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Tuesday, 7 Jul 2020

Written Answers Nos. 181-200

Tax Code

Questions (181)

Emer Higgins

Question:

181. Deputy Emer Higgins asked the Minister for Finance the capital gains and other tax liabilities if a person surrenders their property to the financial institution that owns the mortgage; and if he will make a statement on the matter. [14407/20]

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Written answers

I am advised by the Revenue Commissioners that, in general, where a person surrenders their property to a financial institution and where a person such as a receiver appointed by a financial institution disposes of a property on behalf of that financial institution, the debtor i.e. the property owner, is the person disposing of the property but the person acting on behalf of the financial institution is accountable for any CGT that may be due. That tax must be paid by such accountable person out of the proceeds of the disposal in priority to any debt such as a mortgage secured on the property.

The amount of CGT chargeable is determined by reference to the circumstances of the debtor. Accordingly, if the property disposed of was occupied by the debtor as that debtor’s principal private residence for all or part of the debtor’s period of ownership, full or partial relief from CGT may apply to the extent that any CGT liability arises. The last 12 months of ownership of the property by the debtor is treated as a period of occupation for this purpose.

With respect to local property tax (LPT), under the Finance (Local Property Tax) Act 2012 (as amended), the person who is the liable person on the liability date for a particular year is the person who is responsible for the payment of LPT for that year. Thus, for example, the person who is the liable person on 1 November 2019 is responsible for the payment of LPT for the year 2020.

In general, the owner of a residential property is the liable person. However, where a financial institution enforces its security over a property by taking possession of the property, the financial institution, as a ‘mortgagee in possession’, displaces the owner of the property as the liable person. If the financial institution does not actually become a ‘mortgagee in possession’, the owner of the property continues to be the liable person. However, depending on the particular circumstances, it may happen that a financial institution that does not become a ‘mortgagee in possession’ agrees to pay the LPT.

Mortgage Lending

Questions (182)

Róisín Shortall

Question:

182. Deputy Róisín Shortall asked the Minister for Finance if the relationships framework which prevents the State from intervening in the way in which banks manage their day-to-day business, in the case of banks in which the State has a shareholding will be reviewed by the Government and the European Commission in view of the actions of some banks to greatly restrict mortgage lending in the midst of a housing crisis and unilaterally deny mortgage approval to applicants that are in receipt of a State wage subsidy; and if he will make a statement on the matter. [14412/20]

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Written answers

As the Deputy will be aware, the Temporary Wage Subsidy Scheme is one of the main tools with which we are protecting the income of employees who otherwise would not be working. However, whilst I acknowledge the seriousness of the issue you have raised and its impact on those affected, what I cannot do is mandate how temporary payments received under the Temporary Wage Subsidy Scheme are treated in lending sustainability evaluations by regulators and lenders.

As you have mentioned, the Relationship Framework applies in cases like this. It means that as Minister for Finance I cannot mandate or overrule the internal risk assessment processes in any bank, even one in which the State has a shareholding. Decisions in this regard are the sole responsibility of the board and management of the banks which must be run on an independent and commercial basis. The independence of banks in which the state has a shareholding is protected by Relationship Frameworks which are legally binding documents that cannot be changed unilaterally. These frameworks, which are publicly available, were insisted upon by the European Commission to protect competition in the Irish market.

However just as relevant are the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (CMCAR). These mandate that before concluding a mortgage credit agreement, a lender must make a thorough assessment of the consumer’s creditworthiness. That assessment must take appropriate account of factors relevant to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement. The CMCAR also provide that a lender should only make credit available to a consumer where the result of the creditworthiness assessment indicates that the consumer’s obligations resulting from the credit agreement are likely to be met in the manner required under that agreement.

The assessment of creditworthiness must be carried out on the basis of information on the consumer’s income and expenses and other financial and economic circumstances which is necessary, sufficient and proportionate. In addition, the Central Bank’s Consumer Protection Code 2012 imposes ‘Knowing the Consumer and Suitability’ requirements on lenders. Under these requirements, lenders are required to assess affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower.

