Written Answers Nos. 415-432
415. Deputy Louise O'Reilly asked the Minister for Finance further to Parliamentary Question No. 194 of 20 October 2020, if he will expand on the way in which the possibility of the State acting as an insurer for artists and the live events sector would decrease competition and the way in which he considers it would affect pricing; and if he will make a statement on the matter. [32671/20]
View answerIn relation to my reply of 20 October in relation to the risk presented by the State acting as an insurer for artists and the live events sector, I would draw the attention of the Deputy to the following factors.
Specifically with regard to competition, the concern I have with such a proposal is that it could compound what some see as the ‘cherry picking’ of risk within the market by insurers. In turn, this could further decrease market competition for these or other sectors over the longer term, as some insurers may stop insuring specific risks, particularly if there is a view that a State company is willing to insure those lines of business that could be considered as being less profitable. While potentially having a negative impact upon pricing and possibly on supply, this could also create a large Exchequer exposure if significant losses were incurred.
Also of relevance to both competition and pricing is that any State insurer would be required to comply with the same prudential rules under the Solvency II Directive, as private companies. The Deputy will be aware that the Solvency II Directive is designed to allow for a level playing field across the European Union for insurers, not only in terms of market access, but also with regard to the level of supervision and tregulation. Accordingly, the Directive plays an essential role in facilitating competition in the insurance sector across the EU. Neither I nor the Central Bank of Ireland, could therefore direct the pricing or provision of insurance at a rate lower than other commercial operators for these market segments as it could be deemed as anti-competitive behaviour.
In addition, the cost of any insurance provided by the State would still have to reflect the risk involved. Consequently, there is no guarantee that cover could actually be provided, and if it were, there could be no certainty that it would be much cheaper than existing equivalent private insurance products. Finally, there is no reason to believe that a State run insurer could provide cover in a more efficient way than a private one.
In conclusion, any such proposals for State intervention, while well intended and which may appear as representing an easy solution, are likely to lead to unintended consequences, such as insurers withdrawing from further sectors on the presumption the State will insure loss-making risk. These outcomes would undermine the primary policy goal of decreasing the cost of insurance and increasing the availability of insurance to consumers and businesses. Accordingly, I am not convinced that a State-backed insurance scheme would be a solution to the cost or availability of insurance, either for the arts, entertainment and events industry or other market segments more generally.
416. Deputy Cormac Devlin asked the Minister for Finance if he will publish details of the changes to motor tax and VRT rates; and if he will make a statement on the matter. [32681/20]
View answerDetails of the changes to motor tax and VRT are set out in the Finance Bill.
417. Deputy Pearse Doherty asked the Minister for Finance the expected publication date of a report on capping the cost of licensed moneylenders and other regulatory matters in response to the public consultation which opened for submissions on 31 May 2019; and if he will make a statement on the matter. [32747/20]
View answerThe Department of Finance undertook a public consultation in 2019 seeking views on capping the cost of licensed moneylenders and other regulatory matters in relation to moneylending. The submissions received, proposed a number of policy changes in relation to the moneylending industry and are broadly in favour of introducing an interest rate restriction.
A number of potential policy proposals are being prepared in light of these submissions and I expect to receive a draft report setting out these proposals for my consideration in the coming months. Key to this process will be trying to balance improvements for borrowers with the potential for unintended consequences in terms of financial exclusion, if the supply of credit is reduced.
The Central Bank published Regulations on 8 June 2020 to strengthen protections for consumers of licensed moneylending services and to enhance professional standards in the sector. The regulations include a requirement on Moneylenders to include prominent, high cost warnings in all advertisements for moneylending loans with an Annual Percentage Rate (APR) over 23 per cent. The warning must also prompt consumers to consider alternatives. The regulations will come into effect on 1 January 2021. However, recognising the financial effects of COVID-19 on consumers, the ‘high-cost warning’ requirement in respect of advertisements for moneylending loans with an APR in excess of 23% came into effect on 1 September 2020.
