Written Answers Nos. 182-201
182. Deputy Seán Canney asked the Minister for Finance if his attention has been drawn to the fact that the help-to-buy scheme discriminates against single applicants whose loan to value is difficult to achieve on one income due to the loan value of two and a half times their salary; if he will review the criteria and reduce the 70% ratio to 60% for single applicants; and if he will make a statement on the matter. [3568/21]
View answer200. Deputy Richard Bruton asked the Minister for Finance if he will consider relaxing the terms on the clawback under the help-to-buy scheme in which a family’s need for space has outgrown the original home. [3868/21]
View answer203. Deputy Seán Haughey asked the Minister for Finance if he will consider changes to the help-to-buy initiative; if the five year clawback provision can be abolished or reduced so as to allow expanding families purchase other newly-built larger accommodation without having to pay back money to the Revenue Commissioners; and if he will make a statement on the matter. [3888/21]
View answer231. Deputy Peter Burke asked the Minister for Finance his plans to extend the help-to-buy scheme beyond December 2021; and if he will make a statement on the matter. [4369/21]
View answerI propose to take Questions Nos. 182, 200, 203 and 231 together.
The Help to Buy (HTB) incentive was introduced in 2017. The incentive gives a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid in Ireland over the previous four years, subject to limits outlined in the legislation. An increase in the supply of new housing remains a priority aim of Government policy. The HTB scheme is specifically designed to encourage an increase in demand for affordable new build homes in order to encourage the construction of an additional supply of such properties.
HTB is designed to stimulate the supply of new houses in the housing market and to assist first time buyers in accumulating a deposit for a new home. In order to help further meet these goals, I announced an enhancement to the existing scheme with effect from 23 July last for the remainder of 2020 as part of the July Stimulus Package. The legislation that gives effect to this is set out in the Financial Provisions (Covid-19) (No.2) Act 2020. The Finance Act 2020 further extended the period of application of the enhanced levels of support until 31 December 2021. The Help-to-Buy scheme itself is also scheduled to expire at that point.
In relation to Deputy Canney's question, The current Central Bank macro-prudential mortgage rules restrict the amount of money a purchaser can borrow to a maximum of 3.5 times of their gross income (i.e. the 'loan to income' rule). The Central Bank is independent in the exercise of its functions. This is not related to the 70% LTV condition of the HTB scheme. HTB provides that a purchaser who does not borrow 70% or more of the value of the home cannot avail of the scheme. Individuals who are in the fortunate position of being able to avail of a mortgage at a lower loan-to-value ratio than 70% are considered to have sufficient resources to more than meet the deposit requirements of the macro-prudential rules and thus less in need of assistance from the Exchequer. Lowering the ceiling, as suggested by the Deputy, could only increase deadweight in the scheme. Further, with regard to the suggestion that single applicants should be treated differently to joint applicants, it is fair and equitable that the scheme treats everyone equally.
In relation to the questions from Deputy Bruton and Deputy Haughey, I am advised by Revenue that Section 477C Taxes Consolidation Act 1997 (TCA) outlines the definitions and conditions that apply to the HTB scheme. A key condition outlined in Section 477C(17) TCA requires that a qualifying residence must be occupied for a minimum period of 5 years by the first-time buyer as his or her only or main residence, otherwise the HTB payment, or a proportion thereof, will be required to be repaid to Revenue. The HTB claimant(s) is required to notify revenue if occupation of the qualifying residence ceases within the 5-year period and to repay the relevant amount within 3 months. The rate of clawback due will depend on the year in which the residence ceases to be occupied. The Tax and Duty manual, Part 15-01-46 Help to Buy Scheme, under Section 18 provides details regarding the clawback provisions and example scenarios. Where the applicant(s) cease to occupy a property which they have received a HTB payment on within 5 years, due to the family’s need for larger accommodation, they would be required to repay a portion of the HTB payment to Revenue. The payment due would be calculated in proportion to the amount of time they have occupied the property as set out in Section 477C (17)(b)(ii) TCA. I am not considering making any changes to these provisions.
In relation to Deputy Burke's question, as indicated above, HTB is due to expire at the end of the current year. With a measure such as this, it would be normal practice to carry out a review to assist decision making in advance of the scheduled expiry. I do not intend to prejudge the outcome the likely review at this early stage in the year.
