Written Answers Nos. 458-482
459. Deputy Fergus O'Dowd asked the Minister for Finance his views on proposals raised in correspondence (details supplied) in respect of the taxation of overtime in Ireland; and if he will make a statement on the matter. [14603/21]
View answerIt is a general principle of taxation that, as far as possible, income from all sources should be subject to taxation.
Ireland has a progressive income tax system which is structured such that the more income you have, the more tax you pay. As a person’s income increases they move up through the various rates and bands and, as a result, while the levels of take home pay increase overall, the amount of tax they pay also increases.
Total income taxes paid account for around 40% of Ireland’s annual tax receipts and thereby make a significant contribution to cover the cost of the various Exchequer funded State services, many of which are experiencing significant pressures at this time due to the need to respond to the unprecedented set of circumstances arising as a direct result of the Covid-19 pandemic.
While it is the case that policy choices exist as to how best to deploy the available financial resources of the State, such resources are being prioritised at the present time on initiatives to support those who are no longer in employment or who will or have had reduced income, as well as measures seeking to support employers in retaining staff on the payroll.
460. Deputy Neale Richmond asked the Minister for Finance the engagement he has had with the Central Bank regarding the recent fine levied on a company (details supplied); his views on the impact of this case on the international reputation of Irish financial services in general; the steps being taken to ensure incidents of this type cannot occur again; and if he will make a statement on the matter. [14632/21]
View answerOver the last number of weeks I have been consistent in setting out my views and those of Government regarding the expectation that we have in relation to the conduct of the financial services sector and especially senior people within those organisations that are in a position of trust. In the specific case referenced, the Regulator has taken action and made its views known. Furthermore, the NTMA Board took action in relation to the State's dealing with the firm in question. In addition, the firm has also now taken subsequent actions in response to developments.
It is important to underline that Ireland has a robust and comprehensive regulatory regime for financial services providers, operated by an independent regulator, the Central Bank of Ireland. The importance of an independent regulator is widely recognised. As such they are the ones that determine what measures or actions need to be taken in relation to any potential or actual wrongdoing by regulated financial service providers. This responsibility includes the question of whether to refer any matters to other public authorities that may have a remit to investigate such matters.
My Department continues to keep matters under review in terms of the overall legislative and policy framework. In that context, my Department is in regular contact with the Central Bank on such matters and periodically, I, as Minister for Finance, engage with the Central Bank as appropriate. However, it is important to continue to stress that the Central Bank is an independent Financial Regulator and the benefits of being so are clear to see.
In terms of the legislative framework pertaining to investment firms regulated by the Central Bank, there has been a significant strengthening of the rules in recent years arising from developments agreed at EU level requiring the necessary EU legislation being transposed as well as domestic legislation which went beyond the requirements of EU law.
The Markets in Financial Instruments Regulations 2017 transposes the EU Directive known as “MiFID”, which governs the provision of investment services in financial instruments. It applies to investment firms, wealth managers, broker dealers, product manufacturers and credit institutions authorised to carry out MiFID activities.
These Regulations aim to reinforce the rules on securities markets by, among other things, improving the transparency of financial markets, strengthening governance rules for investment firms and stock exchanges, strengthening investor protection rules and increasing the powers of the Central Bank.
Under current MiFID rules, the Central Bank has a wide suite of powers, including sanctioning powers. It is empowered to apply a maximum monetary penalty, in the case of a legal person, not exceeding €10,000,000, or not exceeding 10% of the total annual turnover of the legal person, or in the case of a natural person, not exceeding €5,000,000. It is also empowered to apply a temporary or, for repeated serious contraventions, permanent ban, from a member of an investment firm’s management body exercising management functions in an investment firm. The Central Bank also has powers to bring and prosecute summary proceedings for an offence under the MiFID Regulations. In this regard, a person may be charged with having committed an offence under the MiFID Regulations even if the body corporate concerned is not charged with having committed an offence in relation to the same matter.
The 2017 MiFID Regulations were supplemented by the Markets in Financial Instruments Act 2018 which sets out a list of indicatable criminal offences pertaining to the MiFID Regulations.
More broadly pertaining to financial services, the Government has also committed to the introduction of legislation around Senior Executive Accountability Regime (SEAR) and the introduction of SEAR will complement existing Central Bank regulatory powers. SEAR will drive positive changes in terms of culture, greater delegation of responsibilities, and enhanced accountability while simplifying the taking of sanctions against individuals who fail in their financial sector roles. My officials are engaging with the Attorney General's Office in advance of submitting draft heads of Bill to Government so as to ensure that the correct balance is struck between appropriate additional powers for the Central Bank and the protection of individuals' constitutional rights.
Finally, I can assure the Deputy that the Government will maintain Ireland’s reputation as having a robust and comprehensive regulatory regime for financial services providers, operated by an independent regulator, the Central Bank of Ireland.
461. Deputy Sean Sherlock asked the Minister for Finance the reason a person (details supplied) in County Cork, having completed a form 12 application in respect of significant medical costs, did not receive a larger tax refund given the level of expenses incurred. [14671/21]
View answerI am advised by Revenue that the health expenses claim for the person in question was processed on 22 February 2021 following the submission of her 2020 Income Tax Return.
A Statement of Liability for 2020 subsequently issued to the person on 23 February 2021 via the MyAccount service, and a refund of tax issued to her bank account on 25 February 2021. The refund was the total amount of tax paid by the person in 2020 and there is no further repayment due.