The Money Advice and Budgeting Service (MABS) is available to anyone experiencing problems with budgeting and debt. Furthermore, I would encourage anyone who is in receipt of a social welfare payment to explore the option of a Personal Micro Credit Scheme Loan. These loans are branded as the ‘It Makes Sense Loan’ and are offered through the credit union network. 108 credit unions and 173 sub-offices (281 locations in total) are now in a position to offer the ‘It Makes Sense Loan’.
418. Deputy Niamh Smyth asked the Minister for Finance if he will review correspondence (details supplied); if he will support this campaign to retain rural services; if his Department has engaged with a bank on this particular issue; and if he will make a statement on the matter. [32762/20]
View answerI am aware of the 'Save our Ulster Bank' campaign that the Deputy is referring to and I share the concerns outlined in the correspondence.
I became aware that NatWest is engaged in a strategic review of its operations, including those of its subsidiary, Ulster Bank, thanks to media reports published last month. Following these media reports, officials from my Department contacted Ulster Bank and NatWest.
Last month, I met with representatives of Ulster Bank. I outlined that I expected that staff, customers and other stakeholders would be informed promptly about any decisions being made. In particular, I asked that staff representatives be consulted and kept informed of developments. I also emphasised the importance of Ulster Bank to the Irish financial services market, to the wider economy and to the communities it serves.
Ulster Bank confirmed that the strategic review is ongoing and that no decision has yet been taken. Ulster Bank also confirmed that there is no set timetable for this review and that it is fully aware of the strategically important role that Ulster Bank plays in the provision of financial services to the Irish market.
While I will have further engagement with the bank as the review process continues, I would like to emphasise that I have no role in the review or any commercial decisions arising from it.
419. Deputy Joe Carey asked the Minister for Finance if he is considering a review of the benefit-in-kind rates and allowances for 2020 due to restrictions on movement and the closure of business as a result of the Covid-19 pandemic; and if he will make a statement on the matter. [32800/20]
View answerIt is presumed that the question relates to benefit-in-kind (BIK) rates and allowances on employer-provided vehicles.
I am advised by Revenue that, due to the unprecedented circumstances of the COVID-19 pandemic, certain concessional treatment was applied by Revenue in relation to the operation of benefit-in-kind (BIK) on employer-provided vehicles. This guidance issued in March 2020 and is summarised below.
Where an employee is in receipt of a vehicle (car or van) provided by his or her employer, the following may apply:
(a) Employer Takes Back Possession of the Vehicle
Where an employer takes back possession of the vehicle and an employee has no access to the vehicle, no BIK shall apply for the period.
(b) Employer Prohibits Use
Where an employee retains possession of a vehicle, but the employer prohibits the use of the vehicle, no BIK shall apply if the vehicle is not used for private use. Records should be maintained to show that the employer has prohibited the vehicle’s use and that no such use has occurred, e.g. communication from employer, photographic evidence of odometer, etc.
(c) Employer Allows Private Use
Where an employee is not prohibited from using a vehicle, but limited or reduced business mileage (if any) is undertaken during the period of the COVID-19 crisis, the amount of business mileage travelled in January 2020 may be used as a base month for the purposes of calculating the amount of BIK due. Personal use of the vehicle must be limited in this scenario and appropriate records should be kept, e.g. business mileage travelled in January 2020, amount of private use, photographic evidence of odometer, etc.
Employee Continues Working
Where an employee continues to undertake business travel as usual in an employer-provided vehicle, the usual BIK rules will apply.
Guidance on the above and other COVID-19 related matters can be found on Revenue’s website, available here.
Finally, the concessional treatment in this instance and in relation to all other matters is kept under regular review by Revenue and updated accordingly.
