Tuesday, 27 Feb 2018

Written Answers Nos. 162-174

Tax Code

Questions (162, 163, 164)

Billy Kelleher

Question:

162. Deputy Billy Kelleher asked the Minister for Finance the introduction date for the sugar sweetened drink tax; and if he will make a statement on the matter. [9461/18]

Billy Kelleher

Question:

163. Deputy Billy Kelleher asked the Minister for Finance the estimated revenue per annum from the sugar sweetened drink tax from 2018 to 2021; and if he will make a statement on the matter. [9462/18]

Billy Kelleher

Question:

164. Deputy Billy Kelleher asked the Minister for Finance if consideration has been given to ring-fencing revenue from the sugar sweetened drink tax specifically for an obesity prevention fund; and if he will make a statement on the matter. [9463/18]

Written answers

Minister for Finance

I propose to take Questions Nos. 162 to 164, inclusive, together.

It is my intention to introduce the Sugar Sweetened Drinks Tax on 6 April 2018 which coincides with the introduction of a similar tax being introduced in the UK on that date.

The estimated yield for 2018 is in the region of €30m with the yield for 2019 and subsequent years €40m per annum. The yield could potentially decrease over time as consumers opt for cheaper non-tax products combined with continued industry reformulation.

Hypothecation is not a feature of the Irish tax system in general. The Department of Finance is opposed to the hypothecation of revenue funds as it reduces the flexibility of the Government to prioritise and allocate funds as necessary at a particular time.

An annual budget is allocated to the Department of Health as part of the estimates process and that is assigned according to the needs within that Department, including in relation to measures to tackle the problem of obesity.

Bank Charges

Questions (165)

Seán Sherlock

Question:

165. Deputy Sean Sherlock asked the Minister for Finance the engagement he has had with banks in regard to persons accessing their statements without being charged. [9473/18]

Written answers

Minister for Finance

All credit institutions in Ireland are independent commercial entities and I have no statutory role in relation to the charges applied by credit instructions. Section 149 of the Consumer Credit Act 1995 came into effect in May 1996 and requires that credit institutions and bureaux de change notify the Central Bank if they wish to:

- Introduce any new customer ‘charge’ for providing a service, or

- Increase any existing customer ‘charge’ for providing a service.

‘Service’ means any service provided by a credit institution to a customer in respect of the following:

- Making and receiving payments;

- Providing foreign exchange facilities;

- Providing and granting credit; or

- Maintaining and administrating transaction accounts.

Should a credit institution wish to impose a new charge or increase an existing charge (should an existing charge be in place) for a statement on an account falling within the definition of a service, that credit institution would require approval by the Central Bank, before imposing that charge on customers.

All regulated entities are required to comply with the Central Bank’s Consumer Protection Code 2012 (the Code). The Code provides that a regulated entity must ensure that in all its dealings with customers and within the context of its authorisation it makes full disclosure of all relevant material information, including all charges, in a way that seeks to inform the customer. The regulated entities ‘terms of business’ document as required by the Code must include a general statement of the charges imposed directly by the regulated entity. Prior to providing a product or service to a consumer, a regulated entity must provide the consumer, on paper or another durable medium, with a breakdown of all charges which will be passed on to the consumer. A regulated entity must display in its public offices a schedule of their fees and charges, and this schedule must also be placed on its website.

A regulated entity must inform a consumer that he or she may request statements to be provided on paper, and provide the statements if requested. In relation to all term and notice deposit accounts with a balance in excess of €20, a credit institution must provide the consumer with an annual statement. An annual statement must also be provided for loans and investment products.

Tax Rebates

Questions (166)

Seán Sherlock

Question:

166. Deputy Sean Sherlock asked the Minister for Finance if a person (details supplied) in County Kildare is due a repayment on taxable income for the past four years. [9496/18]

Written answers

Minister for Finance

I am advised by Revenue that the person in question has received reviews for the tax years 2014, 2015, 2016 and 2017.