This overall regulatory framework means a decision to grant or refuse an individual application for mortgage credit is a commercial decision to be made by the regulated entity. Where a formal loan offer is made by a lender, the loan offer may contain a condition that may allow the lender to withdraw or vary the offer if in the lender’s opinion there is any material change in circumstances prior to drawdown. In such cases, the decision to withdraw or vary the loan offer is also a commercial decision for the lender.

These overlapping and complimentary regulations are designed to protect consumers, prevent risky unsustainable lending, protect the integrity of the financial system and preserve competition in the market.

Question No. 183 answered with Question No. 152.

Wage Subsidy Scheme

Questions (184)

Róisín Shortall

Question:

184. Deputy Róisín Shortall asked the Minister for Finance the number of persons in receipt of the temporary wage subsidy scheme by county and age cohort in ten-year intervals in tabular form. [14429/20]

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Written answers

I would like to advise the Deputy that Revenue publish comprehensive statistics on the Temporary Wage Subsidy Scheme (TWSS) at the following link:

www.revenue.ie/en/corporate/information-about-revenue/statistics/number-of-taxpayers-and-returns/covid-19-wage-subsidy-scheme-statistics.aspx.

I would draw the Deputy's attention to Table 11 of the 25 June report which breaks down the employees and employers availing of the TWSS by county.

Separately, the Central Statistics Office publishes detailed data on recipients of the COVID-19 income supports, comprising the Pandemic Unemployment Payment and TWSS, alongside data on the Live Register at the following link:

www.cso.ie/en/statistics/labourmarket/liveregister/detailedcovid-19incomesupportandliveregistertables/.

I would draw the Deputy's attention to Table 1 of the TWSS table which includes a breakdown of the employees supported by the scheme by age, and Table 2 which has a breakdown of both age and county.

Both these data sources are updated regularly to reflect the most up-to-date data available.

Brexit Issues

Questions (185)

Carol Nolan

Question:

185. Deputy Carol Nolan asked the Minister for Finance the way in which the financial and economic commitments provided for in the programme for Government will be affected in the event of a no-deal Brexit; and if he will make a statement on the matter. [14435/20]

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Written answers

A failure to achieve a trade agreement between the United Kingdom and the European Union at the end of this year could have severe implications for the economy and the public finances, particularly when combined with the shock of the Covid-19 pandemic.

The Deputy will recall that Budget 2020 was framed on the prudent assumption of a disorderly Brexit in January 2020. While the economic scenario has changed dramatically since last October, the scale of the ‘swing’ in the fiscal position will provide some broad indication of the potential impact of the current transition period concluding without an agreement.

Budget 2020 projected a general government deficit in the order of €2.0 billion. This represented a negative swing of some €3.2 billion from the previous forecasts, driven, primarily, by the impact of a disorderly Brexit assumption.

These projections were a point in time forecast, and circumstances have, of course, now changed. The fiscal impact at this juncture may differ significantly from these historic figures. During the process of framing Budget 2021, my Department will take into consideration the impact of a range of potential risks to the economy, including that of a failure to agree a trade deal.

This work forms part of the whole-of-Government preparations for the end of the transition period on 31 December 2020, which is being taken forward on the basis of two scenarios: a limited Free Trade Agreement in goods (and an accompanying fisheries agreement) or a disorderly Brexit (i.e. without an EU-UK trade agreement).

Ministerial Responsibilities

Questions (186)

Seán Sherlock

Question:

186. Deputy Sean Sherlock asked the Minister for Finance if he will publish the departmental briefing paper on his role, remits and powers afforded to him upon appointment to the Cabinet. [14525/20]

View answer

Written answers

I wish to advise the Deputy that a briefing document prepared by the Department of Finance was provided to me on my appointment as Minister for Finance. Arrangements are in train for publication of this document having regard to the relevant provisions of the Freedom of Information Act 2014.