420. Deputy John Lahart asked the Minister for Finance the changes that have been made to benefit in kind in respect of electric vehicles; if he will address a potential anomaly (details supplied); and if he will make a statement on the matter. [32882/20]
View answerI made no changes to the BIK regime for company vehicles in Budget 2021. The Deputy may be referring to changes made in Budget 2020 where provision was made to introduce a CO2 based vehicle BIK regime from 2023.
In recognition of the need to further incentivise the uptake of electric vehicles, in Finance Act 2017 I provided for an exemption from benefit-in-kind for employees or Directors provided with a company electric vehicle for private use. In Finance Act 2018 in order to ensure better value for money I limited this exemption to the first €50,000 of the original market value (OMV) of the electric vehicle.
What this means is that an employee or Director, who as part of their remuneration package is provided with an electric car for their private use, where that car has an original market value of €50,000 and will be a low mileage car, will avoid paying PAYE, PRSI and USC on €15,000 of notional income for every year they have the electric car.
This is an exceptionally generous BIK EV regime and by end 2022 it will have been in place 5 years. This is in addition to the €5,000 EV SEAI buyers grant and the €5,000 EV VRT relief that companies benefit from when they acquire electric vehicles.
In Finance Act 2019 I provided for the introduction of a CO2 based vehicle BIK regime from 2023, where the BIK rate for low emission cars ranges from 9% to 22.5%. This current rate for low mileage cars is 30%. The current EV BIK exemption on the first €50,000 OMV is scheduled to lapse at end 2022 - so at a minimum it has a further two years to run.
421. Deputy Richard O'Donoghue asked the Minister for Finance further to Parliamentary Question No. 121 of 14 October 2020, the reason a number of persons (details supplied) failed to qualify for any of the Covid-19 related schemes that are under the remit of his Department. [32896/20]
View answerI am advised by Revenue that it has not received any engagement from the persons in question regarding eligibility for the Covid-19 schemes administered under its remit. Revenue has also confirmed that the persons are not registered as employers and as such do not qualify for either the Temporary Wage Subsidy Scheme (TWSS), which ceased on 31 August 2020, or the Employment Wage Subsidy Scheme (EWSS).
It may be that the Deputy is referring to the Pandemic Unemployment Payment (PUP), which is the responsibility of the Minister for Social Protection.
422. Deputy Holly Cairns asked the Minister for Finance if his attention has been drawn to research carried out by an organisation (details supplied) on financial abuse and the erosion of financial independence for vulnerable persons; and if he will make a statement on the matter. [32900/20]
View answerI welcome the research carried out by the Banking & Payments Federation Ireland (BPFI) and Safeguarding Ireland on financial abuse and vulnerable persons. I understand that BPFI along with its member banks and with support from Safeguarding Ireland have developed a guide which provides advice on how you can best prepare for a time when you may need assistance to properly manage your money. The guide, Safeguarding Your Money Now and in the Future, is available here: www.bpfi.ie/wp-content/uploads/2018/07/BPFI-Safeguarding-Customers-Guide-FINAL.pdf.
I am advised by the Central Bank that its consumer protection framework is designed to ensure that customers’ best interests are protected. Regulated entities must provide reasonable arrangements and/or assistance to people who may be experiencing particular vulnerabilities, including as a result of the impact of COVID-19. All regulated firms should take a consumer-focused approach and to act in their customers’ best interests, particularly in dealings with vulnerable consumers.
A review of the Consumer Protection Code 2012 (the Code) is currently underway. Amongst other things, the review will consider whether the provisions that relate to vulnerability remain appropriate, and whether they need to be enhanced. A public consultation on the Central Bank’s proposals for amendments will take place in 2021 giving all stakeholders an opportunity to make submissions. This review will also include transferring the Code into regulations in line with the regulation making powers given to the Central Bank in the Central Bank (Supervision and Enforcement) Act 2013 .
The Code currently defines a vulnerable consumer as follows:
“A “vulnerable consumer” means a natural person who:
a) has the capacity to make his or her own decisions but who, because of individual circumstances, may require assistance to do so (for example, hearing impaired or visually impaired persons); and/or
b) has limited capacity to make his or her own decisions and who requires assistance to do so (for example, persons with intellectual disabilities or mental health difficulties).”
