Written Answers Nos. 100-125
100. Deputy Clare Daly asked the Minister for Finance if his Department has undertaken a review of the quantum of the reduction in pension benefits payable to persons in the private and commercial sector as a result of the pension levy that was introduced in 2011 since that levy was introduced; and if he will make a statement on the matter. [13635/18]
View answerI take it the Deputy is referring to the stamp duty levies applying to the assets of funded pension arrangements introduced in 2011 to pay for the Jobs Initiative, the chargeable persons for which are the trustees of pension schemes and others responsible for the management of pension fund assets.
Under the legislation, the payment of the levy is treated as a necessary expense of a pension scheme and the trustees or insurer, as appropriate, are entitled where needed to adjust current or prospective benefits payable under a scheme to take account of the levy. It is up to the trustees or insurer to decide whether, when and how the levy should be passed on and to what extent, given the particular circumstances of the pension schemes for which they are responsible. The legislation also includes safeguards aimed at ensuring that should the option of reducing scheme benefits be taken, it must be applied in an equitable fashion across the different classes of scheme members that could include active, deferred and retired members. In no case may the reduction in an individual member's or class of member's benefits exceed the member's or class of member's share of the levy. Where pension scheme trustees or an insurer took the decision to treat the levy as an expense of the pension scheme, they would have adjusted current or prospective benefits payable to members under that scheme. The consequence of this treatment by the trustees or insurer could be a permanent reduction in members' benefits.
A review of the quantum of the reduction in pension benefits payable to persons in the private and commercial sector as a result of the stamp duty levy on pension schemes has not been undertaken by my Department.
101. Deputy Seán Crowe asked the Minister for Finance if his attention has been drawn to a matter (details supplied); if he has been personally lobbied by Israeli Ministers on this issue; his plans to address this anti-democratic campaign by the Israeli Government and attempts to meddle in the affairs of Irish banks; and if he will make a statement on the matter. [13628/18]
View answerIn response to the Deputy's question, I have not been lobbied in this regard and I am unaware of any actual lobbying on this basis.
I am aware of and agree with the Tánaiste's reply to the same question on 20th March 2018 (PQ Ref No: 12429/18).
102. Deputy Maureen O'Sullivan asked the Minister for Finance further to Parliamentary Question No. 90 of 30 January 2018, if he will consider adopting a system similar to the Australian model on inheritance tax whereby there is no capital acquisition tax and instead adopt a system in which capital gains tax applies in certain circumstances; and if he will make a statement on the matter. [13642/18]
View answerI am advised by Revenue that section 573 of the Taxes Consolidation Act 1997 provides that the transfer of assets on the death of a person is not regarded as a disposal for capital gains tax purposes. The assets of a deceased person are treated as having been acquired by the personal representatives or beneficiaries at their market value at the date of death. Consequently, a CGT charge does not arise on the death of a person and any increase in value in the transferred assets since their acquisition by the deceased person up to the date of death is ignored.
However, capital gains tax does operate in relation to increases in the value of inherited assets following a death. Personal representatives are chargeable to capital gains tax in respect of gains made on the sale of assets during the course of the administration of a deceased person’s estate.
Persons who inherit assets are also chargeable to capital gains tax if they dispose of those assets where they have increased in value since the date of death.
I would also wish it to bring to the attention of the Deputy that one of the main of the reasons presented worldwide for inheritance tax is that it acts to address, to some extent, the concentration of wealth within families and to spread some of the benefit of inter-generational wealth transfers to society generally.
It follows that the basic principle on which CAT operates is that when a gift or inheritance takes place the wealth of the beneficiary grows, and this growth in wealth should be liable to taxation in the same way as income or gains through employment or investment.
The situation in this country is that inheritance tax and capital gains tax are entirely separate taxes and operate independently. Inheritance tax is charged on a person who inherits assets based on the value of those assets. Capital gains tax is charged on the person disposing of assets whose value has increased since being acquired. However, where both of these taxes are chargeable on the same event, a credit is given against inheritance tax for capital gains tax paid.
I understand that in Australia capital gains tax following a death operates in the same way as it does in this country. It is charged on the increase in value of inherited assets between the date of death and the date of their disposal. This seems to be the standard capital gains tax treatment and is not imposed as an alternative to an inheritance. Australia, unlike this country, does not tax the value of inherited assets.
Clearly individual States can make changes to their tax legislation as they consider appropriate, but I have no plans to abolish inheritance tax.