The reviews confirmed that there was no tax refundable in respect of 2014, 2015 and 2016. The review in respect of 2017 confirmed that a refund of tax is due, which will issue to the person in the coming days.

Departmental Budgets

Questions (167)

Pearse Doherty

Question:

167. Deputy Pearse Doherty asked the Minister for Finance his Department's capital allocation in each of the years from 2018 to 2022; and the areas to which funds will be allocated in each of those years. [9519/18]

Written answers

Minister for Finance

The recently launched National Development Plan 2018-2024 contains the relevant information for the Deputy in pages 98 and 104, which outlines the allocation for the years in question under the Department of Finance Vote Group.

Tax Code

Questions (168, 169)

Pearse Doherty

Question:

168. Deputy Pearse Doherty asked the Minister for Finance the estimated savings from the non-indexation of tax bands and credits in each of the years 2018 to 2022. [9528/18]

Pearse Doherty

Question:

169. Deputy Pearse Doherty asked the Minister for Finance the estimated amount that each of the tax bands and tax credits would increase by if they were indexed in each of the years from 2018 to 2022. [9529/18]

Written answers

Minister for Finance

I propose to take Questions Nos. 168 and 169 together.

As the Deputy is aware, the Programme for Partnership Government 2016, indicates that the income tax system will not be indexed. As part of the preparations for Budget 2018, it was estimated that the Exchequer yield from non-indexation of the income tax system would be in the region of €0.6 billion on a full year basis.

It is important to point out that the calculation of non-indexation of the income tax system for 2018 was prepared on the basis of the following technical assumptions:

1. The projected increase in non-agricultural wages in 2018 of 3.1%.

2. The Revenue Commissioners Pre-Budget 2018 Ready Reckoner.

As the Deputy will appreciate, my Department has projected wage growth only out to 2021 for Budget 2018. In addition, I am advised by Revenue that Tax Ready Reckoners beyond 2018 are not available. However, it is not expected that the full year yield for the Exchequer from non-indexation of the income tax system beyond 2018 would change significantly from the €0.6 billion stated above.

Furthermore, I am advised by Revenue that the Post-Budget 2018 Ready Reckoner, available at: https://www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf, shows on page 10 the cost to the Exchequer of a 1% indexation of a number of credits and bands in 2018. Further changes can be estimated on a pro-rata basis from the information shown.

Tax Code

Questions (170)

Pearse Doherty

Question:

170. Deputy Pearse Doherty asked the Minister for Finance if his attention has been drawn to a recent ruling by the British tax authorities, which have found against persons who work for an organisation (details supplied) that uses contracting companies to avoid tax; and if the Revenue Commissioners are investigating persons who work for television broadcasters here in the same manner. [9546/18]

Written answers

Minister for Finance

The use of intermediary-type structures is becoming more prevalent as a means of providing labour. At its simplest, an individual who might otherwise be engaged as an employee by the end-user of his or her services provides the services to the end-user through an intermediary. Typically the intermediary used in such circumstances is a company. The company can take the form of a personal services company (PSC), with only one worker who is also a director. The company earns all, or almost all, of its income from supplying the services of the worker/director to the end user. A variation on the PSC arrangement is a managed service company (MSC), which supplies the services of more than one individual.

I understand that the UK tax authority, HM Revenue and Customs (HMRC) has recently been successful in the appeal case referred to by the Deputy. This appeal was taken by an intermediary company which had a contract with a television company in relation to the provision of the services of a journalist.

The appeal case related to a charge to tax and national insurance contributions arising under specific UK tax and social security legislation relating to the supply of a person’s services through an intermediary. In summary, Chapter 8 of the Income Tax (Earnings and Pensions) Act, 2003 and the Social Security Contributions (Intermediaries) Regulations 2000 provide that where the services of an individual are supplied through an intermediary to an end-user in certain circumstances, the intermediary company is required to treat all payments and benefits, including for example dividends, made to that individual as employment earnings and to deduct and remit PAYE income tax and national insurance contributions accordingly. Those circumstances are where the individual would be regarded for income tax and national insurance purposes as an employee of the end-user if the services were provided under a contract directly between the end-user and the individual.