Revenue has confirmed that it will make direct contact with the person to explain her 2020 tax position and address any queries she may have.
462. Deputy Pauline Tully asked the Minister for Finance the number of persons who claimed carer’s allowance here in each of the years 2018 to 2020, in tabular form; the number of persons who claimed carer’s allowance in each of the years 2018 to 2020 and were not subject to tax due to their income level, in tabular form; the number of persons who claimed carer’s allowance in each of the years 2018 to 2020 and were subject to tax due to their income level, in tabular form; the amount of tax that was collected in each of the years 2018 to 2020 from those claiming carer’s allowance, in tabular form; and if he will make a statement on the matter. [14685/21]
View answer463. Deputy Pauline Tully asked the Minister for Finance if he will consider removing carer’s allowance as a taxable source of income; and if he will make a statement on the matter. [14686/21]
View answerI propose to take Questions Nos. 462 and 463 together.
The Carers' Allowance is a means-tested payment made to individuals on low incomes who are looking after a person who needs support because of age, disability or illness. In order to receive the allowance, the individual must not be engaged in employment, self-employment, training or education courses outside the home for more than 18.5 hours a week. While taxable, the allowance is not subject to USC or PRSI. The Carers' Support Grant is automatically paid to people getting Carers' Allowance in June of each year. This payment is exempt from taxation.
The number of persons who claimed carer’s allowance is a matter for the Minister for Social Protection in the first instance. However, I am advised that according to Revenue records the number of taxpayers with Carers' Allowance in 2016-2018, the latest years for which data are currently available, broken down by those taxpayers with and without an overall tax liability, is as set out in the following table.
|
Year |
Number of Taxpayer Units |
Number of Units with an overall Tax Liability |
Number of Units with no overall Tax Liability |
Overall Income Tax Paid €m |
|
2018 |
28,100 |
15,300 |
12,800 |
76 |
|
2017 |
26,900 |
14,300 |
12,600 |
71 |
|
2016 |
25,400 |
13,100 |
12,300 |
67 |
The data provided is on a taxpayer unit basis, where jointly assessed couples are listed as one unit. The Overall Income Tax Paid figures in the table refer to the tax paid by the taxpayer units, taking account of all incomes, deductions, reliefs and credits. It is not possible to separately identify the amount of tax paid in respect of the Carers Allowance income only.
I have no plans at present to change the tax treatment of the allowance.
464. Deputy Richard Bruton asked the Minister for Finance the five most recent significant capital projects in the major functional responsibilities of his Department which have required his sanction; the time which elapsed between the initial submission of the proposal for consideration until the construction commenced; the significant elements making up this period; the time spent in assessment prior to approval in the planning process; the time spent in assessment prior to approval in the procurement process of contractors; and the way this duration compared with the targeted time to delivery set out at the outset of the process. [14777/21]
View answerI can advise the Deputy that there have been no capital projects in my Department which have required my sanction.
465. Deputy Christopher O'Sullivan asked the Minister for Finance if his attention has been drawn to specific closure timelines and redundancy, security and pension options for staff at a bank (details supplied) scheduled for closure; and if he will make a statement on the matter. [14832/21]
View answerThe NatWest Group (NatWest) announced on Friday, 19 February last that it intends withdrawing from the banking sector in the Republic of Ireland and it will gradually wind down its Ulster Bank business.
NatWest concluded that Ulster Bank would not be able to achieve an acceptable level of return for shareholders and have decided to begin a phased withdrawal over the coming years.
It is anticipated that Ulster Bank’s withdrawal from the Irish market will take place over a number of years and I would expect that matters such as redundancy, security and pension options will be addressed by NatWest in due course. However, I do welcome NatWest’s commitment to seeking solutions where:
- Customers and colleagues are well supported;
- Job losses are minimised with no new compulsory redundancy departures this year;
- Stability is maintained in the sector; and
- NatWest’s withdrawal from the Irish banking sector is achieved in an orderly manner.
As part of this process, NatWest confirmed that it is negotiations with Permanent TSB and other strategic banking partners in relation to certain retail and SME assets, liabilities and operations. I also announced that it is negotiation with AIB in relation to the sale of a c. €4bn portfolio of performing commercial loans, and that staff wholly or mainly assigned to this loan book will transfer with the loan book. NatWest and AIB have signed a Memorandum of Understanding in this regard.
These announcements signal a potentially important development for the Irish banking sector. However, NatWest highlighted that, at this stage, these discussions have some way to go before final transactions are agreed. NatWest, Permanent TSB and AIB have confirmed that they will provide further updates to the market as negotiations progress in this regard.
The Deputy will be aware that I have engaged with Ulster Bank, its parent company, NatWest and the Financial Services Union (FSU) prior to this announcement. In all of these engagements, I strongly emphasised the importance of timely communication with customers, staff and other stakeholders in relation to strategic decisions regarding Ulster Bank. I also met with the FSU after the announcement and I have committed to further engagement with the FSU in relation to this issue.
I understand, that there are approximately 2,800 staff employed some of whom are located in Northern Ireland. Whilst the management of staff matters, including staffing levels, is entirely a matter for Ulster Bank and any counterparty who acquires its business, I would expect all stakeholders to be very sensitive in relation to the needs and rights of staff. This includes full compliance with European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (TUPE Regulations), and honouring all agreements in place between the bank and staff representative bodies. In addition, I would expect these entities to engage with staff representative bodies as appropriate.
