative body acting on behalf of employed special needs assistants wishes to advance a case for a Flat Rate Expense amount they should contact Revenue’s Personal Taxes Policy & Legislation Division, New Stamping Building, Dublin Castle, Dublin 2.
171. Deputy Jim O'Callaghan asked the Minister for Finance the amount of tax in dispute by band; and the number of cases in each band, in tabular form. [39468/17]
View answerI am advised by Revenue that the aggregate amount of all taxes and duties in dispute by way of appeal currently stands at close to €1.5 billion. The following table contains information relating to all cases currently under appeal before the Tax Appeals Commission.
|
Band |
Number of Appeals (see note) |
Amount in Dispute (€) |
|
0 to 10,000 |
2,214 |
3,400,399 |
|
10,000 to 50,000 |
886 |
24,376,355 |
|
50,000 to 100,000 |
428 |
30,176,570 |
|
100,000 to 500,000 |
558 |
122,276,407 |
|
500,000 to 1,000,000 |
109 |
77,436,366 |
|
1,000,000 to 2,000,000 |
85 |
123,820,913 |
|
2,000,000 to 3,000,000 |
32 |
77,096,546 |
|
3,000,000 to 4,000,000 |
14 |
48,643,434 |
|
4,000,000 to 5,000,000 |
11 |
49,984,379 |
|
5,000,000 to 10,000,000 |
24 |
165,450,247 |
|
Over 10,000,000 |
26 |
811,368,921 |
|
|
|
|
|
Totals |
4,387 |
1,534,030,537 |
Note: A taxpayer may appeal against tax assessments relating to a number of tax periods in respect of the same issue. Each of these is counted as an individual appeal.