Provision 3.1 of the Code provides that: “Where a regulated entity has identified that a personal consumer is a vulnerable consumer, the regulated entity must ensure that the vulnerable consumer is provided with such reasonable arrangements and/or assistance that may be necessary to facilitate him or her in his or her dealings with the regulated entity.”
Provision 2.11 of the Code provides that a regulated entity must ensure that in all its dealings with customers and within the context of its authorisation it “without prejudice to the pursuit of its legitimate commercial aims, does not, through its policies, procedures, or working practices, prevent access to basic financial services”. This provision aims to ensure that vulnerable people can gain access to mainstream financial services.
In the context of the COVID-19 pandemic, banks are helping customers who are cocooning to manage their banking in a safe way without leaving their home. The retail banks have dedicated phone lines to assist cocooning customers during the COVID-19 crisis.
I would also like to draw the Deputy’s attention to the Competition and Consumer Protection Commission (CCPC) which is an independent statutory body with a statutory role in relation to financial education. The CCPC carries out this role by running public awareness campaigns on personal finance issues, providing online comparison tools for various financial products and providing personal finance information on its consumer website, including advice on avoiding scams. The CCPC also fulfils its statutory role in the development of financial education and capability by delivering financial education programmes for workplaces and schools and conducting research, such as the Financial Capability and Well-being in Ireland in 2018 study, to inform its financial wellbeing strategy and priorities.
423. Deputy Niamh Smyth asked the Minister for Finance if he will address a matter relating to the employment wage subsidy scheme with regard to a person (details supplied); and if he will make a statement on the matter. [32917/20]
View answerThe Temporary Wage Subsidy Scheme (TWSS) commenced on 26 March 2020 as an emergency measure to provide income support to eligible employees where the employer’s business activities were negatively impacted by the COVID-19 pandemic. The scheme operated until 31 August 2020 and was replaced by the Employment Wage Subsidy Scheme (EWSS) from 1 September 2020.
Payments made under the TWSS and the Pandemic Unemployment Payment (PUP), which is administered by the Department of Social Protection, are income supports and as such are taxable in nature. While the TWSS is liable to both income tax and Universal Social Charge (USC), the PUP follows the general taxation rule for social welfare type payments and is exempt from USC and PRSI charges.
The EWSS operates differently to the TWSS in that it is a flat-rate subsidy that is payable to employers based on the number of eligible employees included on their payroll. Eligible employees are defined as those earning weekly gross wages of between €151.50 and €1,462. The EWSS also re- establishes the requirement for employers to operate the ‘normal’ PAYE system each time they pay their employees and deduct income tax, USC and PRSI. These normal (real-time) deductions were not operated for TWSS payments, which will be taxed at year end.
To minimise the end of year tax impact on employees who received TWSS payments, Revenue placed them on the ‘week 1/month 1 basis’ of taxation from 21 June 2020. The ‘week 1/month 1 basis’ preserves employees’ unused tax credits, which can then be offset against any accumulated tax liabilities at year end, including in respect of TWSS and PUP. Any additional credits that an employee may have, for example health expenses, may also be used to further reduce the accumulated tax liability. Any tax liability that still exists once all available credits have been offset can be paid over a four-year period from January 2022 by reducing the employee’s tax credits for those years.
Revenue has advised me that, according to its records, the person in question received a combination of TWSS and PUP payments during the months of March to August 2020. Her employer also received EWSS subsidy payments for September 2020. In accordance with the rules of the TWSS, the payments were paid gross to her without ‘normal’ income tax or USC deductions applying, which instead fall due at year end.
The PUP payments received by the person from the Department of Social Protection during the period in question were also paid gross and the associated income tax liabilities, as with the TWSS, fall due at year end.
