General Government Debt

Questions (136)

Pearse Doherty

Question:

136. Deputy Pearse Doherty asked the Minister for Finance the projected cost of Government borrowing in each of the years 2020 to 2025. [50105/19]

View answer

Written answers (Question to Finance)

My Department's latest forecasts, published in Budget 2020 Economic & Fiscal Outlook, project the cost of general government borrowing in each of the years 2020 to 2024. These costs are outlined in nominal terms in table 12 and the average interest rate is given in table 14. Forecasts for 2025 are not yet available.

I have set out both in the following link for your convenience.

GG debt

Banking Sector

Questions (137)

Willie Penrose

Question:

137. Deputy Willie Penrose asked the Minister for Finance when a report (details supplied) into local public banking will be published; and if he will make a statement on the matter. [50136/19]

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Written answers (Question to Finance)

As the Deputy is aware, my Department in conjunction with the Department of Rural and Community Development, issued a report on Local Public Banking in Ireland last year. The report concluded that there is not a compelling case for the State to establish a new local public banking system based on the German Sparkassen model in Ireland.

However, a commitment was given in the report that my Department would arrange for an independent evaluation to consider how the objectives of community banking and the local provision of banking and financial services could be furthered through other delivery mechanisms.

Following a procurement process, the contract was awarded to Indecon earlier this year and work on the independent evaluation is underway.

My officials have received an initial draft of this report and I am expecting a finalised version of the report in the coming weeks. Once the final report is received, I will bring it to the attention of my Government colleagues and I anticipate that the report will then be published.

VAT Rate Application

Questions (138, 139, 140, 141)

Pearse Doherty

Question:

138. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of reducing the rate of VAT on electricity energy products and supplies from 13.5% to 9% and 0%, respectively, in each of the years 2020 to 2025. [50164/19]

View answer

Pearse Doherty

Question:

139. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of reducing the rate of VAT on telephone bills and charges from 23% to 17.5%, 13.5%, 9% and 0%, respectively, in each of the years 2020 to 2025. [50165/19]

View answer

Pearse Doherty

Question:

140. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of reducing the rate of VAT on Internet bills and charges from 23% to 17.5%, 13.5%, 9% and 0%, respectively, in each of the years 2020 to 2025. [50166/19]

View answer

Pearse Doherty

Question:

141. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of reducing the rate of VAT on television bills and charges from 23% to 17.5%, 13.5%, 9% and 0%, respectively in each of the years 2020 to 2025. [50167/19]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 138 to 141, inclusive, together.

VAT on goods and services is subject to EU VAT law, with which Irish VAT law must comply. The VAT Directive provides that EU Member States may apply either one or two reduced rates of VAT to certain goods and services. As Ireland already has two reduced rates in place (9% and 13.5%), one would have to be removed before a new reduced rate of 17.5% could be introduced. Also, it is important to note, that under the VAT Directive, Member States may retain 0% VAT on goods and services where this has been in effect since 1 January 1991 but cannot extend a 0% rate to new goods or services. It is also not possible to apply a reduced rate of VAT to expenditure on telephone bills and internet charges under the Directive.

I am advised by Revenue that traders are not required to separately identify the VAT yield generated from the supply of specific services on their VAT Returns. However, using information from a combination of Personal Consumption Expenditure as compiled by the Central Statistics Office, Ireland’s VAT Own Resources and Electricity Tax Returns, an estimate of the cost to the Exchequer of the changes proposed by the Deputy is provided in the following table. For the reasons noted above, 0% and 17.5% rates are not included. Telephone bills and internet charges are also excluded as a reduced rate cannot be applied to these.

