Thursday, 28 Jun 2018

Written Answers Nos. 92-111

Defence Forces Funding

Questions (92)

Clare Daly

Question:

92. Deputy Clare Daly asked the Taoiseach and Minister for Defence the budget in the past five years in Vote 35 Army Pensions and Vote 36 Defence. [28428/18]

Written answers

Minister of State at the Department of Defence

Details of the original gross budget allocations for Vote 35 Army Pensions and Vote 36 Defence for the past five years (2013-2017) are outlined in the table.

	2013	2014	2015	2016	2017
Vote 35 Army   Pensions	€214.8m	€221.0m	€221.0m	€223.7m	€229.6m
Vote 36 Defence	€681.3m	€677.8m	€677.3m	€681.8m	€691.8m
Total	€896.1m	€898.8m	€898.3m	€905.5m	€921.4m

In the years in question the Army Pensions Vote required Supplementary Estimates, with corresponding amounts saved on the Defence Vote. The amounts of the gross Supplementary Estimates in each of the years are outlined in the table below.

Supplementary Estimate	2013	2014	2015	2016	2017
Vote 35 Army   Pensions	€9m	€4.7m	€6.5m	€11m	€11m

Defence Forces Expenditure

Questions (93)

Clare Daly

Question:

93. Deputy Clare Daly asked the Taoiseach and Minister for Defence the actual spend in the past five years in Vote 35 Army Pensions and Vote 36 Defence. [28429/18]

Written answers

Minister of State at the Department of Defence

Details of the gross expenditure for Vote 35 Army Pensions and Vote 36 Defence for the past five years (2013-2017) are outlined in the table.

 

	2013	2014	2015	2016	2017
Vote 35 Army   Pensions	€223.7m	€225.7m	€227.4m	€234.7m	€240.0m
Vote 36 Defence	€667.0m	€673.0m	€670.5m	€670.7m	€680.5m
Total	€890.7m	€898.7m	€897.9m	€905.4m	€920.5m

Naval Service Data

Questions (94)

Seamus Healy

Question:

94. Deputy Seamus Healy asked the Taoiseach and Minister for Defence the number of occasions on which a Naval Service vessel participating in Operation Sophia in the Mediterranean Sea transferred migrants and refugees from an Irish vessel to another vessel at sea; the number transferred in each case; the national designation of the ship to which they were transferred in each case; the port at which the transferred migrants and refugees were put ashore in the case of each transfer; and if he will make a statement on the matter. [28452/18]

Written answers

Minister of State at the Department of Defence

In July 2017, Government and Dáil approval was secured for the deployment of an Irish Naval Service vessel as part of Operation Sophia. Irish naval vessel L.É. Niamh subsequently deployed on 6 October 2017 to join Operation Sophia and returned on 20 December 2017.  The participation by L.É. Niamh in Operation Sophia represented the first involvement by the Naval Service in a multilateral security operation under a UN mandate.  In the course of an 11 week deployment in the Mediterranean, L.É. Niamh rescued 613 migrants, assisting with a further 107 migrant rescues.

In February 2018, the Government approved the consecutive deployment of 2 naval vessels for a period of approximately 30 weeks running from mid-April to end-November.  L.É. Samuel Beckett is currently deployed in this operation and will be replaced in mid-July by L.É. James Joyce.

While participating in Operation Sophia a total of 294 rescued migrants  disembarked from L.É. Niamh at an Italian port.

Irish Naval Service Vessels have in addition, transferred rescued persons to other vessels at sea on four occasions as follows:

a)  23 October 2017 - 21 persons were transferred to an Italian naval vessel

b)  1 November 2017 - 276 persons were transferred to an Italian Coastguard vessel

c)  2 November 2017 - 76 persons were transferred to a German naval vessel

d)  3 November 2017 - 53 persons were transferred to a Spanish naval vessel

Each of these transfers were either to an Italian Coastguard vessel or other Operation Sophia vessels for disembarkation at an Italian port.  The specific Italian port of disembarkation subsequently used in each case is a matter for the Italian authorities in consultation with the vessel in question. 

