Written Answers Nos. 268-282
268. Deputy Paul Kehoe asked the Minister for Finance if he will consider in the upcoming Budget, a reduction of the tourism VAT rate to 9% to assist the hospitality and hotel sector; and if he will make a statement on the matter. [28389/20]
View answerAs the Deputy will be aware, it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
272. Deputy Cormac Devlin asked the Minister for Finance if his attention has been drawn to banks withdrawing the negative equity trade up product; if he will engage with them to reopen it to applications; and if he will make a statement on the matter. [28577/20]
View answerAs Minister for Finance, I do not have a role in the commercial decision making processes of credit institutions or the selection of the products which they choose to provide. This is a commercial matter for each individual credit institution having regard to the relevant legal and regulatory requirements which apply.
With regard to those regulatory requirements, the Deputy may wish to note that there is an exemption from the Central Bank’s macro-prudential mortgage measures – in respect of the loan-to-value (LTV) restriction on mortgage borrowers – for those in negative equity who wish to purchase a new home. This means that the mortgage shortfall remaining after a person sells their existing home can be added to the balance of the new mortgage for a new home and that the macro-prudential deposit requirements will not apply to that new mortgage.
The Central Bank’s consumer protection framework also includes a number of measures to protect consumers who are taking out a mortgage and seeks to ensure that lenders are 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. The Consumer Protection Code 2012 requires regulated entities to carry out affordability and suitability assessment, prior to offering, recommending, arranging or providing a credit product to a personal consumer. Separately, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 require that creditors assess the creditworthiness of the consumer before concluding a credit agreement.
However, subject to the requirement to comply with the relevant legal and regulatory requirements which govern the provision of residential mortgage credit to consumers, as indicated it is ultimately a commercial matter for an individual lender to decide whether to offer particular products or whether to provide a new mortgage loan or decide on how much credit to provide in any particular case.
273. Deputy Catherine Connolly asked the Minister for Finance the cost to his Department to date of all fines paid by Ireland for non-transposition of EU directives into Irish law; the breakdown, by directive of the lump sum cost and the daily cost of each fine; and if he will make a statement on the matter. [28611/20]
View answerA search of official records, in response to the Deputy’s question, indicates that there has been no cost to my Department from 2011 to date for fines paid by Ireland for non-transposition of EU directives into Irish law. To go back beyond that period would not be an efficient use of time and resources.
For background, the European Commission, in 2017 – “EU law: Better results through better application (2017/C 18/02)” - set out its revised approach to seeking fines in cases of non-transposition of an EU Directives. Staff in the Department are aware of this altered approach. Our objective, when dealing with the often complex and time pressurised work of transpositions, is to avoid a situation whereby the imposition of fines may become a consideration.
Furthermore, my Department is represented on an inter-departmental committee (chaired by the Department of Foreign Affairs and Trade) where these and related EU matters are monitored and discussed.
274. Deputy Duncan Smith asked the Minister for Finance the reason State Claims Agency figures have doubled since the previous year; the reasons for this; if the cause can be clarified; and if he will make a statement on the matter. [28620/20]
View answerI assume the Deputy is referring to the figures provided in the response to PQ 26142-20 answered on 24 September last (Dáil reference 103) which set out amounts paid on claims finalised by court award between 1 January 2010 and 31 August 2020. The State Claims Agency (SCA) which is part of the NTMA has advised me that the figures that relate to court awards are not representative of the trends in damages, legal fees or expert costs experienced by the SCA as court awards account for a very small percentage of the total amount of damages, legal fees and expert costs that relate to claims managed by the SCA.
As set out in the 2019 NTMA Annual Report, damages awarded by a court accounted for 0.5% of all claims resolved by the SCA in 2019. The total costs incurred by the SCA in 2019 in resolving and managing ongoing active claims, as set out in the 2019 NTMA Annual Report, were €416.9m (2018: €347.1m).
The 2020 figure set out in the PQ referred to above is higher than in previous years due to a significant award in a catastrophic injury case relating to an infant plaintiff. High awards/settlements in such cases are driven by a requirement to provide for complex lifelong care needs. It should be noted that costs relating to cases included in the response to PQ 26142-20 are all apportioned to the year they are finalised (all associated payments will have been issued or will be in process of being paid). In practice such costs may have been paid over a number of years.
