Written Answers Nos. 83-102
83. Deputy Brendan Smith asked the Minister for Finance the estimated cost to the Exchequer on an annual basis of illegal trade in tobacco, drink and fuel products; the additional measures planned to counteract such illicit trade; and if he will make a statement on the matter. [2927/20]
View answer84. Deputy Brendan Smith asked the Minister for Finance the additional measures he plans to implement to counteract illegal cross-Border trade in tobacco, drink and fuel products; and if he will make a statement on the matter. [2928/20]
View answerI propose to take Questions Nos. 83 and 84 together.
I am assured by Revenue that combating the threat which fuel fraud and the illicit alcohol and tobacco trades pose to legitimate business, consumers and the Exchequer continues to be a priority.
Steps taken by Revenue to combat the illegal fuel trade include the introduction of stringent supply chain controls and reporting requirements, and a rigorous programme of risk focused enforcement action. In addition, Revenue and the UK Revenue and Customs undertook a joint initiative to introduce a new marker for use in marked fuels, which came into operation in April 2015. The industry view is that the actions taken have been successful in curtailing fuel fraud.
Illicit trade in alcohol can occur through the diversion of untaxed alcohol onto the market, through the production of counterfeit alcohol and through smuggling from countries with lower taxes. Revenue takes appropriate action where illicit activity is detected and this action is informed by intelligence on criminal activity and risk-based examination of commercial traffic and stock in retail premises.
Revenue acts against all aspects of the illegal tobacco trade and uses a combination of risk analysis, profiling and intelligence, and risk-based screening of cargo, vehicles, baggage and postal packages to intercept illicit products. Action after importation includes checks at retail outlets, markets and private and commercial premises.
Revenue and An Garda Síochána collaborate closely in acting against fuel, alcohol and tobacco crime, and also cooperate closely with their counterparts in Northern Ireland, in the framework of the North-South Joint Agency Task Force. This cooperation plays a key role in targeting the organised crime groups responsible for much of this criminality, who operate across jurisdictions.
I am advised by Revenue that it is inherently difficult to estimate the extent of any illegal trade with confidence and it is not possible, therefore, to estimate the potential loss to the Exchequer of illegal trade in alcohol. The extent of the illicit trade in cigarettes is estimated, however, through annual surveys of smokers that are carried out for Revenue and the National Tobacco Control Office of the Health Service Executive by IPSOS MRBI. The 2018 survey found that 13% of cigarettes consumed in the State were illicit. This compares to a survey estimate of 13% for 2017 and 10% for 2016. Assuming that the illicit cigarettes consumed displaced the equivalent full tax paid quantity of cigarettes, the results of the 2018 survey indicate that the loss to the Exchequer in excise duty and VAT was approximately €211m.
Revenue conducted random National Sampling Programmes in the years 2016 to 2019 to assess the extent of fuel laundering. The programmes each involved nearly one in ten of some 2,500 holders of auto fuel trader licences. Tests of diesel samples taken from the randomly selected traders found no evidence of the new marker in any of them. The results of this sampling are a clear indication that Revenue’s actions have resulted in the near elimination of the selling of laundered products at retail level. The 2018 sampling programme was expanded to include hauliers and other businesses in the transport sector. A very small number of samples from this programme tested positive. The results of the 2019 sampling programme were broadly in line with previous years.
I am satisfied that Revenue’s work against fuel fraud and the illicit alcohol and tobacco trades has achieved a considerable level of success. I know that Revenue is very conscious of the resourcefulness of those involved in these forms of criminal activity and remains vigilant for, and ready to respond to, any new developments in these areas.
85. Deputy Aindrias Moynihan asked the Minister for Finance the steps being taken to reduce the cost of insurance for community groups holding events; and if he will make a statement on the matter. [3022/20]
View answerI am very aware of the affordability and availability of insurance cover issues facing local community groups, including insurance coverage for events that they hold. I have much sympathy for the position such groups find themselves in, however as the Deputy is aware, there are significant constraints on what the Government can do to immediately resolve this issue. In this regard, neither I, nor the Central Bank of Ireland, have any influence over the pricing of insurance products, and neither can we compel any insurer operating in the Irish market to provide cover to community groups or their events, as this is a commercial matter for insurers. This position is reinforced by EU Single Market rules relating to insurance which expressly prohibit Member States from adopting rules, which would require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. A further constraint is the fact that the Government cannot direct the courts as to the award levels that should be applied.
