Wednesday, 20 May 2020

Written Answers Nos. 81-100

Commencement of Legislation

Questions (81)

Noel Grealish

Question:

81. Deputy Noel Grealish asked the Minister for Finance the stages required in order to commence the Consumer Insurance Contracts Act 2019; and if he will make a statement on the matter. [5921/20]

Written answers

Minister for Finance

The Consumer Insurance Contracts Act 2019 was signed into law by the President on 26 December 2019. The Act provides the Minister for Finance with powers to appoint a date for the Act to come into operation, or to appoint different days to commence different provisions of the Act.

At the end of January, I took the decision that the matter of when to commence the Act should be taken by the next Government. The background to this decision was a series of meetings with the major insurers where significant concerns were expressed about the early implementation of certain aspects of the Act.  Specifically, it was indicated to me that sufficient time would be needed in relation to the implementation of Sections 8 (Pre–contractual duties of consumer and insurer) and Section 12 (Renewal of contract of insurance).  In addition, Sections 9 (Proportionate remedies for misrepresentation) and 14 (Duties of consumer and insurer at renewal) are sufficiently interrelated with Section 8 that it is reasonable to consider that the concerns expressed also apply to these sections. Moreover, the Deputy should note that a general view was expressed by insurers that they also needed a number of months to prepare themselves for the implementation of the sections other than those referred to above.

My officials have advised me that the sector has indicated to them that if insurers are not provided with sufficient time to implement the requirements necessary to fulfil the obligations of the above mentioned sections, they may be forced to withdraw certain products from the market in order to prioritise others so as to ensure that they are fully compliant with the law. Officials understand that such a development would most likely to impact the employer/public liability part of the market. While conscious of the sector’s concerns, officials have emphasised to Insurance Ireland the importance of the need for ongoing preparation by the sector for the ultimate commencement of this Act, either on a phased basis or in full.

Consequently, as I believe that this matter is one to be considered after the formation of the next Government, I cannot currently give any indication of a likely timeline for the commencement of this Act, on a phased basis or in full.

Question No. 82 answered with Question No. 75.

Property Tax Collection

Questions (83)

Bríd Smith

Question:

83. Deputy Bríd Smith asked the Minister for Finance if he will instruct the Revenue Commissioners to defer collection of the LPT from those affected by the Covid-19 crisis, that is, those on the pandemic unemployment payment or in the wage subsidy scheme; and if he will make a statement on the matter. [5959/20]

Written answers

Minister for Finance

As the Deputy is aware, I do not have the authority to instruct the Revenue Commissioners to defer the collection of any tax that is legally collectible, including Local Property Tax (LPT), from those affected by the COVID-19 pandemic.

I am, however, aware that Revenue has already deferred payment of LPT for residential property owners that meet their 2020 liability through the ‘annual debit instruction’ (ADI) payment method, from 21 March to 21 July 2020. I am also aware that Revenue has not initiated any debt collection action against LPT non-payers since the COVID-19 crisis began.

Revenue has advised me that any residential property owners that are experiencing financial difficulties arising from the COVID-19 pandemic and are concerned about meeting their LPT liabilities can amend their current payment arrangement by logging on to their online account at www.ros.ie/myaccount-web/sign_in.html?execution=e1s1.

Alternatively they can engage directly with Revenue via the LPT portal on the Revenue website at https://lpt.revenue.ie/lpt-web/views/login.html?execution=e1s1 or by post to LPT Branch, PO Box 1, Limerick. Revenue has assured me that it will make every effort to assist residential property owners experiencing financial difficulties to the greatest extent possible. 

Questions Nos. 84 and 85 answered with Question No. 57.

Departmental Contracts

Questions (86)

Bríd Smith

Question:

86. Deputy Bríd Smith asked the Minister for Finance if payments or expenses are being paid to a person (details supplied) for services provided during the Covid-19 crisis to the Government and An Taoiseach. [5962/20]

Written answers

Minister for Finance

The Department of Finance has no record of payments or expenses being made to the person named in the PQ for services provided during the Covid-19 crisis. I wish to note that my response refers only to Department of Finance records and I cannot comment on behalf of other Government Departments.  