Estimated Annual Cost to the Exchequer

New VAT Rate

Electricity

TV

13.5%

-

€45m

9.0%

€105m

€67m

Tax Code

Questions (142)

Michael Healy-Rae

Question:

142. Deputy Michael Healy-Rae asked the Minister for Finance if he will address a matter (details supplied) regarding the capital aquisitions tax; and if he will make a statement on the matter. [50181/19]

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Written answers (Question to Finance)

For the purposes of Capital Acquisitions Tax (CAT), the relationship between the person who provides the gift or inheritance and the person who receives the gift or inheritance determines the lifetime tax-free threshold (the Group Threshold) below which gift or inheritance tax does not arise. CAT applies, at a rate of 33%, on the excess over the tax free threshold. As CAT is generally payable by the beneficiary, rather than the disponer, the system promotes horizontal equity in that all individuals with similar circumstances are treated in a similar manner.

The three thresholds are as follows:

- Group A (€335,000) applies where the beneficiary is a child of the disponer.

- Group B (€32,500) applies where the beneficiary is a brother, sister, niece, nephew, or lineal ancestor or lineal descendant of the disponer.

- Group C (€16,250) applies in all other cases.

Those who inherit or receive gifts from a disponer who is not their parent will generally fall within either the category B or C thresholds. There would be a significant exchequer cost to any increase in these thresholds.

It is a long-held principle of inheritance tax that transfers of assets between spouses are exempt. The spousal exemption from inheritance tax was extended to civil partners from 1 January 2011.

Depending on the circumstances, there are reliefs available irrespective of the relationship between the individuals concerned, including agricultural relief, business relief and CAT Favourite Niece or Nephew Relief.

Gifts are generally taxable in the same way as inheritances. There is an annual €3,000 CAT relief available to all recipients of gifts, and this does not depend on the relationship of the individuals concerned.

There are some CAT reliefs which are available for cohabiting individuals. Cohabiting individuals can avail of the ‘dwelling house exemption’ to bequeath their principal private residence, generally the most substantial asset owned by an individual, free from inheritance tax. This relief is available to people who share a home and meet the conditions of the relief and it is not dependent on the relationship between them.

With regard to the gifting of a shared home, the treatment of gifting was amended substantially in the 2016 Finance Act. In general, it is now only possible to receive a tax-free gift of a dwelling house where it is gifted to a dependent relative. This change was made to restore the original policy aim of the relief.

Section 88A of the Capital Acquisitions Tax Consolidation Act 2003 exempts transfers of property made between qualified cohabitants within the meaning of Part 15 of the Civil Partnership and Certain Rights and Obligations of Cohabitants (CPCROC) Act 2010. This is a redress scheme available, which provides protection in law for long-term cohabiting couples and provides safeguards for an economically dependent cohabitant where a relationship has ended, or on death. The introduction of the exemption from CAT in these cases was not intended to give cohabiting couples the same tax treatment as married couples or civil partners, but simply legislated for the tax consequences of the redress arrangements for cohabitants under the CPCROC Act 2010.

Any change in the tax treatment of cohabiting couples, including with respect to CAT, can only be addressed in the broader context of future social and legal policy development in relation to such couples. There would also be potentially significant Exchequer costs in changing the current CAT rules to accommodate the changes sought by the Deputy.

If the taxpayer has any specific matters which they would like to discuss directly with Revenue they may contact Revenue through their local office, providing further detail of their circumstances. Alternatively, the National Capital Acquisitions Tax Unit of Revenue can be contacted at 01-7383673.

Corporation Tax

Questions (143)

Catherine Martin

Question:

143. Deputy Catherine Martin asked the Minister for Finance his views on a minimum effective corporate tax rate within the European Union; and if he will make a statement on the matter. [50301/19]

View answer

Written answers (Question to Finance)