Notwithstanding these constraints, insurance reform remains a priority. The Cost of Insurance Working Group (CIWG) was established in July 2016 and undertook an examination of the factors contributing to the increasing cost of insurance in order to identify what short, medium and long-term measures could be introduced to help reduce the cost of insurance for consumers, businesses and the voluntary/community and arts sectors. The CIWG has produced two reports: the Report on the Cost of Motor Insurance and the Report on the Cost of Employer and Public Liability Insurance.
Many reforms have been made already, including amendments to the Civil Liability and Courts Act 2004, the Personal Injuries Assessment Board Act 2003, and the establishment of National Claims Information Database in the Central Bank of Ireland. It is clear however that the single biggest challenge that still needs to be addressed and which is having the most impact on the community group sector is the level of awards that exist in Ireland, for relatively minor injuries, as compared to other jurisdictions.
In this regard, the key recommendation arising from both of the CIWG’s reports was the establishment of the Personal Injuries Commission (PIC) and the publication of its two reports. The PIC conducted a benchmarking of award levels between Ireland and other jurisdictions for the first time and this has been very helpful in identifying the scale of the problem that is faced. This research showed that award levels for soft tissue injuries in Ireland were 4.4 times higher than in England and Wales. On foot of the PIC recommendations, the Government with the support of all parties in the Oireachtas prioritised the passing of the Judicial Council Act 2019. This Act provides for the establishment of a Personal Injuries Guidelines Committee upon the formal establishment of the Judicial Council. This Committee is tasked with introducing new guidelines to replace the Book of Quantum.
I am also pleased that the Judicial Council held its first meeting on 7 February, and that it has nominated 28 April for the establishment of the Personal Injuries Guidelines Committee. I understand that this means that it will be required by the legislation to submit draft Guidelines to the Judicial Council by 28 October. While the Government cannot interfere in the Judicial Council’s deliberations due to the constitutional separation of powers, I would hope that the Guidelines will take into account the PIC’s benchmarking report, and can come into operation as soon as possible following their submission to the Judicial Council. In return for lower and more consistent award levels, I believe insurers have to significantly reduce their premium levels and broaden their risk horizons.
In summary, the key outstanding challenge to satisfactorily resolve the cost and availability of insurance issue is a recalibration of award levels downwards. I believe that if this is done and these awards are applied consistently by the courts, the current problems being experienced by impacted community groups, as well as other businesses and organisations more generally, will recede.
86. Deputy Bernard J. Durkan asked the Minister for Finance the progress to date in the determination of tax credit entitlements in the case of a person (details supplied); and if he will make a statement on the matter. [3143/20]
View answerI am advised by Revenue that it has examined the tax record of the person in question and is satisfied that they are in receipt of their correct entitlements based on the information provided by them.
For tax year 2019, Revenue records indicate that the person was married but opted to be separately assessed for tax purposes for that year. They may now request a review of their own tax situation and that of their spouse for 2019 to determine whether any unused tax credits or rate bands are available for transfer between them. They can request such a review through Revenue’s MyAccount service for which they are already registered.
If the person and their spouse elect to become jointly assessed for 2020, they should ensure they complete the process, which can also be done through the MyAccount service, before 31 March 2020.
Further information relating to the basis of assessment for married couples or those in a civil partnership is available on Revenue’s website at link: www.revenue.ie/en/life-events-and-personal-circumstances/marital-status/marriage-and-civil-partnerships/joint-assessment.aspx, which may be of assistance to the person. Alternatively, the person can contact Revenue’s National PAYE Helpline at telephone 01-7383636 should he require any assistance.
87. Deputy Catherine Murphy asked the Minister for Finance the estimated additional revenue that would be generated if the stamp duty on private residential properties in excess of €1 million increased from 2% to 4%. [3188/20]
View answerI am advised by Revenue that the Ready Reckoner, which is available on the Revenue website at link www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf, provides (on page 19) the estimated additional revenue that would be generated by increasing the rate of Stamp Duty on the portion of cost for a residential property above €1 million to 4%.
88. Deputy Michael McGrath asked the Minister for Finance his plans to introduce flat rate expenses for dental hygienists; and if he will make a statement on the matter. [3231/20]
View answerThe flat rate expense (FRE) regime is operated by Revenue on an administrative basis where both a specific commonality of expenditure exists across an employment category and the statutory requirement for the tax deduction as set out in section 114 of the Taxes Consolidation Act (TCA) 1997 is satisfied, namely, that the expenses are wholly, exclusively and necessarily incurred in the performance of the duties of the office or employment by the employee concerned and that such expenses are not reimbursed by his or her employer.