I am advised by Revenue that we have no comparable legislation in Ireland governing the taxation of individuals engaged through intermediary companies. As a consequence, there is no basis for Revenue to seek to ignore contractual arrangements entered into by such a company and to apply the tax treatment that gave rise to the appeal.

In relation to the question of an investigation or audit, I am further advised by Revenue that it cannot comment on matters relating to any specific identified taxpayer or narrowly defined group of taxpayers. However, in the absence of legislation similar to that referred to above, there is no statutory basis for Revenue to take the approach that gave rise to the recent UK appeal.

In January I, along with my colleague, the Minister for Employment Affairs and Social Protection, published a report informed by the public consultation on the use of intermediary-type structures and self-employment arrangements. The consultation invited submissions on possible measures to address the loss to the Exchequer that may arise under various scenarios including where an individual, who would otherwise be an employee of an end user, provide his or her services to that end user through an intermediary vehicle.

The report concludes that the major part of the Exchequer loss is attributable to the much lower social insurance contribution payable by self-employed individuals as compared with aggregate total social insurance contribution paid by and in respect of employees. It therefore recommends that the most effective step to take is to consider reducing the differential in social insurance rates.

The report also examined options to address this challenge by providing that, in certain circumstances where an individual is engaged through an intermediary and that engagement bears the characteristics of dependent employment by the end user of the person’s services, that end-user would be required to deduct income tax and PRSI under the PAYE system. The report recommended that such proposals should be further explored and would have potential to reduce the scope for aggressive tax planning.

I am examining these recommendations along with my colleague, the Minister for Employment Affairs and Social Protection.

Motor Insurance Costs

Questions (171)

Marcella Corcoran Kennedy

Question:

171. Deputy Marcella Corcoran Kennedy asked the Minister for Finance the steps being taken to address the exceptionally high motor insurance premiums being charged to returning emigrants; and if he will make a statement on the matter. [9579/18]

Written answers

Minister for Finance

As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. Neither I nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept. This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. Consequently, I am not in a position to review individual cases as to the pricing level or terms or conditions that should apply in such cases.

However, I wish to inform the Deputy that issues faced by returned emigrants, both from EU and non-EU countries, featured prominently in the Cost of Insurance Working Group’s examination of the motor insurance sector. Accordingly, Recommendation 6 of the Report on the Cost of Motor Insurance aims to address the problems faced by this category of drivers. Pursuant to this recommendation, a protocol has been agreed between the Department and Insurance Ireland under which insurance companies have committed to accepting the driving experience returning emigrants gained while abroad, when the driver has had previous driving experience in Ireland. The guiding principle of the protocol is to ensure that a returning emigrant is not treated any differently to any other driver subject to their ability to demonstrate, and the insurance company to verify, continuous driving experience and the normal acceptance criteria of the company. What this means is that the returning emigrant will not be disadvantaged from spending time abroad. Furthermore, under the protocol insurance companies will not distinguish between countries on the basis of which side of the road driving takes place therein or, indeed, whether the country is a member of the EU or not.

In addition to the above, insurance companies have agreed to provide relevant and helpful information on their websites to make it easier for consumers to understand the implications of their move abroad from a motor insurance perspective. As part of this exercise, they will outline what people need to do under a number of different circumstances depending on the length of time they intend being away from Ireland.

Insurance Ireland submitted a report on the implementation of this recommendation to the Department of Finance on 22 December 2017. This report confirmed that Insurance Ireland members have agreed to publish the wording of the agreed protocol on their company websites and any other forms of social media, in addition to providing training for staff who can work through issues with emigrants before they leave, whilst they are out of the country and when they return to Ireland. The stated intention is “to resolve any issues well before they arise and for the consumer to be aware of the considerations when moving abroad”. The wording of the agreed protocol is also available on the Insurance Ireland website.

