Fiscal Policy

Questions (83)

Jonathan O'Brien

Question:

83. Deputy Jonathan O'Brien asked the Minister for Finance the relationship between the withdrawal of funds from the rainy day fund and the EU fiscal rules under the Stability and Growth Pact; and if he will make a statement on the matter. [43898/18]

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Written answers (Question to Finance)

The Fiscal Responsibility Act 2012 imposes a duty on the Government to endeavour to comply with the fiscal rules. The National Surplus (Reserve Fund for Exceptional Contingencies) Bill 2018, which was approved by Government this week and will be published in a matter of days, does not amend or change this obligation. In setting out the circumstances for drawing down funds from the Rainy Day Fund - which will formally be known as the National Surplus (Exceptional Contingencies) Reserve Fund - I have been careful to make a clear link with the existence of "exceptional circumstances" within the meaning of the Stability and Growth Pact. I look forward to presenting and debating the detail of the Bill at second stage in the Dáil in the coming weeks.

Bank Branch Closures

Question No. 85 answered with Question No. 60.

Questions (84)

Niamh Smyth

Question:

84. Deputy Niamh Smyth asked the Minister for Finance if the diminution of banking services in rural Ireland will be addressed; and if he will make a statement on the matter. [40596/18]

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Written answers (Question to Finance)

I should stress at the outset that the Government has no formal role in the commercial decisions of the banks as to their future business model and whether or not they will close particular branches.

The Deputy will no doubt appreciate that the provision of services by banks, including the location of branches, is a commercial decision for the Boards and management of the institutions.

That said, I expect that any bank closing branches will do everything that it can to mitigate the impacts of the branch closures on local communities, including technology and the use of alternative means of service delivery. I also expect that the bank will ensure that customers are kept informed about developments and provided with the appropriate assistance to move branches, switch to other banks and avail of alternative means of accessing financial services. The Central Bank will also have a role in ensuring that consumer protection rules are followed.

As the Deputy will be aware, the Report on Local Public Banking by my Department and the Department of Rural and Community Development has now been published.

Specifically, the Report examined  a proposal from Irish Rural Link and the Savings Bank Foundation for International Cooperation for 8-10 local public banks, starting with a pilot local public bank in the Midlands. The suggested locations in the proposed pilot in the Midlands are already serviced by existing banks, credit unions and post offices.

The Report concludes that there is not a compelling case for the State to establish a new local public banking system in Ireland using €170 million of Exchequer funds, based on the proposed model.  However, as set out in the Report, my Department will commission an independent external evaluation to establish whether the objectives of local public banking, are necessary, and if so, could be achieved by other possible means in Ireland. The Terms of Reference for this evaluation are currently being progressed.

Question No. 85 answered with Question No. 60.

Irish Aid

Questions (86)

Maureen O'Sullivan

Question:

86. Deputy Maureen O'Sullivan asked the Minister for Finance the dates on which funds from budget 2018 were drawn down by Irish Aid through Vote 27; the amount of each drawdown; if the total of over €500 million has been drawn down to date; and if he will make a statement on the matter. [44256/18]

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Written answers (Question to Finance)

I refer the Deputy to Order 36 of Dáil Éireann's Standing Orders Relative to Public Business.

As Minister for Finance I have no responsibility in relation to the matters raised in your question.  It should, therefore, be readdressed to the appropriate Minister.

Ministerial Meetings

Questions (87)

Catherine Murphy

Question:

87. Deputy Catherine Murphy asked the Minister for Finance further to Parliamentary Question No. 105 of 18 October 2018, if he will provide copies of all briefing notes and minutes provided by all parties at the meeting between the former Minister and a company (details supplied); and if he will make a statement on the matter. [44309/18]

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Written answers (Question to Finance)

It is not my Department's practice to pass out briefing of the type requested in response to a Parliamentary Question.  Documents related to the meeting between my predecessor as Minister for Finance and representatives of Enet on 14 December 2016 are currently the subject of an FOI request and subject to the outcome of that process will be available once the FOI process is completed.

Tax Forms

Questions (88)

James Browne

Question:

88. Deputy James Browne asked the Minister for Finance his views on the Revenue Commissioner's decision to make P60s available on an online basis only; the position regarding taxpayers that do not have access to a computer; and if he will make a statement on the matter. [44322/18]

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Written answers (Question to Finance)

I am advised by Revenue that P60 Forms are issued by employers to their employees at the end of each tax year. The P60 is a statement of the employee’s earnings and statutory deductions for that year and is an important part of the current PAYE system.