The FRE regime was established to apply a uniformity of approach to tax deductibility for expenses of large groups of employees and to facilitate ease of administration for both Revenue and employees. The expense should apply to all employees in that category and not be discretionary. Revenue has advised me that it will consider FRE applications where a large number of employees incur broadly identical qualifying expenses which are not reimbursed by their employer. Applications are generally made by the representative bodies in the employment sectors concerned and are considered by Revenue based on the specific commonality of expenses within the employment category and compliance with the strictly applied statutory requirement for a tax deduction.
I am aware that Revenue has recently completed a comprehensive review of their FRE regime. The purpose of the review, which involved engagement with relevant representative bodies, was to ensure that the expenses granted to each employment category remain justified and appropriate to modern day employments and work practices. Each category of FRE allowance was examined separately in the light of the legislative requirements of section 114 of the TCA 1997, which provide that expenses are tax deductible only if they are wholly, exclusively and necessarily incurred by the employee in the performance of the duties of his or her employment and are not reimbursed by the employer. Notwithstanding this review, I understand Revenue is willing to engage with representative bodies of any large groups of employees, including dental hygienists, to consider an application for flat rate employment expenses.
Revenue recently announced its decision to defer the implementation of any planned changes to the FRE regime until 1 January 2021, to allow time, as part of the annual Tax Strategy Group process, for the examination of a number policy matters that were raised during Revenue’s review. Consequently, there will be no change to FRE allowances for 2020. I am advised by Revenue that it remains committed to the FRE regime and encourages all taxpayers to avail of their full tax relief entitlements.
As I have said on previous occasions, there has been no change to the general rule set out in legislation that all employees have a statutory right to claim a deduction under section 114 TCA for any valid expenses incurred wholly, exclusively and necessarily in the performance of the duties of their employment, to the extent which the expenses are not reimbursed from any source. So while certain employees may not be able to claim a deduction on a universal “flat rate” basis, they may be able to still claim a deduction on a specific “vouched basis”.
89. Deputy Michael McGrath asked the Minister for Finance if a particular return submitted to the Revenue Commissioners by a person (details supplied) in County Cork has been fully examined and processed; and if he will make a statement on the matter. [3232/20]
View answerRevenue has confirmed to me that the person in question filed his 2019 Income Tax return (Form 11) via the Revenue Online System (ROS) on 25 February 2020.
Revenue has also confirmed that a Notice of Assessment issued to the person on 26 February and the associated tax refund issued by cheque on 28 February 2020.
90. Deputy Seán Haughey asked the Minister for Finance his plans with regard to the local property tax; and if he will make a statement on the matter. [3301/20]
View answerThe review of the Local Property Tax was completed by the Department of Finance in conjunction with the Departments of the Taoiseach, Public Expenditure & Reform and Housing, Planning & Local Government and the Revenue Commissioners and the report was published in April last year and is available on the Department of Finance website.
In accordance with its terms of reference, the review focused on the impact of house price movements on LPT liabilities under a series of scenarios involving different rate and tax band structures. The review also included an examination of the outstanding recommendations of the 2015 Thornhill review of the Local Property Tax. It included a consultation process to enable all interested parties and individuals to submit their views on the future of the LPT.
The Review Group found significant but geographically uneven increases in residential property price levels which made it difficult to identify a scenario that would deliver on the condition I set that there should be relative stability for all taxpayers in their LPT liabilities and that any increases should be modest, affordable and fair.
Having considered the findings of the review report, I decided to defer the valuation date from 1st November 2019 to 1st November 2020. This gave sufficient time for the Budgetary Oversight Committee to consider the review report in the context of the Committee’s recommendations in its report on LPT of 21 March 2018. Importantly, as a result of my decision, the LPT bills of those liable for the tax will not be increasing in 2020.
I met with the Committee in June of last year to discuss the review of the Local Property Tax. The Committee also had a separate meeting with officials of the Department of Finance. I received the Committee's scrutiny report on the LPT review in September 2019.
In order to bring this matter forward, amending legislation will be required and this will need to be in place sufficiently early this year so that the Revenue Commissioners can have the necessary administrative and technical arrangements in place for the 2021 LPT year. This legislation will be a matter for the incoming government.