183. Deputy Eoin Ó Broin asked the Minister for Finance the status of the work of Home Building Finance Ireland; the number of loans offered; the size of the loans; the recipients of the loans; the number of housing units to be delivered by each loan; the number of units commenced to date; the number of units completed to date; and the projected commencement and completion dates for all housing units funded by Home Building Finance Ireland. [3576/21]
View answerHBFI released its year-end update for 2020 on 25th January 2021. Further details are available at
https://www.hbfi.ie/uploads/banners/HBFI-End-of-Year-Update-2020-final-version.pdf.
The update highlighted that as of 31st December 2020, HBFI had approved 38 facilities amounting to €395m in value. This approved funding can facilitate the delivery of 1.850 new homes across 17 counties. Construction activity has commenced on schemes that will ultimately deliver 1,162 new homes, relating to €263m or 67% of HBFI’s approved funding. In line with the development and construction cycle, these homes will be delivered on an incremental basis over time. To date, 107 completed homes have been sold and a further 476 are contracted for sale or sale agreed as at 31st December 2020.
From the time a facility is approved to drawdown takes a number of months due to completion of due diligence and the signing of legal contracts, therefore there is always a lag between the amount and number of facilities approved and those live on site.
184. Deputy Darren O'Rourke asked the Minister for Finance the number of persons who availed of the stay and spend scheme up to 31 December 2020; the value of receipts uploaded to the scheme; the expected cost to the State of the scheme in 2020; and if he will make a statement on the matter. [3583/21]
View answer195. Deputy Catherine Murphy asked the Minister for Finance the cost to date of the stay and spend initiative in terms of the amount of tax credits availed of under the scheme; and the amount spent on administering the scheme. [3839/21]
View answer196. Deputy Catherine Murphy asked the Minister for Finance the amount spent to date on marketing and advertising the stay and spend initiative as it relates to Fáilte Ireland; and if he will make a statement on the matter. [3840/21]
View answer225. Deputy Steven Matthews asked the Minister for Finance the details regarding the uptake of the stay and spend scheme to date; and his plans to extend the existing deadline for the scheme or reintroduce a similar one to incentivise domestic travel and spending once it is safe to do so. [4290/21]
View answerI propose to take Questions Nos. 184, 195, 196 and 225 together.
The purpose of the Stay and Spend Tax Credit scheme is to provide targeted support to businesses within the hospitality sector whose operations are likely to be most affected by continued restrictions on public health grounds. The scheme was developed at a time when there appeared to be a steady downward trend in infection rates, and there was an expectation that the re-opening of the economy could be sustained uninterrupted.
In order to avail of the tax credit, taxpayers are required to upload a copy of their receipt(s) for qualifying expenditure to the Revenue Receipts Tracker and then make a formal claim for the credit when submitting their annual Income Tax Return.
Under the scheme, a claim may be made in relation to qualifying expenditure incurred between the period 1 October 2020 and 30 April 2021. Broadly, qualifying expenditure includes expenditure on either holiday accommodation or “eat in” food and drink, with a minimum expenditure amount of €25 per transaction being required. As at 21 January, 3,125 service providers have registered to participate in the scheme.
Since 1 October 2020 when the Stay and Spend scheme commenced, a total of 43,980 receipts have been uploaded to the Revenue Receipts Tracker, as at 20 January 2021. The expenditure recorded on these receipts amounts to €6,971,859 and the potential tax cost is €1,394,372, assuming all such expenditure is claimed and qualifies in full for tax relief.
Claims relating to qualifying expenditure incurred in the period from 1 October 2020 to 31 December 2020 can be made when an individual is submitting his/her 2020 Income Tax Return, which is now available for submission. As at 18 January 2021 a total of 4,441 taxpayers Income Tax Returns for 2020 have included the Stay and Spend credit. These claims relate to €1,527,149 of the qualifying expenditure recorded on the Revenue Receipts Tracker to date and the tax cost of same amounts to €305,430. However, as the filing deadline for the 2020 Income Tax Return is not until 31 October 2021, information on the total number of claims and cost for the 2020 year of assessment will not be available until after the filing date and the returns have been processed. Subsequent to claims being made in respect of this scheme and any other relief or deduction, verification of such reliefs and deductions forms part of Revenue’s comprehensive risk assessment programme.
I am advised by Revenue that the administration of the Stay and Spend scheme is carried out as part of Revenue’s ongoing work, using existing resources. In addition, no costs have been incurred by Revenue or by my Department in respect of the marketing and advertisement of the scheme. As regards the question asked by Deputy Murphy, the amount spent to date on marketing and advertising the scheme as it relates to Fáilte Ireland is a matter for the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media.