Question No. 187 answered with Question No. 158.

Property Tax

Questions (188)

Cormac Devlin

Question:

188. Deputy Cormac Devlin asked the Minister for Finance if he will request the Revenue Commissioners to extend the 2020 local property tax collection date from 21 July to 18 August 2020; and if he will make a statement on the matter. [14540/20]

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Written answers

I am aware that Revenue has already deferred collection of 2020 Local Property Tax (LPT) liabilities that were scheduled for payment on 21 March 2020 via the electronic Annual Debit Instruction (ADI) option on two occasions. The initial revised date for collection was 21 May 2020 which Revenue subsequently further extended to 21 July 2020 in response to the unfolding COVID-19 crisis.

Revenue has advised me that arrangements are now in place for these payments to be deducted from nominated bank accounts on 21 July and that no further extensions are possible. Revenue has already written to the relevant property owners advising them that the deductions will be activated on 21 July. It is important to note that property owners availing of the ADI option are a subset of the overall LPT case-base, the vast majority of which has already paid the 2020 liabilities or are paying them on a phased basis over the course of the year.

Revenue has also confirmed that any residential property owners that opted for the ADI option, but are now experiencing changed financial circumstances due to the COVID-19 pandemic, can still amend their payment arrangement to a more suitable method by logging on to their online LPT account at link:

https://lpt.revenue.ie/lpt-web/views/login.html?execution=e1s1 .

To access the system, property owners require their unique Property ID and PIN numbers.

Finally, I am advised that the LPT Helpline (01-7383626) is now operating from 9.30am to 1.30pm, Monday to Friday, to assist with any queries or amendments that customers may have.

Wage Subsidy Scheme

Questions (189)

Richard Boyd Barrett

Question:

189. Deputy Richard Boyd Barrett asked the Minister for Finance if he will provide a tailored wage subsidy scheme for taxi drivers whose industry is facing long-term reductions in incomes as a result of Covid-19 until the sector fully recovers; and if he will make a statement on the matter. [14564/20]

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Written answers

In response to the Covid 19 Public Health emergency, the Government developed a suite of measures designed to support households and businesses that have been negatively impacted by the pandemic and the restrictions that were put in place as a result. These measures include temporary income support for individuals by way of the Pandemic Unemployment Payment (PUP) and the Temporary Wage Subsidy Scheme (TWSS). The TWSS is available in respect of employees and the PUP is available to others who have lost their jobs as a result of the pandemic or self-employed persons who cannot maintain their businesses.

I have direct policy responsibility for the TWSS; the PUP is a matter for the Minister for Social Protection, Community and Rural Development and the Islands.

The underlying legislation and the TWSS itself were developed having regard to the Government objective of providing assistance to employers and employees, where businesses have been seriously affected by the Covid-19 pandemic and the restrictions which were introduced as a result. The scheme is available to eligible employers across all sectors, excluding the Public Service and Non-Commercial Semi-State Sector. This includes businesses that have closed due to the Covid-19 restrictions and those that continue to operate and employ their workforce. The taxi sector is no different in this regard.

The Government decided on 5 June 2020 to extend the Temporary Wage Subsidy Scheme (TWSS) until the end of August. The intention is to continue to monitor the scheme closely. I expect that decisions will be taken at an appropriate time on next steps for the TWSS beyond end-August. In this regard, the Deputy may also wish to note that the Programme for Government contains a commitment that the July Jobs initiative will set out a pathway for the future implementation of the Temporary Wage Subsidy. I acknowledge that certain sectors will face particular challenges into the future as we re-open our economy, and this is one of many factors that will inform decisions.

Question No. 190 answered with Question No. 154.