Brexit Issues

Questions (95)

Micheál Martin

Question:

95. Deputy Micheál Martin asked the Tánaiste and Minister for Foreign Affairs and Trade the Brexit scenario planning that his Department officials are involved in; and the stage the preparations are at. [28543/18]

Written answers

Tánaiste and Minister for Foreign Affairs and Trade

Co-ordination of the whole-of-Government response to Brexit is being taken forward through the cross-Departmental coordination structures chaired by my Department. Contingency planning for a no-deal or worst-case outcome, bringing together the detailed work being undertaken by individual Ministers and their Departments on issues within their policy remit, is now well advanced. Its focus is on the immediate economic, regulatory and operational challenges which would result from such an outcome. It assumes a trading relationship based on the default WTO rules, but also examines the possible effects on many other areas of concern. This work is therefore providing baseline scenarios for the impact of Brexit across all sectors, which can then be adapted as appropriate in light of developments in the EU-UK negotiations, including in regard to transition arrangements and the future relationship. This approach is also enabling the modelling of potential responses under different scenarios, such as one where a withdrawal agreement is concluded and where a Free Trade Agreement is the basis for the future relationship between the EU and the UK.

It also takes account of the planning being undertaken at EU level by the Commission Preparedness Unit, which is issuing information notes aimed at different business sectors and examining legislative actions which may be needed at EU level.

However, the Government is already acting in order to get Ireland Brexit ready. Dedicated measures were announced in Budget 2018, including a new €300m Brexit Loan Scheme for Business and a €25m Brexit Response Loan Scheme for the agri-food sector. Capital expenditure of €116bn over the coming decade under Project Ireland 2040 will also allow the State and its agencies to properly plan major infrastructure projects while ensuring that communities and businesses can plan ahead. There was also increased funding provided to my Department in Budget 2018 for the opening of six new diplomatic missions. A further seven new Missions will be opened as part of the next phase of expanding Ireland’s global footprint. These thirteen new Missions will be located in Europe, Asia, Africa, South America, North America, and Oceania and will contribute to helping our exporters find new markets.

Our Government’s enterprise agencies continue to work with companies, helping them to deal with Brexit – making them more competitive, diversifying market exposure, and up-skilling teams. In total 34 reports analyzing the effects of Brexit across a broad range of sectors and in some cases setting out responses have been published to date by Government Departments. All these reports are available on a dedicated Brexit webpage on my Department’s website: https://www.dfa.ie/brexit/

Longer-term economic strategies will also be critically important in addressing the challenges of Brexit, including Ireland 2040 –the National Development Plan. The Enterprise Strategy 2025 Renewed was recently launched and we are in active discussions with the European Investment Bank on a potential increase in investment in the country.

Passport Applications

Questions (96)

Bernard Durkan

Question:

96. Deputy Bernard J. Durkan asked the Tánaiste and Minister for Foreign Affairs and Trade the correct procedure to be followed to obtain a passport for a child in the case of a person (details supplied); and if he will make a statement on the matter. [28565/18]

Written answers

Tánaiste and Minister for Foreign Affairs and Trade

The Passport Service has confirmed that an application for the person to whom you refer, has been received. I have instructed staff of the Passport Service to update the applicant’s mother on the outstanding requirements for the application.

EU Meetings

Questions (97)

Brendan Smith

Question:

97. Deputy Brendan Smith asked the Tánaiste and Minister for Foreign Affairs and Trade the issues discussed at the recent EU Foreign Affairs Council; and if he will make a statement on the matter. [28574/18]

Written answers

Tánaiste and Minister for Foreign Affairs and Trade

I attended the EU Foreign Affairs Council in Luxembourg on 25 June, where Ministers discussed security and defence, the implementation of the EU Global Strategy, developments in the Horn of Africa and the Red Sea, and Jordan. We were also briefed on the situation in Yemen by the UN Special Envoy. My EU colleagues and I discussed ongoing work on security and defence issues, and took stock of progress on the implementation of the EU Global Strategy. Ireland continues to play an active role in shaping the Common Security and Defence Policy to equip the EU to act as an effective international peace provider in support of the UN. The UN Special Envoy for Yemen, Martin Griffiths, updated the Council on his efforts to prepare a framework for peace negotiations. Ireland fully supports the efforts of the UN Special Envoy and his team as they work towards a peace agreement.