Under the current PAYE system, pay, tax and USC deducted information from the P60 is available to employees through Revenue’s online PAYE Services if they are registered for ‘MyAccount’ and they can also receive any end of year ‘Balancing Statements’ electronically. At this point nearly 650,000 PAYE taxpayers have expressed a preference to receive electronic output in this manner rather than paper copies and I am aware that this figure is continuing to increase. Alternatively, PAYE taxpayers can submit a paper copy of their P60 to Revenue and have a hard-copy ‘Balancing Statement’ posted to them should they wish to do so. These arrangements will remain in place for tax years up to and including 2018. 

With effect from 1 January 2019 the administration of PAYE is undergoing significant change with the move to real-time reporting under the PAYE Modernisation programme. These changes will bring improved accuracy and transparency for all stakeholders, including employers, employees and Revenue, while also significantly streamlining the entire administration process. The streamlining will include the abolition of the current employer reporting obligations via P30, P35, P45, P46 and P60 forms. 

As a result, employers will no longer be required to provide their employees with a P60 from the 2019 tax year onwards. Instead, Revenue will make an automatic End of Year Statement available to all employees. The first End of Year Statement will be available in early 2020 (in respect of the 2019 tax year) and will detail the employee’s pay and deductions based on employer submissions for the year. This will include salary, any taxable Department of Employment Affairs and Social Protection payments and any other income returned by the person, as well as applicable tax credits and reliefs. The End of Year Statement will be available online through the PAYE Services/MyAccount service in the same manner as the current system. In circumstances where a person is unable to access Revenue’s online services for whatever reason they will be able to request a paper copy of their End of Year Statement by contacting Revenue directly.

Electric Vehicle Grants

Questions (89)

Michael McGrath

Question:

89. Deputy Michael McGrath asked the Minister for Finance if the €50,000 cap on the original market value of a vehicle in the context of the 0% benefit-in-kind,BIK, rate for electric vehicles will apply to directors that were provided with an electric car during 2018; and if he will make a statement on the matter. [44331/18]

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Written answers (Question to Finance)

I extended the benefit-in-kind exemption for electric vehicles until 31 December 2021 to support policies to reduce carbon emissions in the transport sector. This forms part of a broader series of measures to support the uptake of electric vehicles, including VRT relief of up to €5,000, an SEAI grant of up to €5,000, very low motor tax of €120 per annum, 50% discount off tolls fees and 0% BIK on electric charging.  

Having regard to value for money and tax equity considerations, a cap of €50,000 on this exemption is applied such that an electric vehicle with an original market value exceeding €50,000 will be subject to BIK on the amount in excess of €50,000. The cap will take effect from the 2019 tax year in respect of all electric vehicles made available to employees in 2019 with an original market value greater than €50,000.

In examining value for money and tax equity considerations, the quantum of tax expenditure provided annually to qualifying taxpayers in relation to the use of high end cars must be taken into account. To take the example of an electric vehicle with an original market value of, say, €150,000 that has been purchased by the employer for the use of a Director, where the employer has already benefitted from VRT relief and an SEAI grant. Without the imposition of a €50,000 cap, the tax expenditure on such a vehicle is the equivalent of an annual grant from the taxpayer to the employee or Director of up to €23,400, for a single tax year (i.e. the tax liability of the taxpayer would be reduced by up to this amount in a single tax year). This amount is equivalent to 7 or 8 home insulation grants to low income households under the SEAI Better Energy Warmer Homes Scheme, where the benefit of these grants will last for many years. Or, that the same amount, under the National Fuel Allowance Scheme, is equivalent to an allowance for about 37 low income households for one year.

I am encouraged by the fact that registrations of new electric vehicles has doubled in the year to September and am satisfied that the cap has been set at a reasonable level which maintains a strong incentive for the take-up of electric vehicles while having due regard for value for money and tax equity.

Departmental Staff Data

Questions (90)

Róisín Shortall

Question:

90. Deputy Róisín Shortall asked the Minister for Finance the breakdown of staff in his Department by grade. [44355/18]

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Written answers (Question to Finance)

I wish to inform the Deputy that the breakdown of staff in the Department of Finance at end September 2018 is shown, as Wholetime Equivalents (WTE) in the table.