Fiscal Policy

Questions (191)

Gerald Nash

Question:

191. Deputy Ged Nash asked the Minister for Finance his plans to increase general spending as a percentage of GDP in view of the low rate here when compared to the European Union 27; if general spending will be increased and sustained in line with the eurozone average during the lifetime of the Government; and if he will make a statement on the matter. [14587/20]

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Written answers

As is widely recognised, GDP figures for Ireland can be misleading due to statistical distortions and are therefore of limited use for comparative purposes. Instead, modified Gross National Income, or ‘GNI*’, an alternative metric published by the CSO, provides a more suitable measure of the underlying size of the Irish economy and as a result is a more appropriate indicator for international comparison.

General government expenditure in EU Member States in 2019, was estimated to be 46.7 per cent of GDP. The equivalent Irish figure was 41.9 per cent of GNI*.

These figures proceed the unprecedented global crisis that we are currently living through. The Covid-19 pandemic is the most significant shock to the world economy since the global financial crisis and, indeed, the impact is likely to be more severe. The response to the pandemic has resulted in a ramping-up of government expenditure this year.

The Stability Programme Update, published by my Department in April, projects general government expenditure of €95.7 billion this year, the equivalent of 55.1 per cent of GNI*. As the economy begins to reopen, general government expenditure looks set to fall next year as temporary policy supports are unwound. As such, general government expenditure is projected at €93.3 billion (49.0 per cent of GNI*) next year.

The level of uncertainty regarding the short- and medium-term path for the economy is unprecedented. It is as yet unclear how different the new equilibrium will be from the old, both in Ireland and for other euro area and EU Member States. Apart from the uncertainty regarding expenditure paths in the short-term, the longer-term effects of the pandemic will need to be considered carefully, especially for the Irish economy with its deep integration into the wider global economy.

That being the case, aiming to increase general government expenditure to equate with overall EU rates would not be appropriate. Government fiscal policy is guided by what is right for the economy at a particular point in the cycle, not by external benchmarks based on the overall budgetary patterns of 27 economies with disparate fiscal and economic situations. The Covid-19 crisis has only reaffirmed this.

Fiscal Policy

Questions (192)

Gerald Nash

Question:

192. Deputy Ged Nash asked the Minister for Finance the status of his plans to manage the public finances to ensure necessary investment in infrastructure and skills required to enhance competitiveness as outlined in the programme for Government; and if he will make a statement on the matter. [14588/20]

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Written answers

The Stability Programme Update, published in April, estimated a general government deficit of €23 - €30 billion in 2020. As I have said previously, it is entirely appropriate that Government runs a deficit and increases borrowing to support the economy in these unprecedented circumstances. However, borrowing at this scale cannot go on indefinitely and once circumstances allow, we must return the public finances to a sustainable path.

Looking ahead, fiscal policy is likely to continue to follow a three phased response as follows:

During phase one, the Government has taken swift action to introduce emergency measures aimed at protecting individuals and businesses during the initial period of uncertainty. Cumulative support provided by Government, so far, amounts to some €15.5 billion, or the equivalent nearly 8 per cent of GNI*. The level of support is exceptional and will be unwound as we continue to reopen our economy.

The main concern in phase two, the ‘recovery phase’, will be to get as many people back to work as quickly as possible. As set out in the Programme for Government, a number of initiatives will be set out to get business back on their feet, bring back confidence to consumers and kick start the economy. This will be done through a targeted, time-limited stimulus, with the primary focus on boosting employment. The Programme for Government also sets out the proposed Recovery Fund, a key pillar of which will be reskilling and retraining for those who have lost their jobs as a result of the pandemic and are unable to return to their previous employment.

Once the economy has recovered, fiscal policy will be required to pursue a credible path towards sustainability. Over the long-term, investment in infrastructure and skills depends on having the public finances on a solid footing.

Questions Nos. 193 and 194 answered with Question No. 180.