Pension Levy

Questions (87)

Brian Stanley

Question:

87. Deputy Brian Stanley asked the Minister for Finance if consideration has been given to removing or altering the levy applied to occupational pensions of those who worked in semi-State companies; and if he will make a statement on the matter. [5975/20]

Written answers

Minister for Finance

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 has been used to protect and create jobs and this helped to improve the 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 benefitted from tax reductions in the last number of Budgets.

Bank Guarantee Scheme

Questions (88)

Catherine Murphy

Question:

88. Deputy Catherine Murphy asked the Minister for Finance if his attention has been drawn to an article (details supplied) and a recent report by a company confirming that the former Anglo Irish Bank was insolvent in 2008; if his attention or that of his predecessors was further drawn to the fact that the company changed its position having reassured the ECB and the Government in 2008 that the bank was in fact solvent; his views on whether the repayment of ECB loans by the bank has now become a legal matter and that the legality of the repayment by Ireland of promissory notes associated with the losses of the bank is now in doubt; and if he will make a statement on the matter. [6005/20]

Written answers

Minister for Finance

Mr. David Tynan of PwC was appointed to the role of Assessor pursuant to the Anglo Irish Bank Corporation Act 2009 in November 2018.  

The Assessor's report was published on the Department of Finance website on 12 May 2020 and the overall conclusion of this report is that the fair and reasonable aggregate value of the transferred shares and the extinguished rights in the bank as at 15 January 2009 for the purposes of payment of fair and reasonable compensation for the acquisition of those shares and the extinction of those rights was nil and therefore, that no compensation is payable to former shareholders of any class or to former rights holders.

The Assessor was appointed pursuant to the Anglo Irish Bank Corporation Act 2009 (the "Act"). Under the Act the Assessor is required to determine this value having regard to the following items:

- on the basis of the true financial state of Anglo Irish Bank on 15 January 2009, taking into account the underlying market values of Anglo Irish Bank’s assets and the extent of its actual, contingent and prospective liabilities on that date;

- having regard to the rights attaching to each class of transferred shares; and

- assuming that no financial assistance, investment or guarantee (other than the guarantee already provided under the Credit Institutions (Financial Support) Act 2008) would in future be provided to or made in Anglo Irish Bank, directly or indirectly, by the State.

The final report of the Anglo Irish Bank Assessor states that, in his opinion, absent the provision of recapitalisation funds from the Government that the former Anglo Irish Bank was unlikely to be able to continue to trade as it was "both cashflow and balance sheet insolvent", as at 15 January 2009.

The Project Atlas October 2008 report, which PwC prepared, was based on Anglo’s IFRS balance sheet as at 30 September 2008 which was after the Government bank guarantee.  The report stated that the balance sheet showed that the bank’s assets exceeded its liabilities.

I am aware of the recent media article but note that the work conducted by the Assessor cannot be compared to the reports undertaken by PwC under Project Atlas given the different dates involved and the fact the Assessor's report was conducted on the assumption of no further future support being provided to the bank (in line with the requirements of the Act).

In relation to Promissory Note payments the Deputy will be aware that the Promissory Notes were cancelled consequent to the liquidation of IBRC in 2013 and that no payments have been made on those notes since that time.

Insurance Industry

Questions (89)

Matt Carthy

Question:

89. Deputy Matt Carthy asked the Minister for Finance if all insurers and reinsurers based or operating here have signalled to the Central Bank that they will not pay discretionary dividends or implement share buy back schemes for 2020; and if he will make a statement on the matter. [6042/20]

Written answers

Minister for Finance

In response to the Deputy’s question, my officials contacted the Central Bank for information on this matter.  In their reply, the Central Bank indicated that as the information sought by the Deputy relates to their day-to-day supervisory work of (re) insurers, they are precluded from providing a response to your question.  They also noted that they do not divulge firm specific information with respect to their supervisory activities. 