Secretary General

1

Assistant Secretary

6

Principal Officer

26.90

Assistant Principal

71.60

Administrative Officer

69.80

Higher Executive Officer

20.63

Executive Officer

38.30

Clerical Officer

55.33

Service Officer

18

 

 

Total

307.56

There are also 10 Specialists seconded from the NTMA to the Shareholding and Financial Advisory Division in the Department of Finance.

Tax Data

Questions (91)

Michael McGrath

Question:

91. Deputy Michael McGrath asked the Minister for Finance the number and value of instances of capital gains tax on the sale of company shares in each of the years 2015 to 2017 and to date in 2018; and if he will make a statement on the matter. [44370/18]

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Written answers (Question to Finance)

I am advised by the Revenue Commissioners that the available information in respect of Capital Gains Tax (CGT) on the sale of company shares is the total amount of consideration received by individual taxpayers in respect of the sale of any quoted or unquoted shares.

Consideration is the gross amount before base cost, reliefs, personal exemption and losses are deducted to arrive at the chargeable gain to which CGT at a rate of 33% would be applied. Therefore, the total amount of consideration is not a reflection of the actual value of the CGT liability. 

It is not possible to separately identify the actual amount of CGT paid as the tax on shares is included with the tax on gains from other assets in the relevant tax returns.

Revenue’s records indicate that the number of cases involving the sale of any quoted or unquoted shares was 26,644 for the tax year 2015 and was 25,663 for the tax year 2016.  Information in respect of 2017 will be not be available until returns in respect of that year have been filed.

Loan Books Purchasers

Questions (92)

Michael McGrath

Question:

92. Deputy Michael McGrath asked the Minister for Finance if unregulated loan owners are allowed to have direct contact with borrowers including face-to-face meetings or to send correspondence direct to the borrower without going through a credit servicing agent; if an unregulated loan owner can write directly to a borrower that has an active loan account with that unregulated loan owner regarding a guarantee provided by the borrower associated with that loan account; and if he will make a statement on the matter. [44412/18]

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Written answers (Question to Finance)

I have been advised by the Central Bank of Ireland that when a consumer takes out a loan from a regulated lender (“the original lender”) it is subject to all the relevant Irish and EU consumer protections. Most loan agreements include a clause that allows the original lender to sell the loan on to another firm.

When a loan is sold on to another regulated entity, the relevant Irish and EU consumer protections continue to apply. 

In the past, if the original lender sold a loan to another person who was not regulated by the Central Bank (“an unregulated firm”), the consumer could lose the protections they previously had under the various Central Bank Statutory Codes of Conduct.  In July 2015, the Consumer Protection (Regulation of Credit Servicing) Act 2015 (“the 2015 Act”) was introduced to fill the consumer protection gap where loans are sold by the original lender to an unregulated firm.   Under the 2015 Act, if the firm who bought the loans from the original lender is an unregulated firm, then the loans must be serviced by a ‘credit servicing firm’ which is authorised and regulated by the Central Bank.  Credit Servicing Firms are typically firms that manage or administer credit agreements such as mortgages or other loans on behalf of unregulated entities.   Credit Servicing Firms are required to obtain authorisation from the Central Bank in order to conduct ‘credit servicing’ activities as defined in the 2015 Act. 

Credit servicing firms must act in accordance with Irish financial services law that applies to ‘regulated financial service providers’. This ensures that consumers, whose loans are sold to another firm, maintain the same regulatory protections that they had prior to the sale, including under the various statutory Codes of Conduct issued by the Central Bank, such as the Consumer Protection Code 2012 and the Code of Conduct on Mortgage Arrears 2013.

For the purposes of the Act, ‘Credit servicing’ means managing or administering the credit agreement, including—

(a) notifying the relevant borrower of changes in interest rates or in payments due under the credit agreement or other matters of which the credit agreement requires the relevant borrower to be notified,

(b) taking any necessary steps for the purposes of collecting or recovering payments due under the credit agreement from the relevant borrower,

(c) managing or administering any of the following:

(i) repayments under the credit agreement;

(ii) any charges imposed on the relevant borrower under the credit agreement;

(iii) any errors made in relation to the credit agreement;

(iv) any complaints made by the relevant borrower;

(v) information or records relating to the relevant borrower in respect of the credit agreement;

(vi) the process by which a relevant borrower’s financial difficulties are addressed;

(vii) any alternative arrangements for repayment or other restructuring;

(viii) assessment of the relevant borrower’s financial circumstances and ability to repay under the credit agreement, or

(d) communicating with the relevant borrower in respect of any of the matters referred to in paragraphs (a) to (c).