103. Deputy Willie Penrose asked the Minister for Finance when the public banking investigation report will be published; the engagement his Department has in respect of this issue; and if he will make a statement on the matter. [13625/18]
View answerThe Programme for a Partnership Government commits the Government to "thoroughly investigate the German Sparkassen model for the development of local public banks that operate within well-defined regions". My Department along with the Department of Rural and Community Development are jointly tasked with the responsibility of fulfilling this commitment. Officials in both departments have been working closely together.
Local public banking is a system of state ownership of particular banks or other financial institutions. The local public banks in Germany are called “Sparkassen”. The operation of these Sparkassen is confined to particular geographic regions local in which they operate. Their aim is to promote economic development and financial inclusion in this area, not just profit maximisation. Working closely with local regional SMEs and building close relationships is an important part of their business model as well.
The investigation of local public banking included a number of aspects. There was engagement with stakeholders and interested parties through a public consultation process conducted last year. Additionally, there has been substantial analysis carried out of a proposal put forward by Irish Rural Link and the Savings Banks Foundation for International Cooperation (SBFIC), the international development wing of the Sparkassen group. This proposal set out a potential model of local public banking, based on the German Sparkassen model, in Ireland. There have been a number of meetings between officials and representatives from Irish Rural Link and SBFIC.
My colleague, the Minister for Rural and Community Development, Michael Ring T.D. and I anticipate that we will be in a position to jointly submit this report for Government approval in the near future. As well as this ongoing work, my Department is working with other Government departments to develop tailored and innovative policy initiatives and continue to support the needs of Irish SMEs and rural economic development, which I assure the Deputy remains a key Government priority.
104. Deputy Richard Boyd Barrett asked the Minister for Finance his plans to ensure that alternative telephone numbers to 1850 and 1890 in all Departments of the Revenue Commissioners are provided in order that those trying to discuss issues with officials are not charged beyond their normal telephone packages; and if he will make a statement on the matter. [13949/18]
View answerI am advised by Revenue that the 1890 LoCall service is the best available option for the scale of its telephone business, which averages almost 2.5 million callers each year. Revenue is however very conscious that some of its customers are not being allowed LoCall rates by their telephone service providers when using the service and has been actively seeking ways to reduce the cost burden.
This includes evaluating new telephony technology which will provide a robust, reliable and scalable telephone service that does not rely on 1890 architecture. Revenue is also exploring the use of other technologies that will enable customers through their existing ‘inclusive packages’ (bundle) to ‘phone’ Revenue from links within its website (www.revenue.ie) and mobile app (RevApp) without incurring the 1890 telephone costs. Revenue hopes to be in a position to launch some of these enhancements in 2018.
The Deputy may be aware that the Commission for Communications Regulation (ComReg) held a public consultation in 2017 on the five classes of ‘Non-Geographic Number’ (NGN) services that are available. These include the ‘1800’ service’’ (Freephone), the ‘1850’ service (Shared Cost- Fixed Charge per Call), the ‘1890’ service (Shared Cost- Charge per Minute), the ‘0818’ service (Universal Access) and the ‘076’ service (Nomadic). As part of the consultation process, views were invited from interested parties and Revenue made a submission expressing its dissatisfaction at the rates charged for 1890 calls. Revenue also supported ComReg’s proposal that the retail charge applicable to a caller using any of the NGN services should not exceed the retail charge that would apply had the caller used a Geographic Number. Revenue is currently awaiting the outcome of the consultation process.
On a wider note, I am aware that Revenue has significantly enhanced its range of online services to reduce the need for customer telephone contact. This includes a new website (www.revenue.ie) which is specifically designed to help customers more easily find the information they are looking for. The information on the website is written in plain language and is easy to find. All of the feedback to date strongly confirms that the new service is very effective and has been well received by the vast majority of users.
105. Deputy James Lawless asked the Minister for Finance if his attention has been drawn to the apparent contradiction in the approach to research collaborations between the IDA and the Revenue Commissioners (details supplied); and if he will make a statement on the matter. [5958/18]
View answerI am advised by the Revenue Commissioners that this is not a matter of Revenue practice but occurs by design of the legislation.
Section 766(1)(b)(viii), introduced in Finance Act 2004, provides that a company may spend up to 5% of its total R&D spend on which the R&D tax credit is claimed, on outsourcing to a University or other 3rd level institution.