Following this, the Council discussed developments in the Horn of Africa and Red Sea region. I welcomed the resolve expressed by the EU to deepen its engagement in the region. I also debriefed the Council on my recent visit to Jordan and called on the EU to step up its efforts to support the resilience of that country.

Betting Regulations

Questions (98)

Michael Healy-Rae

Question:

98. Deputy Michael Healy-Rae asked the Minister for Finance his views on the issue of possible increases in tax levels on the betting industry (details supplied); and if he will make a statement on the matter. [28446/18]

Written answers

Minister for Finance

As the Deputy will be aware, it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.

Brexit Issues

Questions (99)

Micheál Martin

Question:

99. Deputy Micheál Martin asked the Minister for Finance if he has met with the Revenue Commissioners to discuss Brexit scenario planning since President Juncker's comments on same on 21 June 2018; and if he will make a statement on the matter. [28550/18]

Written answers

Minister for Finance

President of the European Commission, Jean-Claude Juncker, and Chief EU Brexit Negotiator, Michel Barnier, visited Dublin on 21 June, this was an important opportunity for the Government and the Commission to take stock of state of play in the Brexit negotiations. President Juncker again emphasised that Ireland has the full backing of the EU and that Irish issues must be dealt with in the Withdrawal Agreement.

The European Union and the United Kingdom share the objective of avoiding a hard border on the island of Ireland. Concrete commitments with a view to achieving this objective were agreed and set out in the Joint Report on Progress in December 2017 and have since been transposed into legal terms in the draft Protocol on Ireland and Northern Ireland, which is an integral part of the Withdrawal Agreement.  The EU has been clear that this is an essential element of the EU-UK withdrawal agreement and that negotiations can only progress as long as all commitments undertaken so far are respected in full.

The Revenue Commissioners are actively engaged in examining the range of scenarios that may apply post-Brexit and have ongoing communications with my Department on this and on other issues.

Stability Programme Data

Questions (100)

Pearse Doherty

Question:

100. Deputy Pearse Doherty asked the Minister for Finance the effects of minimum compliance with the expenditure benchmark on the general Government balance and structural balance respectively as a percentage of GDP if the position of minimum compliance with the expenditure benchmark was taken, including the use of monies earmarked for a rainy day fund as spending, for the years 2019, 2020 and 2021. [28557/18]

Written answers

Minister for Finance

The Government is committed to establishing the Rainy Day Fund as a fiscal buffer in the event of a major shock to the economy.

By spending the €900 million available as per minimum compliance with the expenditure benchmark, it would increase borrowing further by the amounts shown in the table below and would result in not achieving the Medium Term Objective (MTO) until 2021.

In this scenario, the estimates prepared by the European Commission, in its Spring Forecast, and my Department, in the Stability Programme Update 2018, both project a structural deficit of 0.4 per cent of GDP for next year.

Table 4 in the Summer Economic Statement sets out the minimum compliance with the expenditure benchmark.  This does not include spending the allocations set aside for the rainy day fund.

This table is reproduced for the Deputy's convenience below:

	2019	2020	2021
a. General Government Balance (SPU 2018)	-0.1	0.3	0.4
b. Structural Balance (SPU 2018)	-0.4	0.1	0.3
c. MTO	-0.5	-0.5	-0.5
Targeting minimum compliance with   expenditure benchmark:
d. General Government Balance   (minimum compliance)	-0.4	-0.4	0.2
e. Structural Balance (minimum   compliance)	-0.7	-0.6	0.1

Note: The scenario above does not take into account the second round effects of any such measures

If an additional €500 million were to be spent this would, in the first instance, increase the general government deficit by another 0.2 per cent of GDP and have a corresponding impact on the structural position in each of the years 2019-2021. Under the structural balance pillar Ireland would not have achieved the required annual improvement. So we would be running a headline deficit of 0.6 at an advanced stage of the economic cycle - this would be economically reckless. Instead the Government will frame budgetary policy on the basis of what is right for the economy to ensure continued steady improvements in Irish employment and living standards. 