 ‘Credit servicing’ currently does not, however, include taking such steps as may be necessary for the purposes of enforcing a credit agreement, provided that such action is not taken in a manner that if it were so taken by a regulated financial service provider it would be a prescribed contravention.

Therefore, it may be permissible in some circumstances for an unregulated loan owner to contact a borrower directly if this is necessary for the purposes of enforcing a credit agreement.  However, this contact must not be made in such a manner that if it were so taken by a regulated financial service provider it would be a prescribed contravention.

Electric Vehicle Grants

Questions (93)

Jack Chambers

Question:

93. Deputy Jack Chambers asked the Minister for Finance the reason there is a cap on the original market value of the vehicles as part of the 0% benefit-in-kind, BIK, tax on electric vehicles; if his attention has been drawn to the fact that this cap could discourage persons from buying electric vehicles; if his attention has been further drawn to the fact that this cap was never mentioned in documentation relating to this initiative when it was announced; the reason this change has been made; and if he will make a statement on the matter. [44417/18]

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Written answers (Question to Finance)

I extended the benefit-in-kind exemption for electric vehicles until 31 December 2021 to support policies to reduce carbon emissions in the transport sector. This forms part of a broader series of measures to support the uptake of electric vehicles, including VRT relief of up to €5,000, an SEAI grant of up to €5,000, very low motor tax of €120 per annum, 50% discount off tolls fees and 0% BIK on electric charging.  

Having regard to value for money and tax equity considerations, a cap of €50,000 on this exemption is applied such that an electric vehicle with an original market value exceeding €50,000 will be subject to BIK on the amount in excess of €50,000. The cap will take effect from the 2019 tax year in respect of all electric vehicles made available to employees in 2019 with an original market value greater than €50,000.

In examining value for money and tax equity considerations, the quantum of tax expenditure provided annually to qualifying taxpayers in relation to the use of high end cars must be taken in account. To take the example of an electric vehicle with an original market value of, say, €150,000 that has been purchased by the employer for the use of a Director, where the employer has already benefitted from VRT relief and an SEAI grant. Without the imposition of a €50,000 cap, the tax expenditure on such a vehicle is the equivalent of an annual grant from the taxpayer to the employee or Director of up to €23,400, for a single tax year (i.e. the tax liability of the taxpayer would be reduced by up to this amount in a single tax year). This amount is equivalent to 7 or 8 home insulation grants to low income households under the SEAI Better Energy Warmer Homes Scheme, where the benefit of these grants will last for many years. Or, that the same amount, under the National Fuel Allowance Scheme, is equivalent to an allowance for about 37 low income households for one year.

I am encouraged by the fact that registrations of new electric vehicles has doubled in the year to September and am satisfied that the cap has been set at a reasonable level which maintains a strong incentive for the take-up of electric vehicles while having due regard for value for money and tax equity.

Budget 2019

Questions (94)

Róisín Shortall

Question:

94. Deputy Róisín Shortall asked the Minister for Finance the way in which the figure of €295 million cited as impact of new measures on budget 2019 forecast tax buoyancy was computed in respect of table 9 on page 19 of the Economic and Fiscal Outlook of budget 2019; the basis on which it is included in the table; and if it has been used in the calculation of the amount of fiscal space that has been used up in budget 2019. [44421/18]

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Written answers (Question to Finance)

Table 9 of the Economic and Fiscal Outlook sets out the impact of the various taxation and expenditure measures introduced in Budget 2019 on next year’s fiscal position. These have a positive short-run impact upon aggregate demand, which in turn generates taxation revenue. The additional tax revenues or ‘buoyancy’ arising from these second-round effects is estimated to be of the order of €295 million next year. This represents buoyancy of approximately 26 per cent on the full net budget package, which is within the usual range.