Revenue’s Information Technology Division was required to develop a number of technical components to support the new Stay and Spend scheme. This included the development of a new Stay and Spend interface within the Revenue Receipts Tracker App. Revenue was already in the process of redeveloping and upgrading the technology of its mobile app during the second quarter of 2020, and the addition of Stay and Spend functionality into the Revenue Receipts Tracker App was a small extension to the work that was already underway. The total cost of the redevelopment and technology upgrade of Revenue’s mobile app was €98,000, a small portion of which is attributable to the Stay and Spend scheme. In addition, Revenue’s Information Technology Division developed a new registration process for service providers and an extension to the existing Income Tax Return to pre-populate it with the receipts uploaded through the Revenue Receipts Tracker App, and to allow individuals to claim the Stay and Spend tax credit through their annual return. The total cost of these developments was €140,000.
As mentioned already, the Stay and Spend scheme was devised at a time when there was an expectation that the re-opening of the economy could be sustained uninterrupted. Unfortunately, this has not been the case and, thus far, with the exception of some short periods, public health restrictions have had the effect of impeding the operation of the incentive as originally envisaged.
Stay and Spend is due to operate until 30 April but the flexibility exists for me to extend its operation in 2021 beyond that date (to end 2021). It is too early as yet to take definitive decisions in that regard. Much will depend on how circumstances unfold in the months ahead. As I have said before, I will keep an eye on how matters develop and the role that the scheme might play and consider if any changes need to be made.
Finally, it is important also to recall that Stay and Spend shouldn't be viewed in isolation from the other measures put in place to support businesses generally and the hospitality sector in particular. The VAT change; the rates waiver; the wage support scheme and its application to new or seasonal staff; and other Government measures all play a part in helping the hospitality sector cope with the challenges it faces.
185. Deputy Pearse Doherty asked the Minister for Finance the implications for Ireland of a recent French decision regarding the taxable status of digital companies; if he has been in contact with the French authorities or the EU regarding this decision; and if he will make a statement on the matter. [3632/21]
View answerMy Department and the Revenue Commissioners are aware of the legal case in question which concerns specific taxpayers. As the Deputy is aware, it is not appropriate to comment on issues relating to specific taxpayers. It should also be noted that litigation is a common feature of tax administration in all jurisdictions and in this context we must also be conscious that this may be part of an ongoing legal or administrative process.
Ireland has taken the necessary steps to reform and modernise our tax system to take due account of international developments. In this respect, I have just published an Update to our 2018 Corporate Tax Update which sets out the significant measures we have already taken as well as commitments for the period ahead.
186. Deputy Seán Canney asked the Minister for Finance if he will introduce a tax amnesty for pandemic unemployment payment recipients who are being issued with tax bills; and if he will make a statement on the matter. [3644/21]
View answerThe Pandemic Unemployment Payment (PUP) is an income support which is taxable and subject to income tax. The PUP follows the general taxation rule for social welfare type payments, such as Jobseekers Benefit and Jobseekers Benefit (Self-Employed), and is exempt from USC and PRSI charges.
I do not propose to introduce a tax amnesty for PUP recipients as suggested by the Deputy.
It would be inequitable if PUP recipients were granted relief while those on Jobseekers Benefit were not. It would be similarly unfair to those in receipt of the temporary wage subsidy payment, as well as those who continued in employment who must pay tax on their emoluments.
In the case of lower income taxpayers or those whose income comprises solely of social welfare payments, a significant liability to tax typically does not arise because the value of social welfare payments received in a tax year are usually lower than the income sheltered by the main income tax credits. Further, in cases where the tax liability for those payments exceeds unused personal and PAYE tax credits for 2020, the level of income tax due may be reduced if the person has additional tax credits, for example health expenses, to offset.
The steps taken by Revenue, whereby individuals may opt to fully or partially pay any income tax liability or have Revenue collect the liability by reducing their tax credits over four years, interest free, is a demonstration of how arrangements have been made to minimise financial hardship to the greatest extent possible on taxpayers challenged by COVID-19.
Although the final calculation of the end of year liability for each person is dependent on their personal circumstances, I note that almost half of those in receipt of the PUP or TWSS in 2020 have no outstanding liability to discharge (in fact over a third are due a refund). In the case of the remaining taxpayer units with an outstanding liability, the data indicates that amounts to be collected are modest in scale, with 44% owing less than €500 and 72% having a liability of less than €1,000. If paid over the four year period beginning in 2022, the majority of those cases will owe less than €5 per week, with nearly half paying less than €2.50 per week. These figures represent a preliminary liability and may be further reduced by additional tax credits or reliefs such as health expenses.