There is no proposal currently under discussion with regard to a minimum effective corporate tax rate within the European Union. As the Deputy will be aware however, discussions on the concept of minimum effective corporate tax rates are currently underway at the OECD as part of wider work looking at the tax challenges of digitalisation. The discussions at OECD will likely feed into future debates at EU level. It is important to note that the OECD discussions remain on a "without prejudice" basis and that a lot of work remains to be done before any agreement on any aspects of the proposals. I have been very clear that further change to the international tax framework is necessary to ensure that we reach a stable global consensus for how and where companies should be taxed. A certain, stable, and globally agreed international tax framework is vital to facilitate cross border trade and investment. I believe that proposals examining the issue of where companies generate their value and whether new concepts of value creation need to be recognised, could provide a basis upon which a sustainable agreement could be found at the OECD. However, separate proposals on minimum effective tax remains problematic, not least because of a lack of clarity as to what it is the proposals are trying to achieve. I am supportive of measures to limit companies’ capacity to engage in aggressive tax planning. Artificial profit-shifting for tax purposes poses a real challenge and must continue to be addressed. However, I do not support measures which have as their core objective the end of legitimate and fair tax competition. The benefits of tax competition have long been recognised by the OECD and others. I believe that fair tax competition is a legitimate tool for small peripheral countries to balance against size, geographical location or resource advantages other countries enjoy, and this is supported by a wealth of economic research. Ireland is positively engaged in the discussions at the OECD and remains open to solutions which respect our right to compete fairly and which respect the legitimacy of Ireland’s longstanding 12.5% corporate tax rate.

Legislative Measures

Question No. 145 answered with Question No. 128.

Questions (144)

Barry Cowen

Question:

144. Deputy Barry Cowen asked the Minister for Finance the number of Bills sponsored by his Department that have been enacted since November 2013, in tabular form. [50319/19]

View answer

Written answers (Question to Finance)

Twenty-eight Bills sponsored by the Department of Finance were enacted between 1 November 2013 and 30 November 2019, as per the table in the following link.

Lists of Acts sponsored by Minister for Finance

Question No. 145 answered with Question No. 128.

Banking Sector Data

Questions (146)

Éamon Ó Cuív

Question:

146. Deputy Éamon Ó Cuív asked the Minister for Finance the investment made by the State in the covered institutions during the financial crisis by institution; the amount that has been recouped to date from the institutions; the value of residual investment by the State in the institutions; and if he will make a statement on the matter. [50407/19]

View answer

Written answers (Question to Finance)

In response to the Deputy’s question, the following table provides the current position in relation to the amounts injected into the State invested banks, cash received to date in the form of disposal proceeds, investment income and liability guarantee fee income, and the most up-to-date valuation of the remaining equity stakes:

AIB

BOI

PTSB

Total

Amount invested

20,751

4,667

3,954

29,372

Sale/redemption proceeds - including accrued interest

7,112

3,597

1,891

12,599

Investment income - including dividends

1,728

784

120

2,633

CIFS/ELG

1,783

1,547

669

3,998

Net cash position - In/(out)

(10,128)

1,261

(1,274)

(10,141)

Market value of equity stakes - ISE close 29th Nov 2019

5,736

686

355

6,777

Net position - including valuations

(4,392)

1,947

(919)

(3,364)

NAMA Bonds

Questions (147)

Éamon Ó Cuív

Question:

147. Deputy Éamon Ó Cuív asked the Minister for Finance the investment by the State by way of promissory notes, bonds or Exchequer investment in NAMA during the financial crisis; the amount recouped to date; the value of the remaining investment in NAMA at current market value; the expected final surplus from NAMA when it winds up; and if he will make a statement on the matter. [50408/19]

View answer

Written answers (Question to Finance)

The National Asset Management Agency (NAMA) was established in December 2009 as part of the State’s response to the 2008 banking crisis. NAMA paid the banks €31.8 billion for the assets it acquired with €30.2 billion of consideration provided by way of government guaranteed (senior) bonds and a further €1.6 billion in subordinated debt. NAMA redeemed all of its €30.2bn senior debt as of October 2017. The total outstanding subordinated debt is €1.1 billion.

As part of its Annual Report for 2018, NAMA revised its projected surplus to be returned to the State upwards to €4 billion. This was reaffirmed in the Section 53 Annual Statement 2020 which was recently laid before the Houses of the Oireachtas. The realisation of this surplus depends on the success of NAMA’s ongoing deleveraging and completion of its Dublin Docklands SDZ and residential funding programmes.