Fiscal Data

Questions (101, 102)

Pearse Doherty

Question:

101. Deputy Pearse Doherty asked the Minister for Finance the impact on the State’s borrowing if the net fiscal space under the expenditure benchmark, including the €0.5 billion earmarked annually for the rainy day fund as spending, was committed to expenditure for the years 2019, 2020 and 2021. [28559/18]

Pearse Doherty

Question:

102. Deputy Pearse Doherty asked the Minister for Finance the impact on the State’s debt to GDP and debt to GNI* ratio, both in gross terms and as percentage, if the net fiscal space under the expenditure benchmark, including the €0.5 billion earmarked annually for the rainy day fund as spending, was committed to expenditure for the years 2019, 2020 and 2021. [28560/18]

Written answers

Minister for Finance

I propose to take Questions Nos. 101 and 102 together.

The Government is committed to establishing the rainy day fund as a fiscal buffer in the event of a major shock to the economy. This will impact on the State’s borrowing by €500 million for each of the years 2019, 2020 and 2021 and is already captured in the State’s debt.

If this €500 million were to be spent this would increase the deficit by another 0.2 per cent of GDP and have a corresponding impact on the structural position. Furthermore as I set out in the SES, the focus of budgetary policy is to balance the books and reduce nominal debt.

The table shows the impact on debt if the net fiscal space were to be fully spent in 2019-2021.

 

Debt projections as set in Stability Programme Update 2018	2019	2020	2021
Gross government debt as per SPU (€ millions)	209.4	207.7	211.4
Debt % GDP	63.5%	60.2%	58.7%
Debt % GNI*	93.7%	88.9%	86.8%
Debt projections if full utilisation of net fiscal space	2019	2020	2021
Gross government debt  (€ billions)	210.3	210.9	215.4
Debt % GDP	63.8%	61.1%	59.8%
Debt % GNI*	94.1%	90.3%	88.5%

The fiscal rules are currently unhelpful, a full and literal application of these rules would involve the adoption of policies that would mean more borrowing, which is not appropriate for where our economy is now.

We have one of the highest debt per capita ratios in the developed world.  There is general recognition that sovereign borrowing costs are going to rise.  So borrowing even more and adding to our debt pile is reckless - especially in view of the major risks to the economy at present, which I assume the Deputy is aware of.  Such an irresponsible approach would also be repeating the mistakes of the past. The Government, on the other hand, will act in a responsible manner, to build our resilience and ensure steady, sustainable improvements in living standards.

Stability Programme Data

Questions (103)

Michael McGrath

Question:

103. Deputy Michael McGrath asked the Minister for Finance the projected general deficit and the structural deficit in 2019 if the €900 million was spent as permitted solely under the expenditure benchmark and if the €500 million dedicated to the rainy day fund was instead spent; and if he will make a statement on the matter. [28610/18]

Written answers

Minister for Finance

The estimates prepared by the European Commission, in its Spring Forecast, and my Department, in the Stability Programme Update 2018, both project a structural deficit of 0.4 per cent of GDP for next year.

The impact of spending this €900 million is shown in Line ‘d’ in table 4 of the Summer Economic Statement. The deficit in 2019 would increase from 0.1 per cent of GDP to 0.4 per cent. As shown in table 4, the medium term budgetary objective is not achieved.

If an additional €500 million were to be spent this would, in the first instance, increase the deficit by another 0.2 per cent of GDP and have a corresponding impact on the structural position.

The total impact of spending the €900 million and the €500 million dedicated to the rainy day fund would increase the deficit from 0.1 per cent of GDP to a deficit of 0.6 per cent of GDP and increase the structural deficit from 0.4 per cent of GDP to 0.9 per cent of GDP.

The Government is committed to establishing the rainy day fund as a fiscal buffer in the event of a major shock to the economy.

As I set out in the 2018 Summer Economic Statement, the increases permitted under the fiscal rules represent money that we would have to borrow. Budgetary policy will be formulated on the basis of what is right for the economy at this stage in the cycle and not by rules that which would increase borrowing.

Banking Sector

Questions (104)

Michael McGrath

Question:

104. Deputy Michael McGrath asked the Minister for Finance his views on establishing a public banking model here along the lines of a Sparkasse model in Germany; and if he will make a statement on the matter. [28611/18]

Written answers

Minister for Finance

As the Deputy is aware, my Department, along with the Department of Rural and Community Development, are responsible for fulfilling the Programme for a Partnership Government to "thoroughly investigate the German Sparkassen model for the development of local public banks that operate within well-defined regions".