91. Deputy Éamon Ó Cuív asked the Minister for Finance the amount raised by the Exchequer from the levy introduced in 2011 on pensions by year; the long-term effect this levy will have on pensions for those who worked in the semi-State sector who do not have an entitlement to the State contributory pension; and if he will make a statement on the matter. [3325/20]
View answerIt is assumed the Deputy is referring to the stamp duty levy on pension funds, i.e. the pension levy, which was in operation from 2011 to 2015.
I am advised by Revenue that a table showing stamp duty receipts, including the levy on pension funds, for the relevant years, is available on the Revenue website at the link: www.revenue.ie/en/corporate/documents/statistics/receipts/stamp-duty-receipts.pdf.
The data requested by the Deputy are set out in the following table:
|
|
2011 |
2012 |
2013 |
2014 |
2015 |
|
|
€m |
€m |
€m |
€m |
€m |
|
Pension Levy |
463.23 |
482.88 |
535.31 |
742.88 |
169.31 |
For the years 2016-2018, the amount collected by the pension levy is set out in the following table:
|
|
2016 |
2017 |
2018 |
|
|
€m |
€m |
€m |
|
Pension Levy |
0.41 |
0.05 |
0.08 |
The pension fund levy was introduced in 2011 in the wake of the financial crash and at a time when the economy was in serious difficulties. Urgent action needed to be taken to preserve and boost jobs and it is an unavoidable fact that difficult economic situations require hard and very often unpopular decisions. All sectors of the economy had to contribute to the recovery plan and the levy was designed to claw back a small amount of the very generous tax reliefs that those contributing to pension arrangements had benefitted from over many years. The levy went to fund the tax reductions and expenditure measures introduced in the Jobs Initiative, including lowering the VAT rate for the tourism sector to 9%. The levy was successful and did its job as reflected in the increased activity and employment in that sector. The trustees of pension schemes affected by the levy had the option of adjusting current or prospective scheme benefits to take account of the levies, which included the possibility of reducing future retirement benefits.
For the years 2011, 2012 and 2013 the rate was 0.60% of the pension scheme assets. For the year 2014, the rate was 0.75% of the assets and for the year 2015, the final year of the levy, the rate was 0.15%. Under the legislation, the payment of the levy was treated as a necessary expense of a pension scheme and the trustees or insurer, as appropriate, were entitled where needed to adjust current or prospective benefits payable under a scheme to take account of the levy. It was 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.
However, the legislation also included safeguards aimed at ensuring that, should the option of reducing scheme benefits be taken, it had to be applied in an equitable fashion across the different classes of scheme members that could include active, deferred and retired members. In no case could 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.
The value of the funds raised by way of the levies have been used to protect and create jobs and this has helped to create the improving financial and economic position of the State. Taxpayers to whom the impact of the levy may have been passed on by the chargeable persons responsible for the payment of the levy (the pension scheme trustees, etc.) will have since benefited from tax reductions in the last number of Budgets.
In relation to entitlement to the State pension for semi-State employees, entitlement to the State pension is a matter for the Department of Employment Affairs and Social Protection, but I can advise that modified rate PRSI contributors who do not have sufficient means may qualify for the means tested State pension (non-contributory).
92. Deputy Seán Haughey asked the Minister for Finance if he will review the tax treatment of cohabitating couples in order that they are treated the same way as married couples as is the case in the social welfare code; if he will allow tax credits to be allocated between cohabiting couples; and if he will make a statement on the matter. [3329/20]
View answerIn situations where a couple is cohabiting, rather than married or in a civil partnership, each partner is treated for the purposes of income tax as a separate and unconnected individual. Because they are treated separately for tax purposes, credits, tax bands and reliefs cannot be transferred from one partner to the other.
The basis for the current tax treatment of married couples derives from the Supreme Court decision in Murphy vs. Attorney General (1980). This decision was based on Article 41.3.1 of the Constitution where the State pledges to protect the institution of marriage. The decision held that it was contrary to the Constitution for a married couple, both of whom are working, to pay more tax than two single people living together and having the same income.
To the extent that there are differences in the tax treatment of the different categories of couples, such differences arise from the objective of dealing with different types of circumstances while at the same time respecting the constitutional requirements to protect the institution of marriage. Cohabitants do not have the same legal rights and obligations as a married couple or couple in a civil partnership which is why they are not accorded similar tax treatment to couples who have a civil status that is recognised in law. Any change in the tax treatment of cohabiting couples can only be addressed in the broader context of future social and legal policy development in relation to such couples.