Surplus funds may only be returned to the Central Fund once NAMA's subordinated debt and equity obligations have been repaid in full, which is expected to be by summer of 2020. It is estimated that €2 billion will be transferred in H2 2020 with a further €2 billion being transferred during 2021. This timeline is contingent on NAMA’s projected surplus of €4 billion remaining unchanged and is subject to prevailing market conditions in realising the remaining assets.

Any NAMA surplus paid, while Exchequer positive, will not impact the general government balance, in line with Eurostat rules. It will be a decision for the Government as to how any surplus returned by NAMA will be utilised within the framework of the fiscal rules at that time. The intention has always been to use such receipts from the resolution of the financial sector crisis to pay down our national debt and reduce our debt servicing costs.

Superannuation Schemes

Questions (148)

Michael McGrath

Question:

148. Deputy Michael McGrath asked the Minister for Public Expenditure and Reform if a matter raised in correspondence by a person (details supplied) in County Cork in relation to superannuation pensions policy will be addressed; and if he will make a statement on the matter. [49802/19]

View answer

Written answers (Question to Public)

The Additional Superannuation Contribution (ASC) is provided for under Part 4 of the Public Service Pay and Pensions Act 2017. Section 33 (1) defines a "relevant person" as follows:

33.(1) This section applies to a person--

(a) who--

(i) is a public servant on 1 January 2019, or

(ii) is not a public servant on that date but after that date is appointed or otherwise becomes a public servant,

(b) who, on 1 January 2019 or at any time afterwards, is a member of a public service pension scheme and

(c) who is a covered public servant .

(2) In this section, a person to whom this section applies is referred to as a "relevant person".

As the individual continues to be a member of a public service pension scheme he continues to be liable for ASC. Furthermore, the pension of a member of a pre-existing public service pension scheme is a function of two factors: Service to a maximum of 40 years and the final pensionable remuneration at date of retirement. In this regard they continue to accrue a pension benefit until they finally retire including by virtue of the fact that final pensionable remuneration is not determined until the point of retirement.

Government Expenditure

Questions (149, 150, 152)

Pearse Doherty

Question:

149. Deputy Pearse Doherty asked the Minister for Public Expenditure and Reform the expenditure required to respond to demographic pressures across each Department in each of the years 2020 to 2025; and if he will make a statement on the matter. [49818/19]

View answer

Pearse Doherty

Question:

150. Deputy Pearse Doherty asked the Minister for Public Expenditure and Reform the projected pre-committed expenditure in each of the years 2020 to 2025 in the event of an orderly Brexit by pre-committed spending categories of demographics, the Public Service Stability Agreement, carryover costs for budget 2019 and 2020 and pre-committed capital expenditure, in tabular form. [50099/19]

View answer

Pearse Doherty

Question:

152. Deputy Pearse Doherty asked the Minister for Public Expenditure and Reform the pre-committed capital expenditure in each of the years 2020 to 2025. [50101/19]

View answer

Written answers (Question to Public)

I propose to take Questions Nos. 149, 150 and 152 together.

In setting out current expenditure ceilings, certain items of expenditure are classified as pre-committed and are included in the pre-Budget position. This includes allocations to cover demographic costs, public service pay agreements and full year costs of budget measures from previous years.

Expenditure Report 2020 sets out estimates of certain demographic pressures in the areas of Health, Social Protection and Education as pre-committed elements of the current expenditure baseline for the period to 2022. These are primary areas of current expenditure which are particularly impacted by demographic changes. An amount of under €0.5 billion has been allocated each year to 2022 across these areas. This is presented at Departmental level in the following table.

Demographic Allocations 2021 – 2022 (€m)

2021

2022

Health

148

148

Education

47

47

Social Protection

260

260

Total

455

455

These allocations are informed by the paper ‘Budgetary Impacts of Changing Demographics 2017 – 2027’, published by the Irish Government Economic and Evaluation Service (IGEES),which can be found on the IGEES website in the following link: https://igees.gov.ie/budgetary-impact-of-changing-demographics-2017-to-2027/. An update of this paper was published alongside Budget 2020, which can be found in the following link: http://www.budget.gov.ie/Budgets/2020/Documents/Budget/Budgetary%20Impact%20of%20Changing%20Demographics%20from%202020%20-%202030.pdf.