The above said, I would note that on 2 April, EIOPA published a statement on dividend distribution and variable remuneration policies in the context of Covid-19.  This statement sets out that (re) insurers should suspend all discretionary dividend distributions and share buy backs aimed at remunerating shareholders.  In addition, any variable remuneration due to be paid by (re) insurers should also be considered for postponement at this time.  The Central Bank, in its response to my officials, confirmed that it is fully aligned with this statement, which is designed to ensure that policyholders’ interests are protected.  In addition, the Central Bank confirmed that it has communicated this to insurance firms bilaterally and through relevant industry bodies.  I understand that a number of firms have already announced that they are deferring dividends in this context.  I welcome this and believe others should also follow suit. 

Finally, with regard to EU insurance firms that are not authorised by the Central Bank but that operate in the State, I am informed that the Central Bank’s expectation would be that EIOPA’s statement has been duly considered by the supervisory authority of the member State that they are supervised in. 

Covid-19 Pandemic Supports

Questions (90)

Mark Ward

Question:

90. Deputy Mark Ward asked the Minister for Finance if an organisation (details supplied) has benefited from the wage subsidy scheme; and if he will make a statement on the matter. [6116/20]

Written answers

Minister for Finance

I am advised by Revenue that, notwithstanding any obligations imposed on the Revenue Commissioners under section 851A of the Taxes Consolidation Act 1997 or any other enactment relating to the confidentiality of taxpayer information, section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020 provides that the names and addresses of all employers to whom a temporary wage subsidy has been paid will be published by Revenue on its website. 

Revenue further advise me that it will publish the details in question when the temporary wage subsidy scheme has ended. In the interest of fairness to all employers participating in the scheme, Revenue will not be commenting on whether any particular employer has availed of the scheme until the scheme has ended.

Banking Sector

Questions (91)

Carol Nolan

Question:

91. Deputy Carol Nolan asked the Minister for Finance if the report by a company (details supplied) into the activities of the SCBI will be published; and if he will make a statement on the matter. [6130/20]

Written answers

Minister for Finance

An External Review of the SBCI was completed by EY. This was published on the website of the SBCI on the 18th May 2020, along with the SBCI Strategic Plan 2020-2025.

Question No. 92 answered with Question No. 57.

VAT Rate Application

Questions (93)

Michael McGrath

Question:

93. Deputy Michael McGrath asked the Minister for Finance the position relating to the VAT rate that applies to different types of activities in the commercial water sports sector including the provision of diving lessons; and if he will make a statement on the matter. [6166/20]

Written answers

Minister for Finance

I am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply.  In general, the VAT Directive provides that all goods and services are liable to VAT at the standard rate unless they fall within categories of goods and services specified in the Directive in respect of which Member States may apply a lower rate or exempt from VAT.

In accordance with the Directive the provision of facilities for taking part in sporting activities, including commercial watersports activities, are taxable at the second reduced rate, 9% and the supply of sports lessons including diving are generally taxable at the standard rate, 23%.

However, a VAT exemption applies to the supply of training and development courses, subject to the training and retraining being of a vocational nature. The VAT exemption may apply to sports instruction, such as diving lessons that are provided in the manner of vocational training or retraining that may lead to a recognised qualification as a diving instructor. Further information is available in Revenue’s guidance "VAT treatment of education and vocational training" found here:

www.revenue.ie/en/tax-professionals/tdm/value-added-tax/part03-taxable-transactions-goods-ica-services/Services/services-education-vocational-training-post-2015.pdf.

Tax Collection

Questions (94)

Brian Stanley

Question:

94. Deputy Brian Stanley asked the Minister for Finance the amount collected in carbon tax in each of the years 2018 and 2019, respectively. [6161/20]

Written answers

Minister for Finance

I am advised by Revenue that the amount collected in Carbon Tax in each of the years 2018 and 2019 is €431.1 million and €430.4 million respectively.

Mortgage Interest Rates

Questions (95)

Catherine Murphy

Question:

95. Deputy Catherine Murphy asked the Minister for Finance the progress he has made to date with banks here with regard to a significant reduction of interest rates on residential mortgages in view of the fact that they are some of the highest in the eurozone; and if he will make a statement on the matter. [6181/20]

Written answers

Minister for Finance

Decisions in relation to mortgage lending are a commercial matter for lenders and are based on a number of factors, including the cost of borrowing. While interest rates in Ireland remain higher than in many other European countries, there has been significant reduction in interest rates on new mortgage lending over the last 4-5 years. For example, the new business interest rate, excluding negotiations, on loans with fixations over one year, was 4.02% at Jan 2015 and is now 2.72%. These are significant reductions that benefit borrowers greatly over loan lifetimes.