I have been advised by Revenue that from a practical perspective, it would be very difficult to administer a regime for cohabitants which would be the same as that for married couples or civil partners. Married couples and civil partners have a verifiable official confirmation of their status. It would be difficult, intrusive and time-consuming to confirm declarations by individuals that they were actually cohabiting. It would also be difficult to establish when cohabitation started or ceased. There would also be legal issues with regard to ‘connected persons’. To counter tax avoidance, ‘connected persons’ are frequently defined throughout the various Tax Acts. The definitions extend to relatives and children of spouses and civil partners. This would be very difficult to prove and enforce in respect of persons connected with a cohabiting couple where the couple has no legal recognition. There may be an advantage in tax legislation for a married couple or civil partners as regards the extended rate band and the ability to transfer credits. However, their legal status has wider consequences from a tax perspective both for themselves and persons connected with them.
93. Deputy Seán Haughey asked the Minister for Finance the position regarding the imposition of a levy on private pensions during the financial emergency; if he will take appropriate measures including intervention with the relevant private pension companies to ensure that the value of these pensions are restored; and if he will make a statement on the matter. [3335/20]
View answer105. Deputy Robert Troy asked the Minister for Finance if the pension levy for the occupational pension will be reimbursed. [3774/20]
View answerI propose to take Questions Nos. 93 and 105 together.
The pension fund levy was introduced in 2011 in the wake of the financial crash and at a time when the economy was in serious difficulties. Urgent action needed to be taken to preserve and boost jobs and it is an unavoidable fact that difficult economic situations require hard and very often unpopular decisions. All sectors of the economy had to contribute to the recovery plan and the levy was designed to claw back a small amount of the very generous tax reliefs that those contributing to pension arrangements had benefitted from over many years. The levy went to fund the tax reductions and expenditure measures introduced in the Jobs Initiative, including lowering the VAT rate for the tourism sector to 9%. The levy was successful and did its job as reflected in the increased activity and employment in that sector. The trustees of pension schemes affected by the levy had the option of adjusting current or prospective scheme benefits to take account of the levies, which included the possibility of reducing future retirement benefits.
For the years 2011, 2012 and 2013, the rate was 0.60% of the pension scheme assets. For the year 2014, the rate was 0.75% of the assets and for the year 2015, the final year of the levy, the rate was 0.15%. Under the legislation, the payment of the levy was treated as a necessary expense of a pension scheme and the trustees or insurer, as appropriate, were entitled where needed to adjust current or prospective benefits payable under a scheme to take account of the levy. It was 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.
However, the legislation also included safeguards aimed at ensuring that, should the option of reducing scheme benefits be taken, it had to be applied in an equitable fashion across the different classes of scheme members that could include active, deferred and retired members. In no case could 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.
The value of the funds raised by way of the levies have been used to protect and create jobs and this has helped to create the improving financial and economic position of the State. Taxpayers to whom the impact of the levy may have been passed on by the chargeable persons responsible for the payment of the levy (the pension scheme trustees, etc.) will have since benefited from tax reductions in the last number of Budgets.
94. Deputy Seán Haughey asked the Minister for Finance if he will exempt the living alone allowance paid to some social welfare recipients from income tax; and if he will make a statement on the matter. [3338/20]
View answerThe tax treatment of certain benefits payable under the Social Welfare Acts is dealt with under section 126 of the Taxes Consolidation Act of 1997.
The Living Alone Allowance is an extra payment made to individuals who are 66 years of age or over, and are in receipt of any of the following Social Welfare payments:
- the State Pension (Contributory);
- the State Pension (Non-Contributory);
- Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension;
- Widow's/Widower's Pension under the Occupational Injuries Benefit Scheme;
- Incapacity Supplement under the Occupational Injuries Benefit Scheme; and,
- Deserted Wife's Benefit.
The Living Alone Allowance is also paid if a person is under 66 years of age and in receipt of any of the following Social Welfare payments:
- Disability Allowance;
- the Invalidity Pension,
- Incapacity Supplement; or,
- Blind Pension.
The tax treatment of the Living Alone Allowance reflects the tax treatment of the underlying Social Welfare payment which the individual is in receipt of; thus the allowance is taxable where the underlying payment is taxable, and the allowance is already exempt from tax where the underlying payment is specifically exempted from taxation. Any change to this approach can happen only in the context of the Budget and Finance Bill process but there are no plans to depart from the present arrangements regarding the tax treatment of the allowance.