Further, section 766(1)(b)(viii), introduced in Finance Act 2007, which provided that a company may outsource up to 10% of its R&D to an unconnected company. The threshold was increased to 15% by Finance (No. 2) Act 2013. It is important to note that the maximum outsourcing is 10% / 15%, depending on the year, and that this amount is in addition to the 3rd level outsourcing.
Since Finance Act 2012 both the 3rd level outsourcing and the company outsourcing have been subject to an alternative test: the limit is the greater of €100,000 and the 5% / 10% / 15% as appropriate.
The OECD, in their formulation of the modified nexus, placed no limit on the amount of R&D that could be outsourced to unconnected 3rd parties. This was on the basis that R&D results in the development of IP which companies will not want to be known outside of their control group. The Knowledge Development Box therefore includes no limit on the amount of outsourcing to unrelated parties that will be included in the numerator of the modified nexus fraction.
106. Deputy Joan Burton asked the Minister for Finance the reason the Revenue Commissioners have audited only five section 110 companies for tax purposes; the action he has taken in ensuring they fulfil all their obligations in respect of Irish and European money laundering and terrorist financing; the mechanisms in place to review this and key persons in such organisations such as directors, senior managers and so on, on a yearly, monthly and quarterly basis; and if he will make a statement on the matter. [13668/18]
View answer182. Deputy Brendan Howlin asked the Minister for Finance the reason the Revenue Commissioners have audited only five section 110 companies for tax purposes; the action he has taken in ensuring they fulfil all their obligations in respect of Irish and European money laundering and terrorist financing; the mechanisms in place to review this and key persons in such organisations such as directors, senior managers and so on, on a yearly, monthly and quarterly basis; and if he will make a statement on the matter. [13622/18]
View answerI propose to take Questions Nos. 106 and 182 together.
I am advised by Revenue that a taxpayer, including a section 110 company, will be considered for a Revenue compliance intervention having regard to risk.
If an intervention is deemed appropriate it may be by way of audit or any other Revenue compliance intervention, based on an evaluation by Revenue of the presence of various risk factors that might indicate less than full compliance with tax legislation. Each Revenue compliance intervention is designed to be in the form which is most efficient in terms of both the time taken to carry it out and the resources needed to address the perceived tax risk. Depending on the progress or lack of progress of an initial compliance intervention and the nature and scale of non-compliance identified, the intervention can be escalated to an audit or investigation if this is necessary.
The number of non-audit compliance interventions (known as “aspect queries” which involves Revenue examining in detail particular aspects of a taxpayer’s activities) which Revenue carried out on section 110 companies was 348 in 2016 and 203 in 2017 (a total of 551 for the two years). As of 28 February 2018, 36 aspect queries in respect of section 110 companies have been finalised in 2018 to date. Moreover, there are 192 aspect queries currently underway in respect of section 110 companies.
Ireland’s money laundering compliance regime is governed by the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010.
In common with any other business or person operating within the State, Section 110 companies which fall within the definitions of designated entities under the Act are subject to anti-money laundering (AML) and countering the financing of terrorism (CFT) regulatory measures contained in the Act, and fall under the supervision of the relevant competent authority to ensure that they are in compliance with these obligations.
In addition to these direct measures, many companies will have solicitors, auditors, bankers, paying agents and registrars, which are subject to AML/CFT requirements in respect of their own customers.
Ireland’s AML regime has recently been peer reviewed by the FATF and this evaluation found that “Ireland has a sound and substantially effective regime to tackle money laundering and terrorist financing ”. The competent authorities under the Act follow a risk-based approach in the supervision of their respective sectors and have established good cooperation with financial institutions and designated non financial businesses and professions. Coordination, cooperation and the use of financial intelligence are strong points of the Irish AML/CFT framework.
108. Deputy Joan Burton asked the Minister for Finance the regulations and policies in place to ensure the rental proceeds of buy to let mortgages which are in distress are paid over to the bank which holds the mortgage debt rather than be used for another purpose such as servicing the mortgage of the landlord’s principal private residence; and if he will make a statement on the matter. [13671/18]
View answerI have been advised by the Central Bank of Ireland that their Codes of Conduct do not include rules to ensure the rental proceeds of buy to let mortgages which are in distress are paid over to the bank which holds the mortgage debt rather than be used for another purpose such as servicing the mortgage of the landlord’s principal private residence.
The Central Bank’s Code of Conduct on Mortgage Arrears 2013 (the CCMA) applies to the mortgage loan of a borrower which is secured by his/her primary residence. Therefore the CCMA does not apply to Buy To Let mortgages.