Local public banking is where the state, or another public body, has ownership of a bank or other financial institution, as opposed to private ownership. In Germany, local public banks are called Sparkassen. These Sparkassen are only permitted to operate in specific geographic areas. The aim and philosophy of the Sparkassen is the promotion of economic development and financial inclusion in the particular regional area in which they operate, rather than solely maximising profits. Working closely and building relationships with local SMEs is an important element of the German local public banking model and the work of the Sparkassen.

Officials in both departments have been working closely together to conduct a thorough consideration of the potential for a local public banking model in Ireland, based on the German Sparkassen model. This has included a detailed analysis 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. The proposal outlines how a local public banking model, based on the German Sparkassen model I have described above, could work in Ireland. This process included a number of meetings between officials from both my own Department and Minister Ring’s Department, and representatives from Irish Rural Link and SBFIC. 

The report on local public banking has now been completed. Minister Ring and I circulated the report to all Government departments for comments and observations before jointly submitting it to Government at a Cabinet meeting in May. I am pleased to inform the Deputy that the report has now been approved by Government and I anticipate that it will be ready for publication in the near future.

Additionally, there are already significant Government measures in place to support access to finance by Irish SMEs.  These include the Strategic Banking Corporation of Ireland (SBCI), the Supporting SMEs Online Tool, the Microenterprise Loan Fund, Local Enterprise Offices, the Credit Review Office and the Credit and Counter Guarantee Schemes. 

Finally, my Department is working with other Government departments to develop tailored and innovative schemes to meet the evolving needs of Irish SMEs, such as the Agricultural Cashflow Support Loan Scheme and the Brexit Loan Scheme I announced in Budgets 2017 and 2018 respectively.

Departmental Reports

Questions (105)

Michael McGrath

Question:

105. Deputy Michael McGrath asked the Minister for Finance when his Department's report on corporation tax will be published; and if he will make a statement on the matter. [28612/18]

Written answers

Minister for Finance

It is my understanding that the Deputy is referring to 'Ireland's Corporation Tax Roadmap.' This report relates to the implementation of the Anti-Tax Avoidance Directives and also the recommendations of the ‘Review of Ireland's Corporation Tax Code’, undertaken by Mr Seamus Coffey

At present, this report is being finalised and it is my intention to publish it in the coming weeks.

Tax Data

Questions (106)

Michael McGrath

Question:

106. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Question No. 79 of 21 June 2018, the annual cost of removing the income tax, including USC and PRSI, on dividend income and replacing it with a flat rate of taxation on dividend income of 20%, 30% and 40%, respectively; and if he will make a statement on the matter. [28613/18]

Written answers

Minister for Finance

It is assumed that the Deputy is referring to dividend income from Irish resident companies.

I am advised by Revenue that based on tax returns and the yield from Dividend Withholding Tax for 2016, the replacement of all Income Tax, USC and PRSI on dividend income with a flat rate of taxation of 20% is tentatively estimated to be a loss in the region of €95 million.

On the same basis, the estimated tax yield from imposing a flat tax rate of 30% in place of Income Tax, USC and PRSI on dividend income could be in the region of €95 million. The estimated tax yield from imposing a flat tax rate of 40% could be in the region of €280 million. These estimates are based on no behavioural change.

Tax Reliefs Data

Questions (107, 114)

Michael McGrath

Question:

107. Deputy Michael McGrath asked the Minister for Finance the estimated cost of expanding the CGT entrepreneurial relief to include individual external investors, such as angel investors and so on; and if he will make a statement on the matter. [28614/18]

Michael McGrath

Question:

114. Deputy Michael McGrath asked the Minister for Finance the annual number of persons based on the most recent data that have availed of the entrepreneurial relief for CGT; the annual cost in this regard; and if he will make a statement on the matter. [28621/18]

Written answers

Minister for Finance

I propose to take Questions Nos. 107 and 114 together.