The EWSS payments currently being received by the employer are flat-rate subsidies and have no direct bearing on the person’s take-home pay and the employer is obliged to deduct income tax, USC and PRSI from her gross wage in the normal manner. The level of gross wage is a matter between the employer and the person.
The person’s exposure to tax on the subsidy amounts will be reduced by the tax credits that were preserved on her behalf through the ‘week 1’ basis of taxation and may be reduced further if she has any additional credits to claim.
Revenue has also confirmed that it will make direct contact with the person in the coming days to explain how the subsidy schemes operate and to clarify the tax implications for her.
424. Deputy Carol Nolan asked the Minister for Finance his views on the reintroduction and extension of the home renovation incentive scheme; and if he will make a statement on the matter. [32986/20]
View answerThe Home Renovation Incentive (HRI) was introduced by Section 477B of the Taxes Consolidation Act 1997 in 2014 and was terminated in accordance with its statutory sunset clause on 31 December 2018 having been extended twice before that and having been seen to have met its original objective viz. support for job creation in the construction sector in the wake of the financial crisis.
The re-introduction of such an incentive, even for a modified purpose, could be very costly. I must be mindful of the public finances and the many demands on the Exchequer; tax reliefs, no matter how worthwhile in themselves, lead to a narrowing of the tax base. Under my Department's Tax Expenditure Guidelines, the introduction of new tax incentive measures, or the continuation of measures which are due to terminate, should only be considered in circumstances where there is a demonstrable market failure and where a tax based incentive is more efficient than a direct expenditure intervention.
I have no plans to re-introduce the scheme.
425. Deputy Denise Mitchell asked the Minister for Finance the number of properties either renovated or converted under the living city initiative for 2019; and the average amount per successful claim. [33004/20]
View answerThe Living City Initiative (LCI) (provided for in Finance Act 2013 and commenced on 5 May 2015) is a tax incentive aimed at the regeneration of the historic inner cities of Dublin, Cork, Galway, Kilkenny, Limerick and Waterford. The scheme provides income or corporation tax relief for qualifying expenditure incurred in refurbishing/converting qualifying buildings which are located within pre-determined 'Special Regeneration Areas' (SRAs).
I am advised by Revenue that the available information in respect of the Living City Initiative is the number of claimants (rather than number of properties) and the tax foregone. Revenue advise me that information in respect of 2019 is not yet available.
Using the data provided, the average value of claims for each year has been calculated as per the relevant column of the table below.
|
Year |
Amount claimed (€)* |
No. of claimants |
Average claim (€)* |
|
2018 |
500,000 |
27 |
18,500 |
|
2017 |
400,000 |
23 |
17,400 |
|
2016 |
500,000 |
15 |
33,300 |
|
2015 |
500,000 |
13 |
38,500 |
Relevant information is published on the Revenue website for all years up to 2018 at the following link:
www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/property-reliefs.aspx.
426. Deputy Dara Calleary asked the Minister for Finance if he will expand the provisions of the stay and spend scheme to include the purchase of vouchers for accommodation or food purchase during 2021; and his plans to review the scheme in light of the level 5 restrictions. [33005/20]
View answerThe Stay and Spend scheme provides tax relief by means of a tax credit at the rate of 20% on qualifying expenditure of up to €625 per person, or €1,250 for a jointly assessed couple. The tax credit is worth a maximum of €125, or €250 for a jointly assessed couple. The purpose of the scheme is to provide targeted support to businesses within the hospitality sector whose operations are likely to be most affected by continued restrictions.
To be eligible for the relief, claimants must upload their receipts on the Revenue Receipts Tracker App for all qualifying expenditure. Qualifying expenditure refers to expenditure of more than €25 on holiday accommodation, and food and drink consumed on premises (excluding alcohol), provided by registered service providers. While the purchase of vouchers themselves are not qualifying expenditure for the purposes of the scheme, vouchers can be used as payment for qualifying expenditure and the relief granted at that point.