The report also outlines some sample cases which demonstrate how the rolling-out of the protocol has already led to disputed cases being resolved to the benefit of returning emigrants, and provides figures indicating that the number of such cases being processed under the Declined Cases Agreement is decreasing.

If, however, a returning emigrant is unable to secure a motor insurance quotation on the open market, they may be in a position to avail of the Declined Cases Agreement process, and the relevant contact details are: [e-mail] or 01-6761914. More generally, Insurance Ireland operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance, which can be accessed at [e-mail] or 01-6761820.

Tax Exemptions

Questions (172)

John Brassil

Question:

172. Deputy John Brassil asked the Minister for Finance the status of an application for the transfer of residence relief for vehicle registration tax by a person (details supplied); if he will request the Revenue Commissioners to examine the evidence provided to sanction the application; and if he will make a statement on the matter. [9592/18]

Written answers

Minister for Finance

I am advised by Revenue that exemption from Vehicle Registration Tax (VRT) has been granted to the person in question.

The exemption was granted on foot of further supporting documentation, which was provided to Revenue on 22 February 2018.

Loan Books Purchasers

Questions (173, 174, 193)

Michael McGrath

Question:

173. Deputy Michael McGrath asked the Minister for Finance the status of a restructuring arrangement entered into by a person with the original lender in the event of the loan being sold to an unregulated loan owner; the position that applies if the restructuring arrangement expires or has a review clause during the tenure of the ownership of the unregulated loan owner; and if he will make a statement on the matter. [9642/18]

Michael McGrath

Question:

174. Deputy Michael McGrath asked the Minister for Finance the status of a restructuring arrangement entered into by a commercial borrower, such as an SME, with its original lender in the event of the loan being sold to an unregulated loan owner; the position that applies if the restructuring arrangement expires or has a review clause during the tenure of the ownership of the unregulated loan owner; and if he will make a statement on the matter. [9643/18]

Michael McGrath

Question:

193. Deputy Michael McGrath asked the Minister for Finance the requirements on regulated and unregulated loan owners to engage with small and medium sized enterprises, farmers or other commercial borrowers with a view to debt restructuring; the regulatory status of requirements or targets in this area; and if he will make a statement on the matter. [10140/18]

Written answers

Minister for Finance

I propose to take Questions Nos. 173, 174 and 193 together.

As the Deputy will be aware, the transfer of a loan from one entity to another does not change the terms of the contract or the borrower's rights and obligations under the original contract. This is so regardless of the regulatory status of the entities.

The Central Bank of Ireland’s SME Lending Regulations (the Regulations) came into effect and apply to regulated entities from 1 July 2016 and credit unions from 1 January 2017. The Regulations address the procedures for dealing with arrears, set out policy for financial difficulties, provision of standard information for borrowers in financial difficulties and how to communicate with borrowers in financial difficulties for micro and small enterprises.

The Regulations introduce specific requirements for regulated lenders (and credit servicing firms where relevant), including:

- Giving SME borrowers greater transparency around the application process;

- Providing SME borrowers with reasons for declining credit, in writing, that are specific to their application;

- Providing greater protections for guarantors;

- Contacting SME borrowers who have been in arrears for 15 working days;

- Warning SME borrowers if they are in danger of being classified as not co-operating; and

- Expanding the grounds for appeal and setting up an internal appeals panel.

The Central Bank has published a short guide for SMEs and guarantors on the protections available for them under the Regulations which is available on the Central Bank website.

The SME Regulations apply to all regulated financial services providers providing credit to SMEs in Ireland. By virtue of the Credit Servicing Act, this means these protections also apply where the loan was granted by a regulated entity but has since been transferred to an unregulated entity, and is being serviced by a credit servicing firm.