95. Deputy Thomas Pringle asked the Minister for Finance his plans to have a bilateral meeting with the managing director of the IMF, Ms Kristalina Georgieva; the issues that are likely to be on the agenda; and if he will make a statement on the matter. [3498/20]
View answerAs the Deputy may be aware I met with Ms Georgieva during my visit to Washington, D.C. last October to attend the Annual Meetings of the IMF-World Bank. During our short meeting, I invited the new Managing Director to visit Ireland and subsequently confirmed the invitation in writing on my return to Dublin. Ms Georgieva’s response is awaited and while no formal agenda has yet been agreed, I expect that Ireland’s economic outlook and EU and international economic and financial developments would inevitably be discussed. I would also be keen to discuss Ireland’s forthcoming 2020 Article IV consultation and the Financial Sector Assessment Program (FSAP), the Fund’s comprehensive and in-depth analysis of a country’s financial sector, which is due to commence later this year. I would also expect that the progress that has been made on the recently agreed package on IMF resources and governance reform would be a subject for discussion.
I believe that the IMF is a cornerstone of multilateralism, which has contributed to global economic and social progress. As a small and open economy, Ireland has a deep understanding and appreciation of the importance of international cooperation and trade fostered and underpinned by a well-functioning multilateral international economic system. In today’s environment of resurgent protectionism, I would therefore take the opportunity afforded in meeting Ms Georgieva to reiterate Ireland’s ongoing commitment to multilateralism and our continued support for the important work of multilateral institutions like the IMF.
96. Deputy Thomas Pringle asked the Minister for Finance the amount it would cost in a full year if the income tax band for a single person increased from €35,300 to €37,000; the estimated cost for a married couple in which the income tax band for one earner increases from €44,300 to €47,000; and if he will make a statement on the matter. [3499/20]
View answerIt is assumed that the Deputy’s request is to increase the standard rate cut off point (SRCO) for the major earner of a jointly assessed unit (couple) with two incomes (currently €44,300) while also increasing the SRCO for both singly assessed taxpayers (currently €35,300), and jointly assessed taxpayer units with one income (currently €44,300). It is further assumed that the Deputy wishes to retain the current structure, whereby the maximum SRCO available to a jointly assessed couple with two incomes, i.e. €70,600, is equivalent to twice the SRCO available to a singly assessed taxpayer.
That being the case, it is assumed the Deputy wishes to increase the SRCO point to €37,000 for singly assessed taxpayers, €46,000 for jointly assessed taxpayers with one income, and €47,700 for the major earner in a jointly assessed unit (couple).
The estimated first and full year cost of this change is €365m and €421m respectively.
These estimates have been generated by reference to 2020 incomes, based on actual data for the year 2017 (the latest year for which returns are available) adjusted as necessary for income, self-employment and employment trends in the interim.
97. Deputy Robert Troy asked the Minister for Finance if he has considered temporarily exempting homes of persons along the river Shannon that have been adversely affected by recent flooding from the local property tax; and if he will make a statement on the matter. [3677/20]
View answerThe Finance (Local Property Tax) Act 2012 (as amended) provides for a limited number of exemptions from LPT, none of which operate on a temporary basis. It does not provide any exemption for properties liable to, or having actually suffered, flooding. Limiting the exemptions available has kept the tax base as broad as possible and has allowed the rate to be kept low for those liable persons who do not qualify for an exemption. For this reason I do not intend to legislate for the temporary exemption proposed by the Deputy.
Section 13 of the 2012 Act sets out how residential properties are to be valued for LPT purposes. LPT operates on a self-assessment basis and it is a matter for the property owner in the first instance to calculate the tax due based on his or her assessment of the market value of the property. When making an assessment, it is expected that the effect of serious and regular flooding on a property would be factors that a property owner would take into account in valuing the property.
Current property valuations made on the valuation date of 1 May 2013 will continue to apply until 31 October 2020 on foot of S.I. No. 166/2019 - Finance (Local Property Tax) Act 2012 (Section 13(3)) Order 2019. The declared valuation is not affected by any repairs or improvements made to a property, any damage to a property or by any general increase/decrease in property prices that might occur over the course of the valuation period.
Information and assistance in relation to LPT is available via the Revenue LPT Helpline on 01-738 36 26.