A number of important factors determine the interest rates charged on mortgages. These include the fact that the pricing of loans needs to reflect credit risks and capital requirements (which in Ireland are elevated due to historical loss experience), operating costs, structural factors (for example the offering of cashback and other incentives in the Irish market) and weak competition in the domestic mortgage market. However, neither the Central Bank nor I have a statutory role to prescribe the lending, or indeed deposit, rates charged or paid by commercial banks or other commercial lenders.

Nevertheless, the Central Bank has put in place a range of measures in order to protect consumers who are taking out a mortgage.  The consumer protection framework requires lenders to be transparent and fair in all their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle; for example, through protections at the initial marketing/advertising stage, in assessing the affordability and suitability of the mortgage and at a time when borrowers may find themselves in financial difficulties.

In particular, the Central Bank introduced of a number of increased protections for variable rate mortgage holders. The enhanced measures, which are provided for in an Addendum to the Consumer Protection Code 2012, and became effective in February 2017, require lenders to explain to borrowers how their variable interest rates have been set, including in the event of an increase. The measures also improve the level of information required to be provided to borrowers on variable rates about other mortgage products their lender provides which could provide savings for the borrower and signpost the borrower to the CCPC’s mortgage switching tool.

Furthermore, the Central Bank also introduced additional changes to the Consumer Protection Code to help consumers make savings on their mortgage repayments, provide additional protections to consumers who are eligible to switch, and facilitate mortgage switching through enhancing the transparency of the mortgage framework. The new and enhanced requirements took effect from January 2019.

Covid-19 Pandemic Supports

Questions (96)

Michael McGrath

Question:

96. Deputy Michael McGrath asked the Minister for Finance if he will address a matter raised in correspondence (details supplied) regarding the temporary wage subsidy scheme; and if he will make a statement on the matter. [6191/20]

Written answers

Minister for Finance

The Temporary Wage Subsidy Scheme (TWSS) is an emergency measure to deal with the impact of the COVID-19 pandemic on the economy. It builds on data returned to Revenue through the PAYE system and as such is a fully automated solution. The automated solution, which was developed in a very short timeframe in response to the pandemic, is designed around the dates specified in the legislation and cannot function where those timelines are not strictly adhered to. The timelines require that employees were on the payroll at 29 February 2020 and that employers had fulfilled their PAYE reporting obligations for February 2020 before 15 March 2020. 

The 15 March 2020 deadline in respect of the February payroll submission was recently extended to ‘before’ 1 April 2020 by Revenue under its care and management provisions. However, this concession can only apply where all previous payroll submissions were received by 15 March 2020. The concession, which was implemented on 24 April 2020, is also only applicable on a prospective basis and cannot be applied to previous pay periods.   

I am advised by Revenue that the business in question filed its February 2020 payroll submission on 20 March 2020 and as such was outside of the 15 March deadline as specified in the legislation. However, the business does qualify under the revised concessionary arrangements and has been receiving TWSS payments in respect of payrolls made on or after 24 April 2020.

The business also received TWSS payments in error in respect of pay periods prior to 24 April to which it was not entitled. The error occurred due a combination of duplicate payroll submissions (by the business) and a technical issue with Revenue’s IT system at that time. Revenue engaged directly with the business on the issue on 8 May 2020 and confirmed that the earlier payments were made in error and should be refunded.

Revenue has assured me that it will work with the business to agree a repayment arrangement that takes account of its current financial circumstances. 

Question No. 97 answered with Question No. 45.

Tax Data

Questions (98)

Matt Carthy

Question:

98. Deputy Matt Carthy asked the Minister for Finance the estimated amount that would be generated by imposing a €500 per year tax on all second homes, a €850 per year tax on all third homes and a €1,300 per year tax on all fourth and subsequent homes; and if he will make a statement on the matter. [6247/20]

Written answers

Minister for Finance

I am informed by Revenue that the Exchequer yield from the introduction of the additional taxes suggested by the Deputy is estimated to be in the region of €290 million in a full year. This yield assumes that that tax would be imposed on all non-principal private residences, excluding residential properties in the ownership of local authorities and approved housing bodies.