466. Deputy Martin Browne asked the Minister for Finance the supports in place to reimburse businesses for stock they have had to dispose of as a result of stock going out of date or for other reasons that relate to the closure of their premises due to Covid-19 restrictions; and if he will make a statement on the matter. [14968/21]
View answerI wish to advise the Deputy that I do not have responsibility for this matter. However, I can confirm that:
- There has been over €630 million in lending approved to 5,260 businesses across State-backed loan guarantee schemes.
- Take-up of these schemes has varied. There has been high demand for the Future Growth Loan Scheme (FGLS) and working with the European Investment Fund, the Future Growth Loan Scheme was expanded in the 2020 July Jobs Stimulus and makes up to €800m in lending available to eligible businesses to support long-term, strategic investment, including in response to COVID-19. I understand that a number of the participating banks (AIB, Bank of Ireland and Ulster Bank) have currently suspended new loan applications under the FGLS while they process a significant pipeline of existing applications.
- The SBCI COVID-19 Working Capital Scheme makes available working capital loans to help businesses to innovate, change or adapt in response to the pandemic. These innovations may include adjustments to ensure that a business can continue to operate safely.
- The COVID-19 Credit Guarantee Scheme (CGS) was launched by Government on the 7th September 2020 and is the biggest ever state-backed loan guarantee in Ireland. Its focus is to provide additional liquidity to businesses in a wide range of sectors. This has resulted in an increased diversification in loan products available to Irish businesses and greater geographical reach for the COVID-19 CGS.
- While take up of the COVID-19 CGS is less than was foreseen, this is due to the significant supports that Government has ensured are available for businesses during COVID-19 restrictions, including the EWSS, CRSS, tax warehousing and the commercial rates waiver.
- Low demand for credit is a consistent feature of the Irish SME environment. These Government supports, together with general forbearance from the financial system, including payment breaks, have meant that Irish businesses have not looked to access credit during COVID-19 restrictions, including through Government backed loans schemes, at greater levels then the pre-COVID period.
- It is envisaged that SME demand for credit and the use of state backed loans will increase as COVID-19 restrictions are lifted and the economy and businesses are able to reopen.
It should be noted that whether a business can make a successful insurance claim in relation to (the cost of) stock disposed of or wasted because of closure due to COVID-19 will depend on the specifics of their individual policy. While business interruption is generally a feature of standard business insurance policies, the terms and conditions for the policies written by insurance companies will vary and also depend on how insurers price the risk underlying those policies. As the Deputy will be aware, I cannot direct or require that insurers cover claims resulting from infectious diseases such as COVID-19.
Loan, grants and schemes for Business
|
SBCI - COVID-19 Credit Guarantee Scheme |
Facilitates €2bn in lending including for term loans, working capital loans and overdrafts with loans of up to €250,000 available unsecured. Backed by an 80% government guarantee. |
To 4 March: 5,129 loan applications have been made amounting to almost €346m. 3,470 loans have been drawn down by businesses for loans totalling €207.04 million. |
|
SBCI - COVID-19 Working Capital Scheme |
Supports loans from €25,000 up to €1.5 million (first €500,000 unsecured) with a maximum interest rate of 4%. |
To 12 March: 1,007 loans were sanctioned to a value of €136.47 million. |
|
SBCI - Future Growth Loan Scheme |
€800m of loans available for terms of 7-10 years. Loans from €25,000 to €3million. This scheme is available to eligible businesses in Ireland, including those in the primary agriculture and seafood sectors, to support strategic long-term investment. |
To 12 March: 3,228 loans were approved to a value of €668.42 million. |
|
Microfinance Ireland - COVID-19 Business Loan |
Loans of up to €25,000 are available for micro firms with zero repayments and zero interest for the first 6 months and the equivalent of an additional 6 months interest-free subject to certain terms and conditions. |
To 12 March: 274 loans approved to a value of €5.16 million. |
|
Enterprise Ireland - Sustaining Enterprise Fund |
Viable firms in the manufacturing and internationally traded services sectors who have been negatively impacted by COVID-19. Between €100,000 and €800,000 available and the fund includes a 50% non-repayable grant element, up to a limit of €200,000. |
To 12 March: 413 loans approved with a value of €147.89 million. |
|
ISIF - Pandemic Stabilisation and Recovery Fund |
€2 billion fund will make capital available to medium and large enterprises on commercial terms. |
N/A |
|
Small Business Assistance Scheme |
€60 million scheme with grants of up to €8,000. Available to companies with a minimum turnover of €50,000 not eligible for the Revenue scheme CRSS, Fáilte Ireland Business Continuity Scheme or the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media’s Live Performance Support. |
Scheme opened 11 March. |
|
Tourism Business Continuity Scheme |
€55m fund to support those tourism businesses that were not eligible for the CRSS payment or previous Fáilte Ireland continuity grant schemes. |
N/A |
COVID Supports Data Dashboard – Week ending 12 March 2021
Pandemic Unemployment Payment (PUP)
|
Week Ending |
Total PUP Claims |
Weekly change |
4 week change |
|
12 March |
464,860 |
-3,987 |
-16,471 |
Employment Wage Subsidy Scheme (EWSS)
|
Date |
Employer registrations |
Weekly change |
4 week change |
|
11 March |
49,000[1] |
- |
+700[2] |
EWSS Claims
|
|
Employer Claims |
Employees |
Direct Subsidy |
PRSI Foregone |
Total Value |
|
February |
35,700 |
311,600 |
€389.8m |
€60.3m |
€450.1m |
|
Monthly change[3] |
-1,100 |
-41,100 |
- €15.9m |
- €1.8m |
- €17.7m |
|
Total to Date |
47,900 |
539,900 |
€2,313m |
€390m |
€2,703m |
Covid Restriction Support Scheme (CRSS)
|
Date |
Business registrations |
Premises Covered |
|
11 March |
21,200 |
24,800 |
|
Weekly change |
+ 300 |
+ 400 |
Total payment processed to date: €370.5m
Stay and Spend Incentive (SASI)
|
Date |
Service provider registrations |
Weekly change |
4 week change |
|
11 March |
3,144 |
+ 4 |
+7 |
|
Date |
Total no of receipts uploaded |
Total Receipts value |
Total value of credit claimable |
|
11 March |
56,953 |
€9,361,197 |
€1,872,239 |
|
Weekly Change |
+ 937 |
+ €153,953 |
+ €30,790 |
[1] Including 1,600 re-registrations and excluding 2,900 employers who registered then subsequently cancelled their registrations.