I am of the view that Revenue has been adopting a fair and flexible approach to collecting tax due on payments made under the PUP.
187. Deputy Sorca Clarke asked the Minister for Finance if additional customs staff have been put in place at points of entry and exit from the country to meet the increased documentation demand following Brexit. [3654/21]
View answerI am advised by Revenue that as an integrated tax and customs administration, it deploys resources based on evolving business needs and to tackle any risks as they emerge.
Over the last 2 years the number of Revenue staff assigned to our ports and airports has more than doubled over previous levels. As at 1 January 2021, I am advised by Revenue that 675 staff were assigned to our ports and airports.
Staff at ports and airports may be involved in a range of trade facilitation and enforcement duties to ensure the movement of goods imports from, and exports to, countries outside the EU is in accordance with legislative requirements. Revenue will continue to review and adjust staff deployment in response to business needs and any emerging risks, including those related to the UK’s departure from the EU.
188. Deputy Sorca Clarke asked the Minister for Finance if he will report on two vehicles that arrived at customs on 9 January 2021 and were subsequently held for 26 hours with no communication from customs which resulted in their having to leave the loads behind as delivery slots had been missed; and if his attention has been drawn to the fact that his singular event led to a loss of revenue of approximately €1,200 per vehicle as items on board were perishable this excluding the cost of diesel, drivers' wages and other overheads. [3655/21]
View answerI am advised by Revenue that in the absence of specific details, it is not in a position to comment on the case referred to by the Deputy. If the Deputy wishes to provide me with the specific details, I will pass these on to Revenue and Revenue will be happy to engage directly with the Deputy on the matter.
I am advised by Revenue that its overarching objective in the context of the trading arrangements with Great Britain, following completion of the UKs departure from the EU, is to facilitate the movement of legitimate trade. Since January 1, following the end of the transition period on 31 December 2020, the UK has been outside the EU Single Market and Customs Union and is now a 3rd country which means that a range of customs formalities apply to goods moving to, from or through the United Kingdom, excluding Northern Ireland. In that context, I am assured by Revenue that it appreciates the challenges that the freight industry is facing due to the new trading arrangements, with the customs formalities and other regulatory requirements that now apply to such trade. Customs requirements can be complex for businesses, but it is essential that Ireland fulfils its obligations as a member of the EU and that we protect public health, food safety and product standards as well as the integrity of the Single Market and the Customs Union. Customs and SPS formalities are now an integral part of trade with Great Britain.
I appreciate that some businesses have encountered challenges in meeting their customs obligations, but it is also important to recognise that a significant number of businesses have successfully made the transition to the new trading environment and that the majority of goods going through the ports are being green routed on arrival meaning they can leave the port without the need for intervention by Customs or other State agencies.
Where businesses are experiencing delays, I am informed by Revenue that in the majority of cases, this has been caused by customs documentation not being provided or having been completed incorrectly and as a result the goods cannot be released from the port for free circulation.
While Revenue is not in a position to comment on the specific case, I am advised that in most instances of delay it is a feature of incomplete or incorrect information which prevents the desired clearance of the goods.
Revenue has provided a 24/7 helpline service that can be contacted when a particular issue arises, 01-7383685. Revenue is continuing its intensive engagement with trade and business, on both a collective and individual basis, including meetings with haulage representative bodies. Revenue will continue to consider the issues raised with them in order to find practical solutions, where that is possible, to resolve problems being encountered.
189. Deputy Éamon Ó Cuív asked the Minister for Finance the discussions he has had with the Central Bank in relation to the renewal of the loan moratorium for businesses affected by the renewed lockdowns due to Covid-19, particularly in the hospitality industry, similar to that implemented in March 2020; the result of these discussions; if such a moratorium will be introduced; and if he will make a statement on the matter. [3707/21]
View answer190. Deputy Éamon Ó Cuív asked the Minister for Finance the discussions he has had with the financial institutions to ensure that credit arrangements agreed with commercial banks by businesses affected by the Covid-19 restrictions will not affect the credit rating of those businesses in the future; the result of these discussions; and if he will make a statement on the matter. [3708/21]
View answerI propose to take Questions Nos. 189 and 190 together.
On 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. The implementation of this voluntary moratorium by the banking industry was a flexible response to the emerging Covid-19 crisis and ensured that a large volume of affected customers could benefit quickly during a fast moving and evolving public health crisis.