Wage Subsidy Scheme

Questions (195)

Gerald Nash

Question:

195. Deputy Ged Nash asked the Minister for Finance his plans to extend the temporary wage subsidy scheme beyond the scheduled deadline; if he plans a comprehensive audit of companies receiving the scheme to ensure they have met the stated criteria; and if he will make a statement on the matter. [14591/20]

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Written answers

The Temporary Wage Subsidy Scheme (TWSS) is provided for in section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020. The TWSS is an emergency measure to deal with the impact of the Covid-19 pandemic on the economy. Of necessity, the underlying legislation and the scheme itself were developed rapidly, having regard to the Government objective of providing financial assistance to employers and employees, where businesses have been seriously affected by the pandemic and the necessary restrictions introduced as a result.

The Government decided on 5 June 2020 to extend the TWSS until the end of August. The intention is to continue to monitor the scheme closely. I expect that decisions will be taken at an appropriate time on next steps for the TWSS beyond end-August. In this regard, the Deputy may also wish to note that the Programme for Government contains a commitment that the July Jobs initiative will set out a pathway for the future implementation of the Temporary Wage Subsidy.

I have been advised by Revenue that an employer compliance programme to ensure correct operation of the TWSS was announced on 23 June last and is now underway. Over 58,600 employers have already received subsidy payments under the TWSS. Revenue has commenced contacting these employers to confirm that the scheme is operating correctly and is seeking certain documentary evidence to establish that:

- employers participating in the scheme meet the eligibility criteria,

- employees are receiving the correct amount of subsidy, and

- the subsidy amount is being correctly identified in employee payslips.

In order to verify eligibility for the TWSS, Revenue is asking employers to summarise the impact of the Covid-19 restrictions on their business, the basis on which they reasonably anticipated a reduction of 25% or more in their turnover in Quarter 2 of this year and whether that reduction has occurred. In order to ensure that employees are being fairly treated and TWSS funds are being paid out as intended, Revenue is also seeking a sample of payslips in each case. Based on analysis of the material provided, Revenue may request more detailed information from some employers.

I understand, from Revenue, that providing this basic information should not impose a significant overhead and indeed that many employers have already provided an immediate and satisfactory response to the compliance checks. For many employers, a simple statement that, due to the nature of their business, they were required to close their premises and cease to trade for a significant part of Quarter 2 is sufficient to establish eligibility.

Nonetheless, Revenue has made it clear that it recognises the challenges faced by businesses at the present time and will provide additional time to any employers who are experiencing genuine difficulty in meeting the deadline for provision of the requested documentation. The compliance programme now underway is expected to last for several months and Revenue expects that it will confirm that the vast majority of employers are fully compliant in their operation of the TWSS.

Programme for Government

Questions (196, 213)

Gerald Nash

Question:

196. Deputy Ged Nash asked the Minister for Finance his plans to move to a more sustainable tax environment as stated in the programme for Government in view of potential international corporation and digital tax changes; and if he will make a statement on the matter. [14592/20]

View answer

Gerald Nash

Question:

213. Deputy Ged Nash asked the Minister for Finance his plans to implement the Roadmap on Corporation Tax Reform; and if he will make a statement on the matter. [14609/20]

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Written answers

I propose to take Questions Nos. 196 and 213 together.

In September 2018 my Department published Ireland's Corporation Tax Roadmap. This Roadmap set out the progress made at that time, and the direction in which we would go, towards ensuring that Ireland's corporation tax regime remained appropriate in order to support economic growth and prosperity.

Significant actions have been taken on foot on the Roadmap including the introduction of Controlled Foreign Company rules, amendments to Ireland’s exit tax rules, the quick ratification of the BEPS Multilateral Instrument. Most recently, Finance Act 2019 introduced new anti-hybrid mismatch rules in line with our commitments under the Anti-Tax Avoidance Directive, and reformed our transfer pricing provisions ensuring they comply with OECD standards.

The Programme for Government reaffirms our commitment to the 12.5% corporation tax rate. It also confirms that this Government will continue both to implement the Corporation Tax Roadmap and to engage constructively on international tax reform through the OECD process.