Tax Data

Questions (99)

Matt Carthy

Question:

99. Deputy Matt Carthy asked the Minister for Finance the estimated revenue which could be achieved by increasing the number of audit staff employed by the Revenue Commissioners by an extra 180 persons; and if he will make a statement on the matter. [6248/20]

Written answers

Minister for Finance

Revenue has advised me that investment in the training and development of a Revenue auditor or investigator can take up to three years, depending on previous relevant experience. Therefore, it is not possible to accurately estimate the additional yield that would immediately arise from the recruitment of 180 audit staff.

Revenue has also advised me that it undertakes a range of risk management interventions to target and confront different types of non-compliance in addition to tax evasion, for example, shadow economy and smuggling detection activity. The range of interventions used by Revenue has expanded in recent years to cover such diverse risks and includes, assurance checks, aspect queries, profile interviews, enforcement, investigations and prosecutions in addition to tax audits.

The intervention deployed by Revenue in a case depends on the level of risk involved, and the average rate of return varies, depending on the scale of non-compliance. Also, in some types of interventions, for example enforcement, the focus is on the detection of drugs and fiscal smuggling where the direct exchequer yield is not the immediate objective.

As Minister for Finance, I have always responded positively to any requests from Revenue for additional resources needed to tackle identified areas of tax or duty risk. For example, in each Budget since Budget 2016 I have introduced a series of ‘compliance measures’ changes, which were aimed at raising tax revenue through enhanced taxpayer compliance and on each occasion, I have provided the necessary additional resources required by Revenue to ensure successful delivery. The analysis of the results of these compliance measures is available on the Revenue website at: www.revenue.ie/en/corporate/information-about-revenue/research/reviews/index.aspx, which may be of interest to the Deputy.

Tax Data

Questions (100)

Seán Haughey

Question:

100. Deputy Seán Haughey asked the Minister for Finance the number of companies without an EORI number; and if he will make a statement on the matter. [6275/20]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that there are currently 65,946 businesses registered for a Customs EORI number. The Revenue Commissioners noted that 92.7% of the value of imports from the UK in 2019 and 95.8% of the value of exports to the UK in 2019 was carried out by businesses who now have an EORI number.

In relation to businesses who trade with the UK, the Revenue Commissioners have analysed the VAT Information Exchange System (VIES) returns and identified some 96,000 businesses that traded with the UK in 2019. Of these 96,000 businesses, approx. 57,000 do not currently have an EORI number. Of the larger businesses with annual UK import or export trade in excess of €50,000, and therefore with a potential significant supply chain exposure to trade with the UK, the number without an EORI number is approximately 3,000.

The Revenue Commissioners have engaged closely with businesses during 2019 and this has continued in 2020. This engagement has contributed to the positive picture portrayed by this data. However, I am aware that many businesses have been and continue to be adversely affected by the COVID-19 pandemic, and that social distancing requirements, while essential to prevent the spread of the virus, are unfortunately significantly impeding their ability to carry out many operational tasks.

Nonetheless and with this is mind, there are a range of actions that the Revenue Commissioners have encouraged and continue to encourage relevant businesses to consider, to ensure that businesses can trade with the UK after the transition period. This includes:

- Undertake supply chain and cash flow assessments so as to fully understand and identify the impact of Brexit, 

- Register for customs by getting an EORI number, if not already registered,

- Ensure they have the capability to lodge customs declarations, by either getting customs software or engaging a customs agent,

- Understand the impact of and make arrangements for paying import duties,

- Know the origin and commodity code(s) of the goods traded,

- Ensure compliance with product certification requirements, 

- Understand the obligations involved if trading in animal or plant products, and

- Consider what customs related simplifications or authorisations might be relevant and that would further ease the smooth and efficient flow of trade and goods at import or export.

I very much support this engagement by the Revenue Commissioners and I urge all businesses to take the necessary steps to ensure they can trade with the UK post the transition period.