[2] Compared with 11 February EWSS statistics
[3] Compared with January 2021
The Covid Restrictions Support Scheme (CRSS) was announced in the Budget on 13 October 2020. The details are set out in the Finance Act 2020 and guidelines on the operation of the scheme, including the eligibility criteria, are available on the Revenue website.
The support is available to companies and self-employed individuals who carry on a trade or trading activities from a business premises located in a region subject to restrictions, introduced in line with the Living with Covid-19 Plan, with the result that the business is required to prohibit or considerably restrict customers from accessing their business premises. Generally, this refers to Covid restrictions at Level 3, 4 or 5 of the Government’s Plan for Living with Covid-19 but certain businesses may qualify for the support where lower levels of restrictions are in operation.
The CRSS applies to businesses carrying on trading activities from a business premises located in a region subject to restrictions, which requires the business to prohibit or considerably restrict customers from accessing their business premises and as a result, is operating at less than 25% of turnover in 2019.
The CRSS is an additional measure for businesses in a region subject to significant Covid-19 restrictions. Businesses who do not qualify under this scheme may be entitled to support under various measures put in place by Government, including existing supports available under the COVID Pandemic Unemployment Payment (PUP) and the Employment Wage Subsidy Scheme (EWSS). They may also be eligible to warehouse VAT and PAYE (Employer) debts and also excess payments received by employers under the Temporary Wage Subsidy Scheme, and the balance of Income Tax for 2019 and Preliminary Tax for 2020 for self-assessed taxpayers if applicable.
The purpose of the CRSS is to provide additional support to the businesses who have had to close temporarily or significantly restrict access to their premises as a direct result of public health Regulations.
In addition, you may be aware of the Tourism Business Continuity scheme, a €55m strategic funding scheme announced as part of Budget 2021 to support tourism businesses which was launched recently. Further details of the scheme are available on the Fáilte Ireland website at https://www.failteireland.ie/Identify-Available-Funding/Tourism-Business-Continuity-Scheme.aspx
The first phase of the Tourism Business Continuity Scheme is now open for applications from businesses in the following categories who meet the eligibility criteria:
- Outdoor activity providers
- Tourism golf courses
- Hop-on Hop-off bus tours
- Cruise hire companies
- Boat tours operators
- Visitor attractions not eligible for CRSS
- Caravan and camping / outdoor accommodation
In this regard, it may be noted that the Tánaiste and Minister for Enterprise, Trade and Employment recently announced that the Small Business Assistance Scheme for Covid (SBAC) is open for applications through Local Authorities. It is available to companies, self-employed, sole traders or partnerships with a minimum turnover of €50,000 and not eligible for the CRSS, Fáilte Ireland Business Continuity Scheme or the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media’s Live Performance Support. Further details are available at https://www.gov.ie/en/press-release/16d20-tanaiste-opens-applications-for-phase-1-of-8000-grant-under-new-small-business-assistance-scheme-for-covid-sbasc/
467. Deputy Bernard J. Durkan asked the Minister for Finance the basis on which it is concluded that the net pension entitlement of a person (details supplied) should result in more than 50% tax thereby adding a further burden to their serious health problem; if the matter will be urgently reviewed with a view to a more realistic payout; and if he will make a statement on the matter. [14975/21]
View answerI am advised by Revenue that an individual can take a tax-free lump sum from their pension pot – typically 25% of the lump sum, up to a maximum tax free amount of €200,000 - but the balance of the pension pot is subject to tax at appropriate rates. Pensions or payments from an Approved Retirement Fund (ARF) are taxed similarly to other incomes, in that an individual’s personal circumstances dictate the standard rate band and tax credits available, upon which their liability to tax is calculated. There are no ill-health provisions in tax legislation which relieve pension payments from the charge to taxation.