The Deputy may wish to note that borrowers whose payment break has ended are been given an option to return to full repayments based on the same term of the loan or to extend the term of the loan or to engage further with their bank on suitable arrangements. On 30 November last, the BPFI reported that approximately 49% of SMEs returned to repaying on the existing term whilst 46% returned to repaying on extended term basis and just over 5% returned on reduced repayments.
The Central Bank has confirmed that there is no regulatory impediment to lenders offering payment breaks to borrowers, providing they are appropriate for the individual borrower circumstance. The BPFI has also reiterated in recent days that standard payment breaks continue to be part of the wide range of tailored solutions which are being made available to customers upon assessment of their situation.
SME borrowers have regulatory protections via the Central Bank's SME lending regulations. The SME Regulations
https://centralbank.ie/news/article/regulations-for-firms-lending-to-smes-from-2016
set out the required treatment of SMEs by regulated entities in relation to various aspects of business lending. This 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 options could include additional flexibility, and this could be a short-term arrangement such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements.
In addition, Credit Review https://www.creditreview.ie was established to assist those SMEs and farm borrowers that have had credit applications of up to €3 million refused or indeed an existing credit facility withdrawn or amended by the participating bank. SMEs can apply to Credit Review after exhausting the internal appeals process in the participating institution, which are currently AIB, BOI, Ulster Bank and Permanent TSB.
Through ongoing engagement with the BPFI and lenders, the Central Bank is working to ensure that borrowers affected by COVID-19 continue to be supported through this period of unprecedented stress. The Central Bank recently wrote to all lenders indicating that lenders are to ensure that they have sufficient expert resources to assess individual borrower circumstances, and to offer appropriate and sustainable solutions to affected borrowers in a timely manner in line with regulatory requirements. The Central Bank’s clear expectation is that lenders engage effectively and sympathetically with distressed borrowers.
It should be noted that the Central Credit Register does not produce credit scores; rather the information on a credit report provided by the Central Credit Register is factual in nature and the information is provided to the Central Credit Register by lenders. It contains no guidance, recommendation or prohibition for lenders on what decision they should make on an application for credit or repayment arrangements agreed with borrowers. Subject to complying with applicable law and regulatory requirements, it is a matter for lenders to make their own lending decisions in accordance with their own credit policies and risk appetites.
I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection and other applicable frameworks will be fully available to all borrowers that will still need support.
191. Deputy John Lahart asked the Minister for Finance if consideration will be given to companies repaying the pandemic unemployment scheme if they availed of the scheme for their staff in the event that many of them were even more profitable than in the previous year; and if he will make a statement on the matter. [3709/21]
View answerThe Employment Wage Subsidy Scheme (EWSS) has been deliberately designed as an economy wide enterprise support that is open to all sectors on the basis of a turnover test that can be applied across the whole economy while at the same time remain targeted at employers who are considered to be most in need of support.
The EWSS turnover test has been specifically calibrated so as to target the subsidy at otherwise viable employers whose businesses continue to be adversely impacted by COVID-19 by requiring a comparison of the firm’s pre-pandemic operations with their current operations. The legislation provides that the employer must be able to demonstrate that they are operating at no more than 70% in either the turnover of the employer’s business or the customer orders received by the employer by reference to the period from July to December 2021 compared with the same period in 2019.
I would draw the Deputy's attention to the fact that the EWSS legislation contains a number of important safeguards and flexibilities in so far as the scheme’s operation and effectiveness is concerned. As Minister for Finance, I am required under the law to monitor and superintend the administration of the scheme and to have economic assessments made every 2 months at least.
It is also noted that the EWSS legislation requires that immediately at the end of each month, from August 2020 onwards, each employer availing of the scheme must carry out a self-review of its business circumstances and if it is manifest to the employer that it no longer meets the eligibility test for qualification for the scheme, then the employer must immediately cease claiming wage subsidy payments.
I am satisfied that the EWSS legislation contains sufficient safeguards to ensure that the scheme is not taken advantage of by employers, while at the same time allowing viable firms to access the support they need.
192. Deputy Holly Cairns asked the Minister for Finance if his attention has been drawn to the difficulties faced by drivers under 25 years of age who need to use vans or commercial cars for employment but cannot get or find same given the excessive difficulty to secure insurance quotations for these vehicles; and if he will make a statement on the matter. [3733/21]
View answerAt the outset, while I have an appreciation of the specific issue the Deputy raises, neither I, nor the Central Bank of Ireland, can direct the pricing of insurance products, as this is a commercial matter. In addition, we cannot compel any insurer operating in the Irish market to provide cover to specific individuals or groups, such as young or recently qualified drivers who may use a van or commercial car for employment. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive) which expressly prohibits Member States from doing so.