However, the arrears handling provisions of the Central Bank’s Consumer Protection Code apply to loans provided to consumers which are not covered by the CCMA, including Buy To Let mortgages of personal consumers. The relevant rules in the Consumer Protection Code cover the following matters:
i. Having written procedures in place for the handling of arrears
ii. Provision of information to consumers in arrears
iii. That the regulated entity must, if requested, deal with a nominated third party of the personal consumer in relation to their arrears
iv. Revised repayment arrangements
v. Communication with consumers in arrears.
109. Deputy Thomas P. Broughan asked the Minister for Finance the impact he views Brexit will have on the banking and insurance sector; and if the German community bank, the Sparkasse, will shortly be commencing operations here. [11011/18]
View answerAs the Deputy will understand, any negative impacts on the macro-economy of either or both the UK and Ireland would impact Irish banks and insurers.
From the date of the UK exit (or, if agreed, the end of a transition period) Irish banks and insurers which rely on a “passport” to provide services into the UK and vice-versa will lose the right to provide such services. As a result impacted firms in both Ireland and the UK are extensively engaged in contingency planning which may result in the relocation of business from the UK to the EU (including Ireland) and vice-versa. The Central Bank of Ireland and the Prudential Regulatory Authority (PRA) in the UK are in intensive dialogue with firms who are impacted and it is important to note that not all firms are impacted and/or impacted in the same way. The European regulatory system is formulating the supervisory guidance on the many issues raised by Brexit and the Central Bank of Ireland is heavily involved in the design of these policies through our participation in the SSM and the European Supervisory Authorities. While many firms are moving forward with Brexit preparation plans, the final impact of Brexit on banks and insurers will depend on the outcome of the EU27-UK negotiations, with the nature and duration of transition arrangements an important factor in determining the speed of adjustment.
My Department’s preparation and contingency work is ongoing and continues to examine all possible scenarios and challenges, and is a key input into the whole of Government approach. As part of its contingency planning, the Department is engaged on an ongoing basis in examining the potential impacts of Brexit on the financial services sector and potential mitigants. As part of this work the Department liaises with other Government Departments and Agencies who have responsibilities in this area, including Enterprise Ireland and the IDA. The Department also engages closely, via the Financial Stability Group with the Central Bank of Ireland, which has the statutory responsibility for financial stability. Brexit is a standing item on the Group’s agenda.
Additionally, the Government’s strategy to mitigate the impact of Brexit includes fully exploiting opportunities arising. With regard to the Financial Services sector, Brexit will provide opportunities for Ireland to increase its share of financial services based inward investment. In that regard, Minister of State Michael D’Arcy T.D. has responsibility for Financial Services, including the implementation of the IFS2020 Strategy for driving growth in the financial services sector.
As the Deputy is aware, my Department, along with the Department of Rural and Community Development are assigned the responsibility of fulfilling the Programme for a Partnership Government commitment to "thoroughly investigate the German Sparkassen model for the development of local public banks that operate within well-defined regions". Officials in both departments have been working closely together and have finalised a report on their investigation on local public banking. My colleague, the Minister for Rural and Community Development, Michael Ring T.D. anticipate being able to jointly submit the report to Government, for approval, in the near future.
110. Deputy Maureen O'Sullivan asked the Minister for Finance his views on the revenue compliance of dog breeding establishments; if he will authorise an audit by the Revenue Commissioners for licences of dog breeding premises; and if he will make a statement on the matter. [13641/18]
View answerI am advised by Revenue that it does not have any role to play in regard to the licensing of dog breeding premises.
As regards compliance with tax and duty obligations, Revenue has confirmed that dog breeding establishments are monitored in the same way as taxpayers across all other sectors. This includes selecting cases for audit or other interventions based on the presence of specific risk indicators and other available information.
Revenue’s risk ranking systems are very comprehensive and take account of a wide range of data sources including details provided directly by taxpayers and information received from third party sources. Depending on the nature of the risks identified, Revenue may opt to carry out a sectoral based intervention project or individual case interventions. Revenue has confirmed that a number of such risk interventions were carried out on dog breeding premises in 2017.
In addition to tax compliance operations, Revenue works with various agencies such as the Dublin Society for Prevention of Cruelty to Animals (DSPCA) to disrupt the cross border illegal trade in pups and has achieved some notable successes as part of this joint working initiative.