For example, in the current tax year, for a married couple or civil partners with one income, the first €44,300 is taxed at the standard rate of 20% and the balance of income at 40%. In addition, the couple are entitled to deduct personal tax credits from the resulting liability, such as the credit for married persons or civil partners of €3,300 and the employee tax credit of €1,650 (where payments are made via the PAYE system). They may also be able to claim tax relief for health expenses. Income from pensions or an ARF is also liable to Universal Social Charge (USC) and PRSI may apply depending on the age of the taxpayer. In some cases part of the payment may be subject to the higher rate of income tax plus PRSI and the USC, but the effective rate of tax on the overall payment will be much lower.
Payments from an ARF are subject to taxation by way of deduction at source under PAYE. In that regard, it is advisable that the taxpayer ensures that his correct entitlement is on record with his ARF provider to ensure the processing of any payment is carried out correctly with all the appropriate entitlements taken account of in the calculation.
The Deputy provided details of a specific taxpayer in his correspondence and I can confirm that Revenue have undertaken to review and ensure that the record and entitlements of the taxpayer are up to date and correct.
468. Deputy Niamh Smyth asked the Minister for Finance if he met with officials from banks (details supplied) to date in 2021 to discuss the move to reduce banking services in rural areas; the details of the latest negotiations by him or his Department on the issue; and if he will make a statement on the matter. [14978/21]
View answerThe withdrawal of Ulster Bank from the market and the decision by Bank of Ireland to close 88 branches in the Republic of Ireland are regrettable, particularly for its customers and staff and is an unfavourable development for the Irish banking market.
Decisions in this regard, including the management of branch networks, 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.
Notwithstanding this, Bank of Ireland provided me with a briefing in advance which was consistent with its announcement on the matter on 1st March.
Some of the key points contained in the announcement are:
- The decision to close these branches is in response to changing customer behaviour with a significant acceleration in digital banking.
- The branches closing are predominately self-service locations which do not offer a counter service.
- To preserve local access to physical banking for those who want it, the bank has agreed a new partnership with An Post which will allow personal and business customers use their local post office for a range of banking services – including to withdraw cash and make cash and cheque lodgements – at no additional cost. The closing Bank of Ireland branches all have a post office within, on average, less than 500 meters.
- The bank confirmed that the new partnership with An Post will be available to all Bank of Ireland customers before any branch closes.
- Furthermore, the bank stated that there will be no closures for six months.
On staff, the bank commented that it will be working closely with all colleagues at these branches and will be setting out a range of options which include relocating to a different branch, moving to a new role in the bank, or voluntary redundancy for those who choose it.
I have met with representatives from both Ulster Bank and its parent company, NatWest in recent months. My most recent meeting was with Ulster Bank Chief Executive, Jane Howard, on the 19th February.
The Deputy will be aware that NatWest is in early stage discussions with PTSB and other strategic banking counterparties about their potential interest in certain retail and SME assets, liabilities and operations. A Memorandum of Understanding which has been signed with AIB regarding certain corporate and commercial loans, signals a potentially important development for the Irish banking sector. While these are primarily commercial negotiations, the Government is supportive of trying to bring about an outcome that is good for both AIB and PTSB, but more importantly for Ulster Bank’s customers, staff and the Irish economy generally. NatWest, PTSB and AIB have confirmed that they will provide further updates to the market as negotiations progress in this regard.
These decisions are a reflection of the wider challenges banking is facing, not only in Ireland but also abroad. The impact of Covid-19, coming on top of weak enough economic growth in Europe and America, has already been seen in European banking with consolidation and mergers in other European markets.
In addition, there are major changes driving the consolidation elsewhere. The innovations introduced by FinTechs and their increasing market penetration are reducing traffic into the branch networks run by traditional banks. Competing with lean and nimble online firms while coping with high cost structures is posing a considerable challenge for the traditional full service sector and we are seeing cutbacks in these entities in terms of staff, branches and initiatives to move their customers online.
470. Deputy Catherine Murphy asked the Minister for Finance if he plans to allow SMEs to avail of tax warehousing without penalty for at least 12 months after mass gatherings are permitted again in view of the curtailment of their activities due to the public health restrictions. [14993/21]
View answerI am advised by Revenue that the current tax warehousing schemes allow for the deferral of collection of certain tax liabilities relating to “Period 1”, the “Covid-19 restricted trading period”. The tax liabilities that may be deferred or “warehoused” are VAT, PAYE (Employer) liabilities, excess Temporary Wage Subsidy Scheme (TWSS) payments due to be refunded to Revenue by employers, and certain self-assessed income tax liabilities.
In the case of VAT, PAYE (Employer) and excess TWSS liabilities, Period 1 refers to the period when a business has been unable to trade due to the Covid-19 related restrictions and includes the first full two monthly VAT period after the business resumes trading. For example, if a business has been closed due to Covid-19 restrictions but resumes trading in April 2021, it will be able to warehouse liabilities accrued from March 2020 up to the end of June 2021.
Revenue has confirmed that where a business re-opened but has had to close again due to the re-imposition of restrictions, the trade is deemed to be still subject to the restrictions provided for in the regulations under sections 5 and 31A Health Act 1947 until it has re-opened again. This means that VAT, PAYE (Employer) and excess TWSS liabilities for such businesses can continue to be warehoused in respect of the extended restricted period.
Following the expiration of Period 1, businesses are afforded a further 12 months (“Period 2”) during which collection of warehoused liabilities will be deferred.