98. Deputy Aengus Ó Snodaigh asked the Minister for Finance the details of guidelines on NOx payments introduced since 1 January 2020 on imported vehicles; if a transition period was put in place for cars imported over 30 days before 1 January 2020 in cases in which persons were unable to book an assessment for VRT until after 1 January 2020 due to a backlog in the system; and if he will make a statement on the matter. [3721/20]
View answerIn my Budget statement on 8 October I announced, in support of climate and public health policy, that I would be replacing the 1 per cent VRT diesel surcharge with a nitrogen oxide (NOx) emissions-based charge that would apply to all passenger cars registering for the first time in the State from 1 January 2020. The Finance Act 2019, section 50 subsequently introduced this additional charge.
I am informed by Revenue that previously registered vehicles are registered using the National Car Testing Service (NCTS) Centres around the State. Under legislation, a private importer of a vehicle must make an appointment to register a vehicle within seven days of importing the vehicle into the State and must register the vehicle within thirty days of importation. A separate system of authorisation is in place for motor dealers that allows them to hold vehicles beyond the thirty-day limit. The performance standard for the NCTS Centres’ system of registration appointments is based on the thirty-day rule. I am further informed by Revenue that all NCTS Centres, while busy in the November/December period, were in a position to offer appointments for registration of vehicles within the thirty-day service standard.
I am satisfied that ample notice of the new tax was provided from the time of my Budget statement (including extensive coverage in the national media) for people to register their cars and that the system of registration administered by the NCTS Centres on behalf of Revenue was at all times satisfactory. In the small number of cases where people made appointments and presented their vehicles for registration at an NCTS Centre during December, and where, for operational reasons, the registration was not completed, Revenue will allow the registration of those vehicles without the NOx charge.
Further information on the NOx surcharge can be accessed at: www.revenue.ie/en/importing-vehicles-duty-free-allowances/guide-to-vrt/calculating-vrt/nitrogen-oxide-emissions.aspx.
99. Deputy Michael McGrath asked the Minister for Finance if he has consulted with the insurance industry about compensation payouts as a result of flood and other storm damage from the recent storms; if the new rules have come into force regarding cash payments and retention payments; and if he will make a statement on the matter. [3745/20]
View answerMy officials have recently been in touch with Insurance Ireland to get an update on the number of property claims they have received as a result of the recent storms. In response, Insurance Ireland has indicated that there has not been a large increase in the number of calls to their Consumer Insurance Information Service helpline. Therefore, Insurance Ireland's initial view is that the recent storms have not lead to a significant increase in claims at this stage. However, they will continue to monitor the situation.
In the context of the recent storms, the Deputy may wish to note that the Minister for Business, Enterprise and Innovation, Heather Humphreys TD, has announced the opening of a Scheme to provide emergency humanitarian assistance for small businesses, sports clubs, community and voluntary organisations unable to secure flood insurance and affected by recent flooding. In addition to this, the Department of Employment Affairs and Social Protection has activated the Humanitarian Assistance scheme to support householders affected by flooding.
Finally, in relation to the Deputy’s query about the new rules on retention, the position is as follows. Section 17 of the Consumer Insurance Contracts Act 2019 provided for these new rules and this recently enacted piece of legislation is subject to Ministerial commencement. In that regard, I believe that it should be a matter for the new Government to commence that piece of legislation and as such these new rules are not yet active.
100. Deputy Michael McGrath asked the Minister for Finance the exposure GDP faces from contract manufacturing particularly with regard to potential trade disruption as a result of the Covid-19 outbreak; the proportion of goods that are manufactured in China but booked here using the contract manufacturing method; the way in which it impacts on GDP; and if he will make a statement on the matter. [3746/20]
View answerExports from Ireland under 'contract manufacturing' arrangements account for approximately one-third of Irish exports, amounting to just over €68 billion in 2018 (latest available full-year data).
Contract manufacturing is a form of outsourcing whereby an Irish-resident firm engages a company abroad to manufacture goods on its behalf (and vice versa). Despite having no actual production or associated employment in Ireland, this activity is recorded as production in Ireland under the global national accounting framework (which, in the European Union, is referred to as the European System of Accounts 2010, ESA2010). When the products are subsequently exported, this is treated as an Irish export.
These activities artificially inflate Irish GDP. GNI*, however, is not inflated by contract manufacturing as this measurement adjusts for foreign-owned intellectual property located in Ireland (the main domestic input into contract manufacturing).