As set out in the Programme for Government, this Government recognises that taxation policy needs to reflect a changing digital economy. This work is best done through the OECD, as opposed to unilateral measures that could undermine trade. Ireland remains actively involved in that important work at the OECD on addressing the tax challenges arising from the digitalisation of the economy.

I intend, later this year, to publish an update on Ireland's Corporation Tax Roadmap. This update will reflect on the significant progress we have made and consider what future actions may be needed to ensure Ireland's tax system meets international standards. It will also provide an opportunity to reflect on the evolving international tax environment and the important work that continues at the OECD.

Programme for Government

Questions (197, 202)

Gerald Nash

Question:

197. Deputy Ged Nash asked the Minister for Finance his plans to increase purely domestic activity as indicated by GNI as part of a more sustainable tax environment outlined in the programme for Government in view of identified external market risks such as Brexit and increased trade tensions; and if he will make a statement on the matter. [14593/20]

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Gerald Nash

Question:

202. Deputy Ged Nash asked the Minister for Finance the way in which he plans to utilise taxation measures to close the deficit as outlined in the programme for Government; if he plans to predominantly use progressive or regressive taxation measures to achieve same; and if he will make a statement on the matter. [14598/20]

View answer

Written answers

I propose to take Questions Nos. 197 and 202 together.

The Programme for Government “Our Shared Future” contains a number of commitments in the area of budgetary policy and taxation including a commitment to use both taxation measures, as well as expenditure measures, to close the deficit and fund public services if required. In doing so, the Government will seek to focus any tax rises on tax behaviours with negative externalities such as carbon tax, sugar tax, plastics. A key focus of the Programme for Government is to get people back to work as quickly as possible, in order to restore the public finances and enable the provision of better and more accessible public services on a sustainable and long-term basis. A stable and sustainable regulatory and tax environment and sound management of the public finances will allow investment in the infrastructure and skills required to enhance competitiveness.

Looking ahead, fiscal policy is based on a three phased response:

- During the initial phase, phase one, swift action was taken to introduce emergency measures aimed at protecting individuals and businesses during the initial period of uncertainty.

- The focus of the next phase of the response, is on ensuring that the economy returns to growth. The main concern in this recovery phase will be to get as many people back to work as quickly as possible and the State will have a role to play in that regard.

- Over the longer time, fiscal policy will be required to pursue a credible path towards budgetary sustainability; to provide confidence to businesses, the public and to demonstrate that Ireland is back on the right path again.

It is important to note that Ireland has one of the most progressive income tax systems in the developed world – the most progressive within the EU members of the OECD. A progressive income tax system means that those on higher incomes pay proportionately higher rates of tax than those on lower incomes. It is a broad-based income tax system, where the majority of income earners make some contribution but according to their means. As a matter of policy, taxation measures are reviewed on a regular basis as part of the annual Budget and Finance Bill process.

The Programme for Government sets out the commitments for the 5-year term of the Government which has just been formed. The immediate focus of Government is on a fiscal stimulus plan to introduce a package of measures that will build on existing measures in order to help kick-start the economy, safeguard jobs and protect people’s livelihoods. Therefore, as I have previously stated, the short-term focus is on supporting households and firms, to limit the medium term impacts on the economy and to lay the ground for recovery. In October, the Government will set out the medium term budgetary strategy to restore fiscal balance.

Programme for Government

Questions (198)

Gerald Nash

Question:

198. Deputy Ged Nash asked the Minister for Finance the timeline for the establishment of a commission on welfare and taxation as outlined in the Programme for Government; and if he will make a statement on the matter. [14594/20]

View answer

Written answers

The Programme for Government “Our Shared Future” contains a number of commitments in the area of budgetary policy and taxation including a commitment to the establishment of a Commission on Welfare and Taxation. The stated purpose of the Commission will be to consider how best the tax system can support economic activity and promote increased employment and prosperity while ensuring that there are sufficient resources available to meet the costs of the public services and supports in the medium and longer term.