On a general level, my understanding is that firms will use a combination of rating factors in making their individual decisions on whether to offer motor cover and what terms to apply. For example, factors may include the driver’s age; relevant driving experience; the age and type of vehicle; how and where the vehicle is used; the claims record; the number of drivers; and the storage location. Insurers also price in accordance with their specific claims experience and do not use the same combination of rating factors. Accordingly, premium prices vary across the market, demonstrating why it is important for consumers to shop around on their insurance policies.
Where an individual is having difficulty in receiving an insurance quotation, or a private company has issues in relation to named drivers on their fleet policy, which may be relevant in this case, they may wish to use the Declined Cases Agreement (DCA). Under the terms of the DCA, which is adhered to by all motor insurers in Ireland, the insurance market will not refuse cover if the person has approached at least three insurers and has been unable to obtain cover from them. In this regard, there are further details available on the Insurance Ireland website, while more generally, Insurance Ireland also operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance. The relevant contact details are: feedback@insuranceireland.eu or declined@insuranceireland.eu.
Finally, seeking to secure a more sustainable and competitive market through deepening and widening the supply of insurance in Ireland remains a key policy priority for this Government. It is my intention, along with Minister of State Fleming, to work to ensure that the commitments outlined in the Programme for Government are progressed in accordance with the Action Plan for Insurance Reform. In this regard, we will work with our Government colleagues to ensure that a Whole-of-Government approach continues to be the focus and that the cumulative impact of all of the actions Plan can have a positive effect on the affordability and availability of insurance for individuals, businesses and voluntary groups across Ireland.
193. Deputy Patricia Ryan asked the Minister for Finance his plans to address the exceptionally high mortgage rates in Ireland relative to the European norm; and if he will make a statement on the matter. [3760/21]
View answerI am aware that the general level of lending interest rates in Ireland are higher than is the case in many other European countries, though it should also be noted that recent trends indicate that certain mortgage rates have been falling in Ireland. For example, the interest rates on new fixed rate mortgages (excluding renegotiations) have fallen from 4.11% in December 2014 to 2.67% in November 2020.
However, Irish mortgage and other loans can have different characteristics from those offered in other countries. For example, many Irish banks include incentives such as cash back offers, which reduce the effective Irish mortgage interest rate. Also Irish mortgages are also generally not subject to upfront fees which are typically charged by banks in some other EU jurisdictions.
Nevertheless, there are a number of important factors which will likely influence the interest rates charged on Irish mortgages. These include operational costs, certain structural factors as referenced above (such as incentives offered), as well as the fact that pricing will reflect:
credit risk and capital requirements which in Ireland are elevated due to historical loss experience;
the level of non-performing loans which is higher in Ireland relative to other European banks (as provisioning and capital requirements are higher for these loans to reflect their higher risk and this in turn results in higher credit and capital costs for the Irish banks);
higher cost-to-income: growing cost inefficiencies have been a characteristic of the Irish banking sector in recent years;
there are lower levels of competition in the Irish banking market compared to other jurisdictions (however, it is noted that a new entrant has recently entered the residential mortgage market and that it is offering fixed rate mortgages at competitive interest rates).
The Central Bank has a range of measures 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; 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 which came into effect in February 2017. The enhanced measures, which are provided for in an Addendum to the Consumer Protection Code 2012, 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.
The Central Bank also introduced additional changes to the Consumer Protection Code in January 2019 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. Consumers can reduce average pricing in the mortgage market by availing of switching options to ensure that recent and potential future price reductions through increased competition pass through to the greatest number of customers possible. Indeed the Central Bank advises that a recent study by it estimated that three in every five ‘eligible’ mortgages for principal dwelling homes stand to save over €1,000 within the first year if they switch and €10,000 over the remaining term.
Ultimately, however, the price lenders charge for their loans is a commercial matter for individual lenders. As Minister for Finance I cannot determine the lending policies of individual banks including the interest rates they charge for loans including mortgages. Nevertheless, I will continue to work with the Central Bank and also engage with lenders to encourage, within a framework which seeks to maintain overall financial stability, greater price and other competition in the mortgage market, both for new and existing borrowers. It is, therefore, a welcome development that a new residential mortgage lender has recently entered the market and it will be of benefit to new mortgage borrowers and also to borrowers, in particular to borrowers who may still on a standard variable rate with their lender, who may wish to consider switching to a new lender.