No interest will be charged on outstanding Covid-19 liabilities in either Period 1 or Period 2. In cases where businesses have been subject to re-imposition of restrictions intermittently since March 2020, the earliest liabilities warehoused (Jan/Feb VAT and Feb PAYE) have already been warehoused at 0% interest for almost 12 months. For instance, where such businesses do not resume trading until April 2021, these liabilities may be warehoused at 0% interest for a period of 28 months in total (from March 2020 until June 2022). Interest on warehoused liabilities is charged thereafter at c. 3% per annum until the liabilities are paid in full (this is “Period 3” of the warehousing scheme).
Legislation underpinning the warehousing scheme refers to the day on which a business ceases to be subject to Covid restrictions and the day it recommences business. I would not consider a reference to “mass gatherings” would be appropriate to include in the legislation.
The legislation provides that Period 2 may be extended by Ministerial order but cannot extend beyond 31 December 2022. This is to ensure compliance with EU State Aid rules, provided for under the EU Temporary Framework for State Aid measures to support the economy in the current COVID-19 outbreak.
The Government will continue to assess the effects of the Covid-19 pandemic on the economy and I will continue to work with Ministerial colleagues to ensure that appropriate supports are in place to mitigate these effects.
474. Deputy Jennifer Whitmore asked the Minister for Finance if he has engaged with banks on the issue of negative interest rate charges (details supplied). [15007/21]
View answerAs the Deputy is aware, as Minister for Finance I have no role in the day to day operations of any bank operating within the State including banks in which the State has a shareholding. I am precluded from intervening on behalf of any individual customer in any particular bank. Decisions in relation to commercial matters 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.
The application of interest rate charges is solely a commercial matter for the board and management of each bank.
Deposit balances and liquidity in general has risen significantly across the banking system in Europe in recent years as the ECB has continued to provide additional funds through their asset purchase schemes and long term refinancing operations. This has been further exacerbated by the Covid-19 pandemic as households continue to stay at home and save and businesses defer investment decisions. This excess liquidity which has grown significantly in the European system has to go somewhere and in large part it gets placed back on deposit with the ECB who charge the banks -0.50%. The application of negative deposit rates by the ECB has resulted in European banks incurring a consequent cost on deposit accounts. The Irish banks are impacted in a similar way to their European counterparts. The banks across Europe have looked to pass some of the costs associated with negative rates to deposit holders with larger balances. The Irish banks are no different in this regard.
In passing on some of these costs it is important to note that banks cannot differentiate between customers in different sectors and for that reason the approach taken is to apply charges based on the size of the deposit balance.
475. Deputy Joe O'Brien asked the Minister for Finance the efforts being made to ensure that the associated savings will be passed on to the customer by insurance companies on foot of the recent publication of new Judicial Council guidelines for personal injury claims; and if he will make a statement on the matter. [15023/21]
View answerAs the Deputy is aware, neither I, nor the Central Bank of Ireland, can interfere in the provision or pricing of insurance products. This position is reinforced by the EU Solvency II Directive insurance framework. Consequently, I am not in a position to direct insurance companies as to their business activities, including in relation to how they price premiums.
Notwithstanding the above, the Government’s Action Plan for Insurance Reform contains a range of deliverables in a number of Government Department policy areas. It is intended that the cumulative effect of the implementation of the actions will be to improve the insurance environment, in particular for businesses. One of the key deliverables in this Action Plan was the recent publication of the Personal Injuries Guidelines by the Judicial Council.
The Guidelines significantly reduce award levels for many categories of common injuries, particularly those of soft tissue, and provide further detail on how these should be assessed. Of note is that a number of common injuries will now move to the jurisdiction of the District rather than the Circuit Court, thus reducing associated legal fees. The Guidelines also provide guidance in relation to injuries previously not included in the Book of Quantum and will be used by both the Personal Injuries Assessment Board (PIAB) and the judiciary. Therefore, in addition to the lower awards and legal fees, the Guidelines should help to bring more certainty to claimants and insurers, and as such reinforce the benefits of using PIAB to settle claims. This in turn should further reduce the costs of claims, particularly legal fees. Amendments will be advanced through the Family Leave Bill 2021 to allow implementation of these Guidelines as soon as possible.
My expectation is that insurers should commence reflecting savings to consumers, businesses and other groups. I have also previously stated that they should increase their risk appetite to extend cover to new market segments or areas they may have withdrawn from in recent years. The insurance industry has previously committed to reduce premiums in line with lower award levels. In this regard, Minister of State Fleming is meeting the CEOs of the main firms in the coming weeks to hear how they will respond to these recent developments. In addition, I would hope that the improved insurance operating environment may help to attract new entrants into the Irish market.
In summary, the Personal Injuries Guidelines, in conjunction with other strands of the insurance reform agenda, should go some way to improving both the cost and availability of insurance for businesses, consumers, and other voluntary, sporting & community groups. The Deputy can be assured that the Government is committed to achieving a more sustainable and competitive insurance market, and is continuing to progress other aspects of the Action Plan for Insurance Reform.
477. Deputy Brendan Griffin asked the Minister for Finance if his Department has considered or researched the possible impacts of providing a reduced rate of capital gains tax for property owners selling a home to a first-time buyer to help first-time buyers gain a competitive advantage over speculators; and if he will make a statement on the matter. [15079/21]
View answerIn responding to the Deputy's question, I would draw attention to the existing reliefs that are already available to property owners selling their home and to first-time buyers.