The Programme for Government sets out the commitments for the 5-year term of the Government which has just been formed. The work of the Commission should help to set the framework within which tax policy will be determined for the next decade and I believe that it is important that the Commission take a strategic, considered and balanced perspective that recognises the emerging and significant challenges in our economy and society.

The immediate focus of Government is on a fiscal stimulus plan to introduce a package of measures that will build on existing measures in order to help kick-start the economy, safeguard jobs and protect people’s livelihoods. In due course, the details of the proposed Commission on Welfare and Taxation. including the membership, the terms of reference and the reporting date can be considered and agreed.

Property Tax

Questions (199)

Gerald Nash

Question:

199. Deputy Ged Nash asked the Minister for Finance when he plans to bring forward legislation for the local property tax on the basis of fairness as outlined in the programme for Government; his plans to increase the local property tax yield on the basis of fairness in view of the comparative low local property tax yield as cited in the 2019 report (details supplied) by his Department; if he plans to bring the yield of the tax in line with the EU average; and if he will make a statement on the matter. [14595/20]

View answer

Written answers

The Programme for Government "Our Shared Future" adopted by the Government on 27 June 2020 includes a commitment to bring forward legislation in relation to the Local Property Tax (LPT) on the basis of fairness and that most homeowners will face no increase in their LPT liability. In addition there is a commitment to bring new homes, which are currently exempt from the LPT, into the taxation system. Further, all LPT funds collected locally will be retained within the local authority concerned. This is to be done on the basis that those counties with a lower LPT base are adjusted via an annual national equalisation fund paid from the Exchequer.

My Department is examining options for the implementation of these commitments in conjunction with the Revenue Commissioners and relevant Departments. Matters such as the overall LPT yield naturally fall to be considered in that context. I hope to be able to bring proposals to Government soon.

Credit Unions

Questions (200)

Gerald Nash

Question:

200. Deputy Ged Nash asked the Minister for Finance his plans to enable and support the credit union movement to grow as outlined in the programme for Government; the way in which he plans to help credit unions deliver an expanded range of community banking services; and if he will make a statement on the matter. [14596/20]

View answer

Written answers

The Government welcomes the important work credit unions are doing to support communities throughout Ireland at this difficult time and recognises the key role that credit unions play in the delivery of financial services in local communities across Ireland, the need for which is heightened at this time. Credit unions account for approximately one third of the consumer credit market and are well positioned to provide access to credit to support the recovery from the current crisis.

The economic outlook arising by virtue of COVID-19, including reduced demand for new lending, has increased the challenges the sector is already facing. As a result it was agreed that the CUAC would report to me on challenges and opportunities for the sector, incorporating implications of COVID-19, the role credit unions could play in the economic recovery and any relevant recommendations. I understand that this report is almost complete and will be submitted to me in the coming days.

There are several commitments in Programme for Government which relate to credit unions, which will be expanded upon in the coming weeks and months as the new Government beds down, taking into account work already completed such as the CUAC report noted above and a separate CUAC report on directors finalised in February 2020.

But credit unions do already have the ability to deliver an expanded range of community banking services. Credit unions could further grow their consumer lending, mortgage and SME lending, expand the range of products and services they provide their members and further embed digitisation, either individually or through collaborative efforts.

Following recent revisions to Central Bank lending regulations the sector currently has capacity to lend an additional €1.1 billion for mortgage and SME lending collectively, with additional lending capacity available to credit unions which can comply with certain conditions or on approval by the Central Bank. As at end 2019 credit unions had a mortgage and SME loan book of approximately €300 million.

There are also positive examples of credit unions providing new services. To date, 53 credit unions have been approved by the Central Bank to provide current accounts with debit cards, overdrafts and a range of payment services to their members. This has been rolled out in approximately 35 credit unions so far.

I and my officials will continue to engage constructively to assist credit unions in delivering new services to their members.

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