In future years, demographic allocations may be re-stated to reflect this more up-to-date analysis.

There are carryover costs in 2021 relating to certain current expenditure measures introduced in Budget 2020. This amounts to an estimated €0.2 billion in 2021 and is set out in table 7 on page 46 of Expenditure Report 2020 as well as below.

Carryover Impact of Certain Budget 2020 Measures in 2021 (€m)

-

Additional Impact in 2021

Education

50

Justice

50

Health

80

Housing

50

Total

230

This allocation relates to measures to be implemented during 2020 and as such the cost in 2021 will depend on factors such as timing and take-up of initiatives. As is usual, these costs will be re-examined during the course of the year and may be re-stated in the 2020 Mid-Year Expenditure Report. In addition, there is a carryover impact of €0.3 billion in 2021 relating to elements of the Public Service Stability Agreement that come into effect in 2020.

In relation to capital expenditure, Table 9 of the Economic and Fiscal Outlook published as part of the Budget 2020 includes an allocation for voted capital expenditure out to 2024. The increases in voted capital expenditure included in that table for 2021 and 2022 are included with the current expenditure pre-commitments, outlined above, in the following table.

Pre-Committed Expenditure 2021 – 2022 (€bn)

-

2021

2022

Demographics

0.5

0.5

PSSA

0.3

Budget 2020 Carryover

0.2

Capital Expenditure

1.0

0.3

Total

2.0

0.7

Table 8 in the Budget 2020 Expenditure Report also set out gross voted capital expenditure allocations over the period to 2022 at a Departmental level. However, it should be noted in relation to the Departmental capital allocations, that given the nature of capital spending, it may be necessary to make some moderate adjustments to the published allocations over the period 2021 and 2022, with these final allocations then published in the Revised Estimates Volume for the relevant period. At this point in time, it is expected that any amendments would be modest and would not pose any material effect on Departmental allocations. The allocation of funds for voted capital expenditure in 2023 and 2024 has not been assigned at a Departmental level at this juncture.

Brexit Expenditure

Question No. 152 answered with Question No. 149.

Questions (151)

Pearse Doherty

Question:

151. Deputy Pearse Doherty asked the Minister for Public Expenditure and Reform if the Brexit contingency funding allocated in each of the years 2020 to 2025 as outlined in table 11 of the economic and fiscal outlook in budget 2020 will be allocated in the event of an orderly Brexit. [50100/19]

View answer

Written answers (Question to Public)

The Brexit related expenditure of €1.2 billion for 2020 reflected in table 11 of the Economic and Fiscal Outlook is made up of the following:

- Supports to sectors identified as most affected by Brexit; Agriculture, Enterprise and Tourism, and to help stabilise the worst affected regions;

- Increased Social Protection expenditure on the Live Register and related schemes and labour market activation supports; and

- Costs related to ensuring that necessary compliance checks can be carried out in Dublin Port, Rosslare Europort and Dublin Airport.

As the risk of a disorderly Brexit increased, preparations for essential compliance checks by our regulatory agencies that would be required in the event of a disorderly Brexit were accelerated, with recruitment of additional staff and development of facilities and infrastructure. Consequently, as outlined in Table 1 on page 24 of Expenditure Report 2020, €51 million of the estimated costs, primarily related to staff required to carry out compliance checks at the ports and airport, are included in the departmental Budget Estimates for 2020.

The allocation of the balance of funding available in 2020 in relation to facilities and infrastructure for compliance checks will be assessed taking into account the up to date Brexit position, including the expected form of the UK’s exit from the European Union and future relationship. Table 11 of the Economic and Fiscal Outlook was prepared on the basis that c. €0.2 billion would be required under this heading in 2021 with c. €0.1 billion recurring annually from 2022 to 2024. Similar to 2020, the allocation of this funding will also be informed by the up to date position regarding the expected form of the UK’s exit from the European Union and future relationship.