111. Deputy Louise O'Reilly asked the Minister for Finance if officials in his Department have examined a report (details supplied); and if he will make a statement on the matter. [13659/18]
View answerThe Central Bank of Ireland is responsible for the regulation of the financial services sector. In November 2016, Royal Bank of Scotland (RBS) announced a complaints process for SME customers in Ulster Bank’s GRG and indicated publically that “a customer is in-scope for the new complaints process if they were a small or medium sized enterprise under the control of GRG in the United Kingdom or Republic of Ireland between 1 January 2008 and 31 December 2013”.
In line with its risk-based supervisory approach, the Central Bank has been and continues to monitor all relevant issues as they arise from a system perspective. The Central Bank will continue to monitor this matter and is overseeing complaints received for any issues arising particularly in the context of SME Regulations compliance. The protection of SME customers is a priority for the Central Bank. The Central Bank’s SME Regulations provides key protections to SME customers including those on handling complaints and managing arrears and financial difficulties.
The Central Bank also continues to engage with the UK Financial Conduct Authority on this matter. I am confident that the Central Bank will act as appropriate on this matter and that it possesses the necessary tools to do so if required.
112. Deputy Paul Murphy asked the Minister for Finance his views on the recommendations of the Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach on the credit union sector, in particular with regard to tiered regulation and a review of levies; and if he will make a statement on the matter. [13661/18]
View answerI welcome the Report of the Joint Committee which along with the Credit Union Advisory Committee (CUAC) Report and its forerunner the Commission on Credit Unions Report, makes an important contribution to the debate on credit union reform.
I wrote to the Joint Committee on 19th December 2017 to thank them for their Report and to advise that my views on the recommendations, many of which are common to the CUAC Report, including tiered regulation, and are being progressed.
Since 2012 there has been a very extensive engagement with the sector in relation to tiered regulation. The Commission on Credit Unions report in 2012 recommended the introduction of a tiered regulatory approach to ensure that ‘regulatory requirements in place for credit unions are proportionate to the nature and scale of the credit union.’ The Commission recommended a three tier system of regulation.
The CUAC report in 2016 recognised the significant challenges in the introduction of a tiered system and that the approach adopted can be expected to have a profound long-term effect on the sector and on balance considered a two tier system of regulation more appropriate.
Tiered regulation was also the subject of a Central Bank consultation, CP76, which finished in 2014. In light of the feedback received, the Central Bank did not propose to introduce a tiered regulatory framework for credit unions at that time.
The Implementation Group, established to monitor and oversee implementation of the CUAC Report recommendations, continues to consider tiered regulation. The Implementation Group is finalising a comprehensive paper which will put forward a number of proposals for consideration by the Central Bank. I expect that the Implementation Group will report to me shortly.
Finally, I can advise the Deputy that my Department will shortly issue an information note to explain all of the levies and charges the credit union sector pays. The Stabilisation Levy review which my Department undertook in 2017 has also been published on my Department’s website.
113. Deputy Martin Heydon asked the Minister for Finance the status of the implementation of recommendations of the cost of insurance working group examining motor insurance; the recommendations which have already been implemented; when the work is expected to be completed; and if he will make a statement on the matter. [13636/18]
View answerThe Cost of Insurance Working Group’s Report on the Cost of Motor Insurance was published in January 2017 and makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, which are set out in an Action Plan.
In line with the commitment to publish quarterly update reports on the implementation of the recommendations of the Report on the Cost of Motor Insurance, the Working Group has published four update reports to date, most recently on 20 February last. This shows that of the 46 separate deadlines set during 2017 within the Action Plan, 39 have been met. Substantial work has also been undertaken in respect of the nine action points categorised as “ongoing”.
Some of the recommendations which have been fully implemented include the protocol agreed with Insurance Ireland committing insurers to accept returning emigrants’ claims-free driving experience in another country, the publication of the First Motor Insurance Key Information Report, and the setting up of a forum to better enable Insurance Ireland to become aware of issues affecting businesses and consumers.
All of the remaining actions are scheduled to be completed before the end of this year. At this juncture, as highlighted in the last update report, it is anticipated that the action points likely to be delayed beyond 2018 are those related to the large-scale initiatives under the remit of the Minister of Transport, Tourism and Sport. These includes the completion of the Master Licence Record project and the database to identify uninsured drivers.