I am advised by the Revenue Commissioners that based on initial analysis of Capital Gains Tax (CGT) returns filed for the tax year 2016, the latest year available, approximately 410 individuals have availed of entrepreneurial relief with an estimated cost in the region of €20 million. This is provisional and likely to change as further analysis is done.

In relation to the estimated cost of expanding entrepreneurial relief to include individual external investors, it is not possible to accurately estimate the cost of the proposal as information in respect of potential taxable gains affected is not available.

Tax Data

Questions (108)

Michael McGrath

Question:

108. Deputy Michael McGrath asked the Minister for Finance the estimated annual cost of expanding the SURE scheme to include persons that were previously self-employed before establishing a new company; and if he will make a statement on the matter. [28615/18]

Written answers

Minister for Finance

As the Deputy will be aware, Start Up Refunds for Entrepreneurs (SURE) provides a refund of tax paid in the previous six tax years to those previously in PAYE employment, or recently unemployed, where they invest funds into a new company set up by them. I am advised by Revenue that there is no statistical basis on which to estimate the cost of broadening the SURE scheme to self-employed taxpayers as it is not possible to quantify the potential uptake as a result of this change, or the amount of income tax paid by these taxpayers in the previous four years.

Employment Investment Incentive Scheme

Questions (109, 110)

Michael McGrath

Question:

109. Deputy Michael McGrath asked the Minister for Finance the estimated annual cost of removing the 30% share ownership restriction for the EIIS; and if he will make a statement on the matter. [28616/18]

Michael McGrath

Question:

110. Deputy Michael McGrath asked the Minister for Finance the estimated annual cost of increasing the annual cap for the EIIS from €150,000 to €1 million; and if he will make a statement on the matter. [28617/18]

Written answers

Minister for Finance

I propose to take Questions Nos. 109 and 110 together.

As the Deputy will be aware, I made significant changes to the operation of the Employment and Investment Incentive (EII) in Finance Bill 2017 in order to ensure that the incentive accords with Art 21(3) of the European Commission General Block Exemption Regulations (GBER). GBER requires that risk finance aid schemes such as the EII should be restricted to independent private investors and should not provide relief to persons with close connections to the undertaking.

The changes provided for in Finance Bill 2017 came into effect on 2 November 2017 and allow that only independent private investors, within the meaning of GBER, are eligible for relief under EII. Prior to these changes being made, Part 16 of the Taxes Consolidation Act allowed connected persons up to 30% shareholding (or options) in the enterprise to avail of the incentive.

On the basis that the change will result in fewer eligible applicants, with the saving to the Exchequer estimated at between €6 million and €10 million (based on 2016 data). This represents the latest available estimate of the effect of the change.

I am advised by Revenue that based on investments made under the EII for each tax years from 2012 to 2016, the estimated annual cost of increasing the annual cap for the EIIS from €150,000 to €1 million would have been as set out in the table below. The figures do not include investments made through funds and assume the maximum relief available to all investors.

Tax Year	Additional Cost (€m)
2012	1.06
2013	0.53
2014	1.73
2015	2.18
2016	1.16

Tax Deduction Systems

Questions (111, 115)

Michael McGrath

Question:

111. Deputy Michael McGrath asked the Minister for Finance the estimated annual cost of expanding the foreign earnings deduction to an extra country; and if he will make a statement on the matter. [28618/18]

Michael McGrath

Question:

115. Deputy Michael McGrath asked the Minister for Finance the annual number of persons based on the most recent data that have availed of the foreign earnings deduction; the annual cost in this regard; and if he will make a statement on the matter. [28622/18]

Written answers

Minister for Finance

I propose to take Questions Nos. 111 and 115 together.

I am advised by Revenue that the latest information on the cost and number of individuals availing of the Foreign Earnings Deduction (FED) is as follows:

Year	Numbers	€m
2015	472	3.2
2014	144	1.1
2013	135	1
2012	108	0.8

The latest year for which data is currently available is 2015. I am further advised by Revenue that data in respect of 2016 will become available shortly.

Regarding the Deputy's question on the estimated annual cost of expanding FED to an extra country, Revenue has advised me that it is not possible to estimate the cost of this proposal as there is no data available on the number of taxpayers that would qualify to claim the deduction, how this would vary from country to country, or the ability of taxpayers to absorb the deduction.