Regarding the sectoral expenditure of €650 million for 2020, this funding is to be released in multiple tranches in the event of a no-deal Brexit. Similarly, the additional funding for employment supports of €410 million in 2020 would also be made available in the event of a no-deal Brexit.

For the period post 2020, the Brexit contingency amounts include, in addition to the amounts noted above in relation to compliance checks, the estimated funding requirement for employment supports arising following a no-deal Brexit. Similar to the 2020 position, this funding for employment supports would be made available in the event of a no-deal Brexit.

Question No. 152 answered with Question No. 149.

Cross-Border Projects

Questions (153, 154)

Brendan Smith

Question:

153. Deputy Brendan Smith asked the Minister for Public Expenditure and Reform the outcome of the most recent discussions held with departments and agencies in Northern Ireland in relation to cross-Border projects part funded by his Department or agencies under the remit of his Department in view of the possible impacts of Brexit on cross-Border development; and if he will make a statement on the matter. [50183/19]

View answer

Brendan Smith

Question:

154. Deputy Brendan Smith asked the Minister for Public Expenditure and Reform the outcome of discussions held with the departments and agencies in Northern Ireland in relation to the development of projects on a cross-Border basis post-2020 which will be part funded by his Department or agencies under the remit of his Department; and if he will make a statement on the matter. [50184/19]

View answer

Written answers (Question to Public)

I propose to take Questions Nos. 153 and 154 together.

As the Deputy is aware, the two cross-border cooperation programmes, PEACE and INTERREG, are important drivers of economic and social cohesion in the border region of Ireland and in Northern Ireland.

The current €270 million 2014-20 PEACE programme (PEACE IV) supports peace and reconciliation via projects in the areas of Shared Education; Children and Young People; Shared Spaces and Services; and Building Positive Relations. As of 30 Septembe 2019, PEACE IV funding is fully committed, with €270.3 million allocated to 95 projects across the programme.

The 2014-20 INTERREG programme (INTERREG VA) has a total value of €283 million and supports cross-border projects under the following themes: Research and Innovation; Environment; Sustainable Transport; and Health and Social Care. As of 30 September 2019, the Programme is 98.4% committed, with a total value of €278.1 million allocated to 32 projects across the programme.

Both Programmes are progressing well, and are supported by the relevant sectoral Departments, North and South.

In terms of the UK’s exit from the EU:

The draft October 2019 Withdrawal Agreement between the UK and the EU would enable the programmes to continue without interruption or amendment up to their normal closure in 2025-26.

In the event that the UK leaves without an agreement, a contingency Regulation will enable the two programmes to continue, financed from the EU budget, with funding levels unchanged and using current management structures. The Regulation came into force on 28 March 2019, but will not apply unless and until a UK departure from the EU without agreement. It essentially provides for business as usual.

In relation to the 2021-2027 programming period, the European Commission proposed a special new PEACE PLUS programme to continue and build on the work of both the PEACE and INTERREG programmes , as part of its post-2020 Multiannual Financial Framework (MFF) and Cohesion Policy proposals.

The programme development process for PEACE PLUS is now underway, led by SEUPB in close partnership with the Department of Public Expenditure and Reform in Ireland and the Department of Finance in Northern Ireland. The process is supported by a cross-sectoral Programme Development Steering Group comprising of government departments, local government, business, trade union, environment, rural, equality, and community and voluntary sector representative organisations.

SEUPB has conducted initial engagements with Government Departments, North and South and a range of relevant organisations. A wider stakeholder engagement process is scheduled to run from December 2019 to February 2020, with a public event planned for each county in Northern Ireland and the Irish border counties.

Departmental Operations

Questions (155)

Micheál Martin

Question:

155. Deputy Micheál Martin asked the Minister for Public Expenditure and Reform if he will report on the commitment in A Programme for A Partnership Government on transparent oversight of Departmental performance. [50123/19]

View answer

Written answers (Question to Public)

I wish to advise the Deputy that a deferred reply will be issued to him in respect of this Parliamentary Question, in line with Standing Order 42A.