275. Deputy Emer Higgins asked the Minister for Finance the support that will be made available to persons on the pandemic unemployment payment or employment wage subsidy scheme that receive notification from their bank that they have now withdrawn their mortgage holiday; his plans to discuss the issue with the major banks; and if he will make a statement on the matter. [28634/20]
View answerOn 18 March last, the Banking and Payments Federation of Ireland (BPFI) announced a coordinated approach by banks and other lenders to help their customers who were economically impacted by the Covid-19 crisis. The measures included flexible loan repayment arrangements where needed, including loan payment breaks initially for a period up to three months and then subsequently extended for up to six months. This was a welcome initiative and it allowed necessary relief to be quickly and efficiently provided to borrowers.
Banks have now provided for flexible options for borrowers who can recommence payments following a Covid-19 payment break, and the BPFI has produced a useful guide on this - https://www.bpfi.ie/wp-content/uploads/2020/09/Final-BPFI-Coming-off-the-COVID-19-Payment-Break.pdf. The Central Bank has also updated its Covid-19 FAQ in relation to mortgage payment breaks on 18 September.
However, I am very conscious that many other borrowers continue to be impacted by the economic consequences of Covid-19, and that they may not be in a position to resume their loan repayment commitments when their payment break ends. I am fully aware of the stress and uncertainty that these borrowers are still facing, and they will continue need assistance and support from their lenders. At our recent meeting, this point was made very clear to the CEOs of the country’s retail banks, and to the BPFI, by the Tánaiste, the Minister for Public Expenditure and Reform and myself. It was also indicated that it is particularly vital that lenders work with their customers to ensure that suitable arrangements are put in place to assist their customers who are still experiencing difficulty. Borrowers have a suite of regulatory protections and lenders have specific obligations to support and work with borrowers still experiencing mortgage or other loan difficulty because of Covid-19. These options could include additional flexibility, and this could be short term such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements. Each individual’s position is different and that’s why a case-by-case approach is now the best approach as some sectors of the economy are more impacted than others.
I will also continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection framework will be fully available to mortgage and other borrowers that will still need support following a Covid-19 payment break.
276. Deputy Robert Troy asked the Minister for Finance if he will provide details of the tax status of those employed in recent months and availing of the temporary wage subsidy scheme (details supplied). [28695/20]
View answerThe Temporary Wage Subsidy Scheme (TWSS) was legislated for in section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020. The scheme was predicated on the employer wanting to keep the employees on the payroll and to retain them until business picked up. The employer was expected to make best efforts to maintain the employee’s net income for the duration of the scheme. Legally, however, there was no requirement for a minimum amount that the employer had to pay as a normal wages payment to an employee to top up the wage subsidy. The reason there is no such requirement is simple – many businesses were forced to close completely and would have had no capacity to continue to pay employees’ wages. The purpose of the TWSS was to get much needed financial assistance to employees, while retaining the employer / employee relationship which facilitated the early recommencement of normal business when conditions permitted.
Payments made under the Temporary Wage Subsidy Scheme are income supports and share the characteristics of income. Other income earners in receipt of comparable “normal wages” are taxable on those wages. In the interest of equity, therefore, payments under the TWSS are subject to income tax and USC.
While income tax and the USC on most income is deducted in real-time as and when the person is paid, the TWSS payments were not taxed in real-time and are instead liable to income tax and USC at the end of the year (2020).
Revenue will make a Preliminary End of Year Statement available to all employees in January 2021, including those who were in receipt of the TWSS. The Preliminary End of Year Statement includes information relating to an employee’s income received, including pensions and income from the Department of Employment Affairs and Social Protect, as well as their tax credit entitlements. For the tax year 2020, the Statement will also include information on the amounts of TWSS payments, if any, received by each employee. In addition, the Statement will provide employees with a preliminary calculation of the income tax and USC position for 2020 and will indicate whether their tax position is balanced, underpaid or overpaid for the year.
Upon viewing the Preliminary End of Year Statement through myAccount, which is Revenue’s secure online facility for individual taxpayer services, employees will have an opportunity to update their personal record, declare any additional income and claim any additional tax credits due, for example qualifying health expenses, to arrive at their final liability for 2020.
Where a liability is finalised, individuals may opt to fully or partially pay any income tax and USC liability through the Payments/Repayments facility in myAccount. Where individuals do not opt to fully or partially pay, Revenue will collect the liability by reducing their tax credits over 4 years, interest free. The reduction of tax credits will start in January 2022.
On 25 September 2020, Revenue provided an update, by way of public announcement, as to how any tax liability arising on the TWSS will be dealt with. I am pleased to welcome this fair and flexible approach being taken by Revenue in the collection of tax due on payments made under TWSS which aims to minimise any hardship on any individuals concerned.