194. Deputy Michael Healy-Rae asked the Minister for Finance if he will address a matter regarding the case of a person (details supplied); and if he will make a statement on the matter. [3781/21]
View answerI am advised that the National Car Testing Service (NCTS), which manages the Vehicle Registration Tax (VRT) process on behalf of Revenue, submitted incorrect weights (to Revenue) for the vehicle in question when it was being registered for VRT purposes.
Revenue has confirmed to me that the matter has now been rectified and the correct weights have been notified to the relevant motor-tax office. To conclude the matter, the person in question should contact his motor-tax office to request a revised log-book.
197. Deputy Thomas Gould asked the Minister for Finance the local property tax paid by local authorities in respect of social housing stock in 2020. [3843/21]
View answerI am advised by Revenue that it is precluded, by virtue of taxpayer confidentiality obligations set out in section 851A of the Taxes Consolidation Act 1997, from providing the specific information sought by the Deputy in relation to Local Property Tax (LPT) payments made by Local Authorities on social housing stock.
Revenue publishes a comprehensive range of quarterly and annual statistics relating to LPT on its website, including detailed information regarding Local Authority collection and compliance data on all its housing stock, at
www.revenue.ie/en/corporate/information-about-revenue/statistics/local-property-tax/index.aspx.
198. Deputy Fergus O'Dowd asked the Minister for Finance if a response will issue regarding concerns raised (details supplied) in respect of the temporary wage subsidy scheme and possible issues arising; the measures that should be undertaken in such circumstances; and if he will make a statement on the matter. [3853/21]
View answerThe Temporary Wage Subsidy Scheme (TWSS) was introduced on 26 March 2020 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) on 1 September 2020.
To ensure payments were made to employees as quickly as possible, Revenue operated a ‘transitional phase’ of the TWSS from late March until 3 May 2020. The ‘transitional phase’ provided a subsidy of 70% of the average net weekly pay up to maximum of €410 in respect of eligible employees.
On 4 May 2020 the TWSS moved to the ‘operational phase’ and included increased subsidy rates of up to 85%, subject to various maximum payments. During this phase, the subsidy amount paid to employers was based on each employee’s Average Revenue Net Weekly Pay (ARNWP ), which was calculated using average net earnings in January/February 2020.
According to Revenue’s records, the person in question had three active employments in 2020, with one employer participating in the TWSS. This employer started operating the scheme in April 2020 and the person first received a subsidy of €260.04 on 30 April 2020. Subsequent monthly payments from May to August 2020 were reported (to Revenue) by the employer in respect of the person, indicating subsidy payments of €315.77. The amount of subsidy paid to the person corresponds with his ARNWP and the applicable rates of subsidy due to him under the scheme.
Revenue has confirmed that it is engaging directly with the employer regarding the actual amount of TWSS that was paid to the person. Once the amounts are confirmed, Revenue will ensure any necessary adjustments are made by the employer to the person’s 2020 salary record, which will impact (reduce) his taxable income for the year.
The TWSS payments correctly received by the person are subject to income tax and Universal Social Charge (USC). The amount due can be reduced by the allocation of any unused tax credits for 2020 or additional tax credits such as health expenses. Any remaining balance at that point will be collected, interest free, over four years from 1 January 2022 by reducing tax credits, thereby minimising any financial hardship to the greatest extent possible.
199. Deputy Ged Nash asked the Minister for Finance if tax liabilities will be issued to workers whose employer wrongly availed of the temporary wage subsidy scheme; and if he will make a statement on the matter. [3858/21]
View answer237. Deputy Ged Nash asked the Minister for Finance the number of employers found not to be in compliance with the temporary wage subsidy scheme to date; if employees who have worked in firms found not to be compliant are subject a tax bill on their payment; and if he will make a statement on the matter. [4478/21]
View answerI propose to take Questions Nos. 199 and 237 together.
As recently advised to the Deputy in a previous reply to a Parliamentary Question, Revenue has completed compliance checks in respect of more than 92% of employers who participated in the Temporary Wage Subsidy Scheme (TWSS). To date, over €3m of subsidy payments has been recouped in aggregate from some 620 employers, and enquiries are ongoing in the remaining cases.
It is to be noted that these figures are in the context of total TWSS payments in excess of €2.8bn to some 66,000 employers. It should also be noted that 5,195 employers have repaid over €79m in TWSS payments up to 31 December 2020. The overpayments typically occurred in circumstances where the level of estimated business decline did not materialise or where unintended errors were included in claims.