A large proportion of Irish-outsourced contract manufacturing takes place in China which, of course, was the epicentre of the COVID-19 outbreak and where significant disruptions to production have taken place.
Given these disruptions, it is certainly possible that Irish production and exports associated with contract manufacturing could be affected. If this was to happen, headline GDP would be adversely affected although there would be no impact on GNI* or employment in a direct sense. If the lost output and sales are not recovered by year-end, it is possible that corporation tax receipts could be affected.
The extent of the impact on the economy will depend on the duration of the disruptions to production in China (and elsewhere) caused by COVID-19. My Department will continue to monitor developments and advise accordingly.
101. Deputy Michael McGrath asked the Minister for Finance the potential exposure to the economy from the Covid-19 outbreak; the potential impacts on tourism, travel, trade and global supply chains; and if he will make a statement on the matter. [3747/20]
View answerAt the outset, it must be stressed that it is difficult to quantify the global and domestic economic impacts of the Covid19 outbreak at this stage. This is because the impact will depend on several factors, not least the duration of the epidemic as well as the containment measures put in place to limit its spread. These are simply impossible to estimate and, accordingly, it is extremely difficult to quantify the macroeconomic impact at this point in time.
Nevertheless, the OECD has estimated that, in a scenario where economic disruption is mainly confined to China, with only limited spill-overs to other regions, measures put in place to contain the Covid19 virus could take ½ a percentage point (pp) off the growth rate of the global economy this year.
I would stress, however, that this is a very benign scenario - it is also based on the assumption that the impact is mostly contained to the first quarter of this year, which appears a somewhat heroic assumption. In a broader contagion scenario, where the economic fall-out is longer-lasting and more widespread, the OECD estimates that this could take 1½ percentage points off the global growth rate.
As small and export-oriented, the Irish economy is particularly sensitive to external economic conditions. Over the medium-term, the pass-through of a global shock to the domestic economy tends to be broadly one-for-one - i.e. if world demand falls by 1 pp then, over the medium term, Irish economic activity is c. 1 pp below what would otherwise have been the case – with a less than one-for-one impact in the short-term. Slower growth would, in turn, have negative consequences for the labour market and the public finances.
While difficult to quantify at this stage, there are likely to be negative impacts for the Irish economy across a range of sectors. An increasingly integrated world economy means that supply-chains are also increasingly integrated, with many being ‘just-in-time’. Falling production of intermediate goods in China is now affecting the final output in other countries that will also likely impact production facilities in Ireland. In terms of direct trade links, the share of goods trade with China is around 6 per cent of total trade, based on preliminary data for last year.
However, indirect exposure to China is potentially more significant. The euro area is Ireland’s largest trading partner, accounting for close to a third of total exports. In turn, China accounts for 9 per cent of total euro area goods and services trade. The tourism and travel sectors are also likely to be negatively affected as travellers in many parts of the world are likely to take a more cautious approach than would otherwise have been the case.
My Department is monitoring the situation closely and will prepare updated economic forecasts over the next month or so, taking into account all of the latest available information. It must be stressed, however, that in the current environment, there is much more uncertainty than normal attached to any set of forecasts.
102. Deputy Michael McGrath asked the Minister for Finance when the next payments from the insurance compensation fund will be authorised by the High Court for claimants in the case of a company (details supplied); and if he will make a statement on the matter. [3750/20]
View answerSetanta Insurance ("Setanta") was placed into liquidation by the Malta Financial Services Authority on 30 April 2014. As it was a Maltese incorporated company, the liquidation is being carried out under Maltese law.
As the Deputy is aware, neither I nor the Department of Finance have any role in the process including the making of applications to the High Court or payments.
Regarding when the next payments will be made, the Deputy will note that in accordance with the relevant legislation, there are certain steps to be completed in preparing any application to the High Court for payment from the ICF. These steps include the assessment and verification of each individual claim within the application by the State Claims Agency.
Officials in my Department have contacted the State Claims Agency who have confirmed that the date of the next Court application relating to Setanta claims is not yet known. The audit and legal process leading to the Court application will commence towards the end of March. It is expected that the Court application will be in April 2020 with payments being made most likely towards the end April or in early May. It is understood the value of the next tranche of Setanta payments will be approximately €7.5 million.
Finally, any individual (or their solicitor) who has queries about their payment should contact the liquidator via phone at +353 (0)818 255 255 or via email at iesetanta@deloitte.ie.