Capital Gains Tax
Capital gains tax (CGT) is chargeable on any gain arising on the disposal of an asset at the rate of 33%. The first €1,270 of chargeable gains of an individual in any year are exempt from CGT.
Where certain conditions are met, a person may be able to avail of relief from CGT in respect of a gain arising on the disposal of a property.
If the property was occupied by an individual as his or her principal private residence for all or part of his or her period of ownership, then full or partial relief from CGT will be available where a chargeable gain arises on the disposal of that property. The last 12 months of ownership of the house by the individual is treated as a period of occupation for this purpose.
If the property was acquired between 7 December 2011 and 31 December 2014, then full or partial relief from CGT will be available where a chargeable gain arises. Full relief will apply if the property has been owned by an individual for a period of 7 years. Where the property has been owned by an individual for a period of more than 7 years, relief is given on the gain in the proportion that the period of 7 years bears to the period of ownership. For example, if the property was owned for 8 years, relief will be given on 7/8ths of the gain. Where the property is held for at least 4 years and less than 7 years, any gain will not be liable to CGT where the disposal is made on or after 1 January 2018.
To be eligible for principal private residence relief or the relief for property acquired between 7 November 2011 and 31 December 2014, a person is not required to dispose of a property to a buyer within a particular category. Guidelines on both reliefs are available on the Revenue website at: https://www.revenue.ie/en/gains-gifts-and-inheritance/cgt-reliefs/index.aspx
Help to Buy Scheme
An increase in the supply of new housing remains a priority aim of Government policy. The Help to Buy 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.
The Help to Buy incentive is a scheme that is targeted at first time purchasers and assists them with a deposit to buy or build a new house or apartment. The incentive gives a refund on Income Tax and Deposit Interest Retention Tax (DIRT) paid in the State over the previous four years, subject to certain limits set out in section 477C Taxes Consolidation Act 1997.
In August 2020, an enhancement to the Help To Buy scheme was made as part of the July Stimulus package, which was later extended in Finance Act 2020. In summary, where a first-time purchaser
- enters into a contract for the purchase of a new home, or
- makes the first draw down of the mortgage in the case of a self-build;
during the period 23 July 2020 and 31 December 2021, they can avail of increased relief under Help to Buy scheme, based on the lesser of:
- €30,000 (increased from €20,000),
- 10 per cent (increased from 5 per cent) of the purchase price of a new home or the completion value of the property in the case of self builds, or,
- the amount of Income Tax and DIRT paid in the four years prior to making the application.
This is subject to the person meeting a number of conditions set out in the legislation. Further guidance on the Help To Buy scheme is available on the Revenue website at: https://revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-46.pdf.
As the Deputy will be aware, all taxes are subject to ongoing review which includes the consideration and assessment of rates along with any associated reliefs and exemptions. Tax policy in this area is reviewed by the Tax Strategy Group as part of the annual Budget and Finance Bill process and considered in the wider tax policy context.
478. Deputy Duncan Smith asked the Minister for Finance the number of vehicles owned or leased and operated by his Department and agencies and semi-State companies under his remit broken down by the number of internal combustion engine, ICE, and non-ICE vehicles and fuel category, that is, petrol, diesel, hybrid, plug-in hybrid, electric and so on; and if he will make a statement on the matter. [15119/21]
View answerI wish to infrom the Deputy that my Department does not own or lease any vehicles, nor does it operate vehicles to conduct any Departmental duties.
There are 17 bodies under the aegis of my Department, 3 of which own or operate vehicles. These 3 bodies are the Central Bank, the National Treasury Management Agency (NTMA) and the Office of the Revenue Commissioners.
The Central Bank of Ireland owns or operates 10 vehicles, 7 of which are internal combustion engine (ICE) vehicles and 3 are non-ICE. The fuel categories are petrol (1), diesel (3), electric (3) and gas (3).
The NTMA owns 14 vehicles, 13 of these are ICE vehicles and 1 is non-ICE. The fuel categories are petrol (5), diesel (8) and electric (1).
The Office of the Revenue Commissioners owns 302 vehicles, 301 of which are ICE vehicles and 1 of which is non-ICE. The fuel categories are petrol (18), diesel (283) and electric (1).
479. Deputy Martin Browne asked the Minister for Finance his views on the amounts in personal injuries insurance guidelines as set by the Judicial Council; and his views on whether the level of payment for damages is a contributor to the excessive costs of insurance premiums. [15177/21]
View answer484. Deputy Michael McNamara asked the Minister for Finance if he will intervene as a matter of urgency regarding the increasing insurance costs on small businesses and reduce damages for minor injuries by 80% given that the Law Reform Commission has made it clear that direct intervention by the legislature to cap damages will be entirely constitutional subject to certain safeguards; and if he will make a statement on the matter. [15193/21]
View answerI propose to take Questions Nos. 479 and 484 together.
In relation to the questions raised by the Deputies regarding the cost of insurance and the Personal Injuries Guidelines, I would first note that addressing the cost of insurance is a key aim of the Government’s Action Plan for Insurance Reform. In this regard, I welcome the recent publication of the Personal Injuries Guidelines by the Judicial Council, which represents an important action of the Action Plan.