Any TWSS payments received by employees are subject to income tax and USC irrespective of whether the employer was correctly eligible to participate in the scheme or not. Where Revenue has recovered TWSS amounts from ineligible employers, it is a matter between the parties (i.e. employer and employee) as to whether the payments are subsequently recouped from relevant employees. Any such recoupment by employers will result in a reduction in the taxable income of the relevant employees.
Where the TWSS amounts paid to relevant employees are not recouped by the employer, then the income tax and USC liabilities remain due. Revenue has confirmed that these liabilities, which may be reduced by the allocation of unused tax credits or additional tax credits such as health expenses, will be collected, interest free, over four years from 1 January 2022. This will be achieved by reducing tax credits for those years, thereby reducing any financial hardship to the greatest extent possible.
201. Deputy Fergus O'Dowd asked the Minister for Finance if he will address the concerns raised in correspondence (details supplied) in relation to financial support measures for Irish pilots; and if he will make a statement on the matter. [3884/21]
View answer207. Deputy Cian O'Callaghan asked the Minister for Finance if the employment wage subsidy scheme and mortgage breaks will be extended to aviation workers until 2022; and if he will make a statement on the matter. [3994/21]
View answer218. Deputy Neale Richmond asked the Minister for Finance if he plans to extend the employment wage subsidy scheme for the aviation industry past the current deadline of 31 March 2021; and if he will make a statement on the matter. [4141/21]
View answerI propose to take Questions Nos. 201, 207 and 218 together.
I am aware of concerns that have been raised regarding the pace of recovery for the aviation sector, and that it has been suggested that the level of support be increased and/or that the application of some of the new State supports should be delineated on the basis of explicit sectoral qualification criteria. However, the reality of COVID-19 is that our whole economy and labour market have been rapidly transformed by this unprecedented shock and nearly all sectors have been negatively impacted either directly or indirectly.
The objective of the Employment Wage Subsidy Scheme (EWSS) is to support all employment and maintain the link between the employer and employee insofar as is possible. The Employment Wage Subsidy Scheme (EWSS) has been a key component of the Government’s response to the continued Covid-19 crisis to support viable firms and encourage employment in the midst of these very challenging times. To date, subsidy payments of over €1.5 billion have been made and PRSI relief worth over €270m granted to over 41,600 employers in respect of over 467,000 employees.
I have been clear that there will be no cliff-edge to the EWSS. It is noted that the legislation implementing the measure provides that it will be in place until 31 March 2021, but also provides that the scheme may be extended until the end of June 2021 if required and subject to certain procedural conditions.
It is likely that continued support will be necessary out to the end of 2021 to help maintain viable businesses and employment and to provide businesses with certainty to the maximum extent possible. Decisions on the form of such support will take account of emerging circumstances and economic conditions as they become clearer.
In the meantime I am satisfied that the design of the Employment Wage Subsidy Scheme (EWSS) fully takes account of the changing environment around living with the COVID-19 pandemic, in line with Resilience and Recovery 2020-2021: Plan for Living with COVID-19.
For those businesses who may need additional support at this time, I would draw attention to the comprehensive package of other business and employer supports that have been made available since the July Stimulus Plan and Budget 2021 - including the Covid Restriction Support Scheme (CRSS), the Credit Guarantee Scheme, the SBCI Working Capital Scheme, Sustaining Enterprise Fund, and the Covid-19 Business Loans Scheme.
Regarding the offering of further mortgage payment breaks, I would draw the Deputy's attention to the fact that the Central Bank has confirmed that there is no regulatory impediment to lenders offering payment breaks to borrowers, providing they are appropriate for the individual borrower circumstance. The BPFI has also reiterated in recent days that standard payment breaks continue to be part of the wide range of tailored solutions which are being made available to customers upon assessment of their situation.
Borrowers have a suite of regulatory protections, such as the Central Bank's Code of Conduct on Mortgage Arrears and the Consumer Protection Code, and lenders have specific obligations to support and work with borrowers who are continuing to experience loan difficulty because of COVID-19. The options could include additional flexibility, and this could be a short term arrangement such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements.
Through ongoing engagement with the BPFI and lenders, the Central Bank is working to ensure that borrowers affected by COVID-19 continue to be supported through this period of unprecedented stress. The Central Bank recently wrote to all lenders indicating that lenders are to ensure that they have sufficient expert resources to assess individual borrower circumstances, and to offer appropriate and sustainable solutions to affected borrowers in a timely manner in line with regulatory requirements and Central Bank expectations.
I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection and other applicable frameworks will be fully available to all borrowers that will still need support.
Questions in relation to the Pandemic Unemployment Payment are a matter for my colleague, the Minister for Social Protection.