As I indicated when the scheme was launched, it was in the anticipation that the economy would be on the way to being fully open, and there would be mobility across our country. We know that this is not the case now. As I have also indicated previously, I will be monitoring the scheme to see how it works and to assess if there are any changes that we may need to make.
429. Deputy Ged Nash asked the Minister for Finance the reason the deadline for the completion of a deal with NAMA’s preferred bidder for the development of the former Irish Glass Bottle site in Dublin was allowed to lapse; the reason an extension to complete the deal appears to have been granted to the preferred bidder; if the recent addition of a company (details supplied) as a joint-venture partner with another company is the cause for the delay in the completion of the deal; his views on the delay; and if he will make a statement on the matter. [33154/20]
View answerI wish to advise the Deputy that Section 9 of the NAMA Act provides that NAMA is independent in the performance of its functions and that I, as Minister, have no role in relation to its commercial operations or decisions. Nor am I a party to commercial transactions in which NAMA is engaged.
I am advised by NAMA that, in relation to the asset concerned, a commercial process remains ongoing and the detail of same is commercially sensitive. NAMA confirms that its management of the process is fully in line with its statutory obligation under the NAMA Act to obtain the best achievable financial return for the State.
431. Deputy Denis Naughten asked the Minister for Finance the way regulated financial service providers, including pillar banks and alternative lenders, will be required to handle distressed commercial loans; if the appointment of receivers and-or other enforcement action should be pursued by such regulated financial service providers in respect of borrowers who are in default on their loan arrangements as a result of the pandemic or related events; if extended and indefinite moratoriums will instead be afforded to the borrowers; and if he will make a statement on the matter. [33192/20]
View answerThe payment break scheme coordinated by the Banking and Payments Federation of Ireland (BPFI) and introduced by its Members last March was a welcome initiative that allowed important and necessary cash flow relief to be quickly and efficiently provided to borrowers affected by Covid-19, including SMEs. As the Deputy is aware, the original 3 month payment break was extended by another 3 months for borrowers that requested it.
As these expire, many borrowers are returning to repayment but other borrowers continue to be impacted by the economic consequences of Covid-19, and 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 to need assistance and support from their lenders. 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 when we met them at the end of September. 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. These arrangement 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 case 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.
The Central Bank expects all lenders to develop strategies and operational capability to continue to support borrowers who cannot return to full capital and interest repayments after the end of the payment break. This will include offering forbearance as required and restructuring of loans in the event of long-term affordability issues.
With regard to loans to SMEs, regulated financial service providers are required to comply with the Central Bank (Supervision and Enforcement Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015, which are generally referred to as the SME Regulations. These set out the required treatment of SMEs by regulated entities in relation to various aspects of business lending. It includes detailed provisions around the credit application process, requirements regarding security or collateral, credit refusals and withdrawals, handling complaints, managing arrears and having in place policies for engaging with SMEs in financial difficulty.
The SME Regulations also specify that borrowers must be informed about a regulated entity’s internal appeal process in respect of a decision on whether to grant an alternative arrangement. The SME Regulations also state that borrowers with participating lenders should be informed of the Credit Review Office where the participating lender’s decision in relation to alternative arrangements are subject to review by the Credit Review Office. The Credit Review Office (www.creditreview.ie) was established to assist those SMEs and farm borrowers that have had credit applications of up to €3 million refused or have an existing credit facility withdrawn or amended by the participating bank or in relation to alternative arrangements for borrowers in difficulty. SMEs can apply to Credit Review after exhausting the internal appeals process in the relevant participating institution, which are currently AIB, BOI, Ulster Bank and Permanent TSB.
Receivership and the appointment of receivers is a commercial decision for regulated financial service providers to make on a case-by-case basis. The Companies Act 2014 is the relevant legislation, which is under the remit of the Department of Business, Enterprise and Innovation.
I would urge borrowers facing difficulties due to COVID-19 to contact their lenders as soon as possible to make alternative arrangements that will assist them to come through this difficult period.