However, the vast majority of the Action Plan should be completed by the end of this year, including in relation to key recommendations such as the establishment of a National Claims Information Database and relevant proposals received from the reports of the Personal Injuries Commission being put into operation.
It should be noted that the most recent CSO data (for February 2018) indicates that private motor insurance premiums have decreased by 18.1% since peaking in July 2016. While the CSO statistics indicate a greater degree of stability on an overall basis, these figures represent a broad average and therefore I appreciate many people may still be seeing increases. However, I am hopeful that the improved stability in pricing will be maintained and that premiums shall continue to fall from the very high levels of mid-2016.
114. Deputy Paul Murphy asked the Minister for Finance the contacts he has had with senior management of the main banks in relation to the potential sale of loan books to vulture funds; and if he will make a statement on the matter. [13662/18]
View answer116. Deputy Jonathan O'Brien asked the Minister for Finance the meetings he has held with the State owned banks at which the issue of the sale of loans to vulture funds was raised; and if he will make a statement on the matter. [13938/18]
View answer194. Deputy Richard Boyd Barrett asked the Minister for Finance the reason he continues to allow banks, particularly those in which the Government has an ownership stake, to sell mortgage loans to vulture funds; his plans to implement policy changes to address this issue; and if he will make a statement on the matter. [13630/18]
View answerI propose to take Questions Nos. 114, 116 and 194 together.
As part of their regular engagement with the banks in which the State has a shareholding, officials in my Department discuss a wide range of topics, including loan sales. For example, in the case of Project Glas, the recently announced project announced by PTSB to sell a portfolio of NPLs, officials were first briefed by the bank on the timing of the sale, and potential composition of the portfolio, in the week commencing 15th January. Officials in turn, briefed me on the matter on 19th January.
As this information was commercially sensitive, and as I am obliged to comply with stock exchange disclosure and market abuse rules, I was not in a position to discuss it publicly at the time.
In addition to the regular engagement Department officials have with the banks, I myself have met recently with senior officials of some of the Irish retail domestic banks and intend holding similar meetings with the remaining banks in due course. At these meetings, loan sales were discussed, where relevant. The Deputy will be aware in this regard, that it is not appropriate for me to put any more facts into the public domain, over and above what the banks themselves have disclosed, as I must respect commercial confidentiality and stock exchange disclosure rules.
It is worth noting that, in the case of PTSB, no loan has been sold yet and it won’t be known how many loans will be sold for a number of months, nor the composition of these loans. In addition, it is not known to whom the loans will be sold. However, I want and expect PTSB to be transparent with their customers when it comes to this sale process as it evolves.
It is important to highlight that there are no changes to the rights or obligations of a customer whose loan is sold by a bank. All terms and conditions attached to their mortgage contract remain in place. In addition, as credit servicing firms servicing loans on behalf of unregulated entities are required to comply with the Code of Conduct on Mortgage Arrears (CCMA), all protections under the CCMA are unchanged. The customer is in the exact same position as they were before their loan was sold. In relation specifically to restructured loans, including splits, any purchaser will be obliged to honour the terms of the restructure agreement, should such loans be included in the final sale.
Notwithstanding the protections currently in place, I have made it clear that I am prepared to engage with Deputies from other parties in an effort to see if we can strengthen and enhance the protections, in a sensible manner, that are already in place for mortgage holders. I would highlight in this regard the Bill that has been introduced by Deputy Michael McGrath which seeks to regulate credit agreement owners of mortgage loans and which has received Government support.
For clarity, I should highlight for the Deputy that I cannot stop loan sales, even by the banks in which the State has a shareholding. These decisions are the responsibility of the Board and management of the banks which must be run on an independent and commercial basis. The banks’ independence is protected by Relationship Frameworks, which are legally binding documents that I cannot change unilaterally. These frameworks were insisted upon by the European Commission to protect competition in the Irish market. Loan sales do not require my consent, though the banks are required to formally consult with me. In the case of the PTSB loan sale, the bank has not yet consulted with me but will do so in due course.
117. Deputy Jonathan O'Brien asked the Minister for Finance when a decision on the future of the local property tax will be made. [13937/18]
View answerI recently announced a review of the Local Property Tax (LPT) which will look in particular at the impact on LPT liabilities of property price developments. It will include an examination of the outstanding recommendations of the 2015 Thornhill review of the Local Property Tax. It is expected that the review will be completed at the end of August and that the review report will provide a number of policy choices for consideration. The review will be informed by the desirability of achieving relative stability, both over the short and longer terms, in LPT payments of liable persons. It will also include a consultation process to enable all interested parties and individuals to submit their views on the future of the LPT.