The Guidelines significantly reduce award levels for many categories of common injuries, particularly those of soft tissue. Of note is that a number of common injuries will now move to the jurisdiction of the District rather than the Circuit Court, thus reducing associated legal fees. The Guidelines also provide guidance in relation to injuries previously not included in the Book of Quantum and will be used by both the Personal Injuries Assessment Board (PIAB) and the judiciary. Therefore, in addition to the lower awards and legal fees, the Guidelines should help to bring more certainty to claimants and insurers, and as such reinforce the benefits of using PIAB to settle claims. This in turn should further reduce the costs of claims, particularly legal fees. Amendments will be advanced through the Family Leave Bill 2021 to allow implementation of these Guidelines as soon as possible. I believe it needs to be recognised that the Guidelines were carefully considered by the judiciary. As such we will need a period of reflection to assess their implementation, and they should be given some time to be applied in practice. I would further note that although the Law Reform Commission’s report on “Capping Damages in Personal Injuries Actions” provided a potential legislative model to cap award levels, it also concluded that it would be entirely appropriate, and desirable, that the new Guidelines be given some time to be applied in practice.
In terms of the benefits accruing from reduced award levels, the insurance industry has previously committed to reduce premiums in line with lower award levels, so as such, my expectation is that insurers will commence reflecting these savings to consumers, businesses and other groups. In this regard, the Minister of State, Deputy Fleming, is meeting the CEOs of the main firms in the coming weeks to hear how they will respond to these recent developments. In addition, I would hope that the improved insurance operating environment may help to attract new entrants into the Irish market, thereby increasing competition.
Finally, it is important to note that publication of the Personal Injuries Guidelines represents just one of the 66 actions in the Action Plan on Insurance Reform. Other actions aimed at reducing the cost of insurance include proposals to increase competition, address dual pricing, and reform PIAB. I believe that the new Personal Injuries Guidelines, in conjunction with these and other aspects of the Government’s insurance reform agenda, should go some way to improving both the cost and availability of insurance for businesses, consumers, and other groups in Ireland.
480. Deputy Willie O'Dea asked the Minister for Finance the status of the review of the policy framework within which credit unions operate. [15183/21]
View answer481. Deputy Willie O'Dea asked the Minister for Finance the measures being taken to enable and support the credit union movement to grow. [15184/21]
View answer482. Deputy Willie O'Dea asked the Minister for Finance the way in which he is supporting credit unions in the expansion of services to encourage community development. [15185/21]
View answerI propose to take Questions Nos. 480 to 482, inclusive, together.
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. As part of the formation of the new Government, the Minister of State in my Department, Sean Fleming TD, has credit unions as part of his remit.
There are a number of commitments set out in Programme for Government, including a review of the policy framework in which credit unions operate. As part of the review, the Department has held extensive engagement with the credit union representative bodies since September 2020 to seek feedback on their key priorities for the sector. In addition, the Department is taking into account work already completed by the Credit Union Advisory Committee (CUAC). The review is now at an advanced stage.
In terms of supporting and enabling the sector to grow, I will outline some recent developments in relation to lending and investment regulations, SME lending, access to finance for retrofit, current accounts and investment in Approved Housing Bodies (AHBs).
Review of Lending and Investment Regulations
The Central Bank has in recent years completed reviews of both the lending and investment frameworks to ensure that credit unions operate under a framework that is both tailored and proportionate, to reflect the unique nature of the sector, and to provide significant flexibility for credit unions who have ambitions to grow.
Following introduction of the new lending regulations on 1 January 2020, credit unions now have a combined capacity to provide up to approximately €1.1 billion in SME and mortgage loans, with further additional lending capacity available to credit unions who can comply with certain conditions or on approval by the Central Bank. As at December 2020, credit unions had a combined mortgage and SME loan book of circa €344 million, an increase of 12% year-on-year.
The revised investment regulations took effect on 1 March 2018. Under these regulations, credit unions are permitted to place their surplus funds that have not been lent to members in a range of investments including accounts in authorised credit institutions, certain bank and corporate bonds, sovereign bonds and investments in Tier 3 Approved Housing Bodies (AHBs) to provide social housing.
SME Lending
I very much welcome the recent announcements that nineteen credit unions, supported by ILCU, CUDA and Metamo, have been approved by the Department of Enterprise, Trade and Employment for participation in the Covid-19 Credit Guarantee Scheme. With their local knowledge, credit unions are ideally placed to support the recovery and providing loans to local businesses is a key element of the recovery. Further development of SME lending in a controlled manner could also assist credit unions in growing and diversifying their loan book.
Access to Finance for Retrofit
As you will be aware the Government significantly increased the funding available to support retrofit in Budget 2021. My officials have been engaging with the Department of Environment, Climate and Communication, the Department of Public Expenditure and Reform, and the Sustainable Energy Authority of Ireland to support increased credit union participation in green retrofit loan schemes.
Current Accounts
The Deputy may also wish to note that under the additional services regime set out in the 2016 regulations credit unions can seek approval from the Central Bank to offer additional services such as current accounts and debit cards. 51 credit unions, representing circa 50% of sector assets, currently have approval to provide Member Personal Current Account Service (MPCAS).
Investment in Approved Housing Bodies
Since 1 May 2018 it has been possible for credit unions to invest in Approved Housing Bodies through a regulated vehicle. I understand that a number projects are being progressed by the sector at present, which will hopefully lead to investment in AHBs.