In terms of its calculation, this represents the difference between the extra taxes projected for 2019 on a no-policy change basis i.e. the White Paper scenario and the forecast tax take following the introduction of Budget 2019, less the net change in tax yields arising from the introduction of the new measures. Therefore in summary, this represents the additional projected net tax yield arising from the implementation of Budget 2019.        

It should be noted, buoyancy is not used in the calculation of fiscal space as this is an expenditure-driven concept. Under the expenditure benchmark, the fiscal rules take account of discretionary revenue measures, such as an increase in tax rates or other structural revenue-raising measures. Increases in revenue due to buoyancy from the economic cycle should not be used in the calculation of fiscal space. 

At present, the fiscal rules - both the structural balance rule and, especially, the expenditure benchmark rule - are not well-suited to guide budgetary policy, given our position in the economic cycle.  I highlighted this in the Summer Economic Statement and I note that the Irish Fiscal Advisory Council, in its pre-Budget statement, also addressed this issue. 

Accordingly, the more important framework for guiding fiscal policy is 'fiscal stance' - what is right for the economy at a particular point in time, so as to support sustainable, incremental improvements in public services and living standards. Given the range of potential challenges facing the economy, it is only possible to assess the appropriate fiscal stance on a year-to-year basis at present.

Fiscal Policy

Questions (95)

Róisín Shortall

Question:

95. Deputy Róisín Shortall asked the Minister for Finance the projected fiscal space for each of the years 2019 to 2024 net of known carryover costs, public pay deal commitments, national development plan commitments, demographics, rainy day fund transfers and other pre-commitments. [44423/18]

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Written answers (Question to Finance)

At present, the fiscal rules - both the structural balance rule and, especially, the expenditure benchmark rule - are not well-suited to guide budgetary policy, given our position in the economic cycle.  I highlighted this in the Summer Economic Statement and I note that the Irish Fiscal Advisory Council, in its pre-Budget statement, also highlighted this issue. 

Essentially, the problem boils down to the fact that full allocation of 'fiscal space' would lead to a repeat of pro-cyclical budgetary policies that would threaten the living standards of Irish people. Pro-cyclical budgetary policies should be avoided; this is especially true when we are facing serious issues such as the exit of the UK from the European Union (and a non-negligible possibility of a 'disorderly' exit). 

With this in mind, the more important framework for guiding fiscal policy is 'fiscal stance' - what is right for the economy at a particular point in time, so as to support sustainable, incremental improvements in public services and living standards.

The correct 'fiscal stance' can only be ascertained once account is taken of the position in the economic cycle.  If the economy is operating at full capacity, then it would be incorrect to adopt an expansionary budgetary policy. On the other hand, if there is spare capacity in the economy, then it may be appropriate to use tax and expenditure policy to help absorb the spare capacity. 

Given the many issues facing the economy and the heightened level of uncertainty (such as what form the UK's exit from the EU will take), it is only possible to assess the appropriate fiscal stance on a year-to-year basis at present.

Financial Services Regulation

Questions (96)

Michael McGrath

Question:

96. Deputy Michael McGrath asked the Minister for Finance when legislation updating the laws on limited partnerships will be introduced; and if he will make a statement on the matter. [44450/18]

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Written answers (Question to Finance)

The Investment Funds Industry has been a successful and significant element of the Irish financial services landscape for many years.  This success has been underpinned by various periodic relevant changes in the legislative landscape that have made Ireland an attractive domicile for promoters in Asia, across Europe, the U.S., and further afield. This success has also benefitted from the fact that we have a regulatory regime which provide a robust and consistent approach to the supervision that promotes confidence in Ireland as a location for investment funds. 

Due to changes in the global private equity market in both structure and relevant European legislation, it has been decided that there is a case to update the Investment Limited Partnership Act 1994.  The IFS2020 Action Plan commits to developing amendments to the Investment Limited Partnership Act 1994 so as to make the structure more attractive to fund managers. 

Consequentially, my Department sought and obtained approval from the Government for the preparation of the necessary "Heads" for legislation in 2017. My officials have developed the Heads and these have been sent to the Office of the Parliamentary Counsel for their consideration. A drafter has been assigned to work on the drafting of the legislation and the Bill is a priority on the Government's legislative programme for 2018. The draft legislation is currently being prepared and my officials are working with the draftsman to arrive at a publish Bill. I am aiming for the Bill to be considered by the Houses of the Oireachtas before the end of the year.