My Department is advancing work on this matter in conjunction with the Departments of the Taoiseach, Housing, Planning & Local Government, Public Expenditure & Reform and the Revenue Commissioners. The purpose of the review will be to inform me in relation to any actions I may recommend to Government concerning the overall yield from LPT and its contribution to total tax revenue. This will enable me to revert to Government with proposals for change to the LPT in a timely way. Any such change would need to be legislated for by the first quarter of 2019 so that the Revenue Commissioners can be in a position to have the necessary administrative and technical arrangements in place in time in respect of the 2020 LPT year.
118. Deputy Thomas P. Broughan asked the Minister for Finance his views on the future level of Ireland's contribution to the EU budget and multi-annual financial framework; and if he will make a statement on the matter. [12894/18]
View answerMy Department currently forecasts that Ireland's contribution to the EU budget will be €2,650 million in 2018, €2,675 million in 2019 and €2,750 million in 2020. It is worth noting that these forecasts are contingent on a number of variables, including updated GNI forecasts, the size of the overall EU budget for the year and other EU budget operational developments which will only emerge as the year progresses. As a result, all forecasts will be monitored and updated on an ongoing basis as new information becomes available.
The current Multiannual Financial Framework (MFF) (2014-2020) provides a medium-term framework for financial programming and budgetary discipline by ensuring that EU spending is predictable and stays within agreed limits. The annual EU budget negotiations take place within the framework of the medium-term ceilings as established under the MFF.
As the current MFF is coming to the end of its lifespan, the European Commission is due to publish its formal proposal on the next MFF in May 2018.
While my Department has undertaken some initial preparations on the future MFF, it would not be prudent to comment on any individual elements without seeing the broader package within which they fit. My Department will continue to work closely with other Government Departments and will examine the proposal in detail upon its publication.
119. Deputy Brendan Howlin asked the Minister for Finance if he will report on the engagements and discussions he has had with other EU leaders on vacancies at the European Central Bank. [9660/18]
View answerI have ongoing contact with my EU counterparts, including at the monthly Ecofin and Eurogroup meetings. In relation to vacancies at the European Central Bank, I was in direct contact with many of my counterparts in support of my nomination of the Governor of the Central Bank of Ireland, Professor Philip Lane, for the position of Vice President of the European Central Bank.
During these contacts, I received very positive feedback and expressions of support in relation to the candidacy from many Member States who acknowledged how well-qualified Professor Lane would be for the position. I believed, however, that it was crucial that the election of a new Vice-President be based on consensus. In this context, I decided that it would be in the best interests of the Euro-area as a whole to withdraw Professor Lane's candidacy in advance of any vote. I wish to reiterate my appreciation to Professor Lane for putting himself forward as a candidate, whose ability and expertise was widely acknowledged throughout the process.
122. Deputy Mick Wallace asked the Minister for Finance the status of the appointments to the board of NAMA advertised in January 2018; if he has considered appointing persons with the requisite skill in construction and real estate; and if he will make a statement on the matter. [13940/18]
View answerUnder the NAMA Act 2009, the NAMA Board is to consist of nine members - the NAMA Chairman, the CEO of NAMA (ex-officio), the CEO of the NTMA (ex-officio), and six ordinary members. There are currently seven members on the NAMA Board and there are two vacancies for ordinary members which have arisen as a result of departures from the board in December 2013 and January 2014. A full complement of Directors and committee members will ensure appropriate corporate governance as the Agency progresses its objectives and plans for its final phase and wind-up.
As the Deputy will be aware, on 11 January 2018 the Department of Finance launched the process to appoint two new ordinary members to the Board of NAMA to fill the current vacancies. This process is being run in conjunction with the Public Appointments Service (PAS) and in line with the guidelines governing appointments for State Boards which can be found at: http://www.publicjobs.ie/publicjobs/publication/document/2014_1125_Guidelines_Appointments_to_State_Boards.pdf
The application process closed on 8 February 2018 and applications are currently being reviewed. Essential criteria for these roles include demonstrable business expertise in one or more of a number of relevant areas including commercial and residential property development. The full set of criteria for this vacancy is set out in the information booklet for this process, available at: http://www.stateboards.ie/stateboards/campaignAdvert/68882/booklet.htm. As this appointment process is ongoing it would not be appropriate for me to comment any further at this time.
123. Deputy Robert Troy asked the Minister for Finance his plans to block sales by financial institutions in which the State has a majority share holding to unregulated vulture funds. [11006/18]
View answerAs the Deputy is aware Non-performing loans (NPL's) remain at an elevated level across the European banking system and addressing this issue is one of the key priorities for the Single Supervisory Mechanism (SSM). The reduction of NPL's is also being given high priority at EU level with the Commission announcing their "Action Plan to Tackle Non-Performing Loans in Europe" in July 2017. The action plan calls upon various institutions including the Commission to take appropriate measures to further address the challenges of high NPL ratios in Europe.
In Ireland significant progress has been made across the banking sector in reducing the level of NPLs since the financial crisis. Despite this progress, the level of NPLs in the sector remains well above the European average of c.5% (of gross loans). Hence in recent years the SSM has tasked the management and board of each institution with developing and implementing a strategy to address this challenge.
Progress to date in reducing NPL's has been primarily achieved by customers engaging directly with their banks and agreeing a sustainable restructure which provides the customer with an achievable path out of arrears. However in recent times, loan sales as a last resort have also been a feature of the deleveraging process. This would be in cases where meaningful engagement has not been forthcoming or affordability is not evident and in recognition of the fact that the end of the road has been reached and achieving an acceptable NPL ratio will not be possible without loan sales.
Under the Relationship Frameworks (RFs) the disposal of loans is a commercial decision for the management and Board of each individual institution and is not subject to Ministerial consent. I therefore do not have the power to stop a loan sale. These agreements are legally binding documents that I cannot change unilaterally and they were insisted upon by the European Commission to protect competition in the Irish market. While loan sales do not require my consent, banks are required to formally consult with me during the process.
Finally, it is important to highlight that the contractual terms of borrowers remain in place post any loan sale. In addition, all the protection enjoyed by borrowers under the CCMA is unaffected. In relation to buy to let or BTL mortgages, it should be noted that the rights of tenants remain unchanged if they happen to live in a property connected to a loan sale.
124. Deputy Thomas P. Broughan asked the Minister for Finance the estimated impact of proposed EU tax changes on his Department's estimates of Ireland's corporation tax revenues in 2018, 2019 and 2020; and if he will make a statement on the matter. [13627/18]
View answerI am assuming that the Deputy is referring to the recently published proposals from the Commission on taxation of certain digital activities. I am advised that Revenue have been examining the potential impact of the proposed changes proposed by the Commission but which yet have to be discussed by Council. Information provided in Corporation Tax returns does not separate the digital and internet activities of companies from other activities within the same entity, which makes estimation of impacts challenging in the absence of such information. However, with the recent publication of more detailed proposals from the Commission, Revenue will continue this work towards estimating the possible impact of the proposals.
125. Deputy Michael McGrath asked the Minister for Finance when he expects the national claims information database to be fully up and running; when he expects enacting legislation to be brought forward and passed; and if he will make a statement on the matter. [13643/18]
View answerThe development of the National Claims Information Database is a complex project as insurers very often record data in different ways and do not necessarily use the same definitions.
For this reason, my officials established a data sub-group in 2017, which has been meeting since then to examine the issues regarding its development and to prepare the General Scheme of the legislation required. At the end of 2017, it completed its work on the development of this Scheme and on 19 December 2017, the Government approved the General Scheme of the Central Bank (National Claims Information Database) Bill.
The Bill is included in the Government Legislative Programme on the list of Priority Legislation for publication this session. It was submitted to the Joint Oireachtas Committee on Finance, Public Expenditure and Reform and the Taoiseach for pre-legislative scrutiny, and that Committee contacted me in February to indicate that it would not be conducting any further scrutiny on the Bill. It should also be noted that the Office of the Parliamentary Counsel assigned a drafter to the Bill on 26 January 2017 and officials in my Department are currently working with the drafter to finalise a draft of the Bill as soon as possible. A consultation will also have to take place with the European Central Bank on the Bill once it is published.
As the Deputy will be aware, it will take a certain amount of time following publication of the Bill, for it to pass through the Houses of the Oireachtas however I am hopeful that with the cooperation of all parties in the Houses, the Bill can be considered and approved expeditiously.
To ensure that the Database can be operationalised quickly following the enactment of the legislation, the Central Bank has continued to work in parallel on the technical specifications for the Database and recently held a series of meetings with the insurance sector as part of its consultations with the sector on developing these specifications.
