Written Answers Nos. 177-210
177. Deputy David Cullinane asked the Minister for Finance if the closing date for employment wage subsidy scheme applications will be extended considering the recent announcement of the scheme being extended into 2022; and if he will make a statement on the matter. [44659/21]
View answer207. Deputy Mary Butler asked the Minister for Finance if he will address the concerns raised in correspondence regarding the EWSS (details supplied); and if he will make a statement on the matter. [45116/21]
View answerI propose to take Questions Nos. 177 and 207 together.
Section 28B of the Emergency Measures in the Public Interest (Covid-19) Act 2020 provides for the EWSS which is an economy-wide enterprise support for eligible businesses in respect of eligible employees. The Finance (Covid-19 and Miscellaneous Provisions) Act 2021, signed into law on 19 July, provides for the extension of EWSS to 31 December 2021, ensuring that the scheme continues to provide ongoing and necessary employment support for eligible businesses as the economy returns to a full re-opening.
For Q3 2021, the Government has decided to broadly maintain the status quo for EWSS, including the enhanced rates of support, with a modification to widen eligibility, and maintaining the reduced rate of Employers’ PRSI of 0.5%.
Decisions in relation to the configuration of the EWSS in Q4 2021 regarding its various aspects will be addressed shortly. Also, no formal decisions have been taken by Government in relation to future of the scheme beyond the end of Q4, 2021.
The Finance (Covid-19 and Miscellaneous Provisions) Act 2021 provides that for employers to be eligible for the EWSS, they must be able to demonstrate that their business will experience a 30% reduction in turnover or customer orders for the calendar year 2021 compared to the calendar year 2019 and that this disruption to normal business is caused by the COVID-19 pandemic.
As regards the concern around a closing date for applications of 15th August, I wish to clarify that no such end-date exists or is provided for in the legislation. However, I should point out that there is a requirement that immediately at the end of each month, from the introduction of the scheme in 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.
To assist employers in conducting a monthly review of its continuing eligibility for the scheme, Revenue is providing an EWSS Eligibility Review Form through its Revenue Online Service (ROS). From 21 July 2021, completing and submitting an EWSS Eligibility Review Form to Revenue will be necessary to avail of EWSS supports, with details of an employer’s monthly eligibility review check to be submitted by the 15th of the following month. For example, the eligibility review undertaken on the last day of September will need to be completed and submitted to Revenue by 15 October.
Timely submission of the form will provide assurance to both employers and Revenue that subsequent EWSS claims are appropriate and in line with the terms of the scheme. This, together with Revenue’s EWSS ongoing real-time compliance program, will reduce the possibility of employers, inadvertently or incorrectly, claiming EWSS amounts to which they are not entitled and having to subsequently repay those amounts to Revenue.
Failure to complete and submit the EWSS Eligibility Review Form that confirms the requisite reduction and related declaration will result in suspension of payment of EWSS claims. Where a business who has not completed and submitted the Form within the required timeframe subsequently does so, and is eligible for the scheme, suspended payments will be released and paid.
Given the scale of resources being disbursed from Exchequer funds under the EWSS, I consider that the eligibility review is the minimum level of due diligence required of employers and Revenue has sought to make the process as user-friendly as possible.
Finally, employers must have a tax clearance certificate to be eligible to join the EWSS and must continue to meet the requirements for tax clearance for the duration of the scheme.
178. Deputy Neale Richmond asked the Minister for Finance if wage supports will be extended for the childcare sector to allow them to operate the pod system and prevent closures; and if he will make a statement on the matter. [44663/21]
View answerSection 28B of the Emergency Measures in the Public Interest (Covid-19) Act 2020 provides for the operation of the Employment Wage Subsidy Scheme (EWSS), which is an economy-wide enterprise support for eligible businesses in respect of eligible employees. It provides a flat-rate subsidy to qualifying employers based on the numbers of paid and eligible employees on the employer’s payroll and charges a reduced rate of employer PRSI of 0.5% on wages paid which are eligible for the subsidy payment.
While the criteria for eligibility for business in general is based on a reduction in turnover, as a result of the pandemic and having regard to the importance of maintaining the provision of childcare facilities so as to enable parents to continue in, or to take up, positions of employment, the legislation provided that childcare businesses in possession of tax clearance and registered in accordance with Section 58C of the Childcare Act 1991 are eligible for the EWSS.
The objective of the scheme is to support all employment and maintain the link between the employer and employee insofar as is possible. The 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, payments of over €4.76 billion and PRSI credit of over €750 million have been granted to 51,400 employers in respect of 656,900 workers.
I have been clear that there will be no cliff-edge to the EWSS and, as the Deputy will be aware from announcements made in June, it has been decided that the scheme is now to be extended until the end of December 2021. For Q3 2021, the Government has decided to broadly maintain the status quo for EWSS, including the enhanced rates of support, with a modification to widen eligibility, and maintaining the reduced rate of Employers’ PRSI of 0.5%.
Decisions in relation to the configuration of the EWSS in Q4 2021 in relation to its various aspects will be addressed shortly. Also, no decisions have been taken in relation to future of the scheme beyond the end of Q4, 2021.
The Government remains fully committed to supporting businesses and employers insofar as is possible at this time.
179. Deputy Neale Richmond asked the Minister for Finance if he has considered introducing a 0% VAT rate for the early years sector; and if he will make a statement on the matter. [44669/21]
View answerThe Vat Consolidation Tax Act 2010 (VATCA) on Schedule 1 Paragraphs (1) (2) and (3), provides for crèche and nursery services exemption for VAT. This exemption also applies to childminding, childcare and child protection/ education services. The exemption applies to childcare provided on a non-profit basis and also to childcare regulated by Parts (VII) or (VIII) of the Child Care Act 1991 even where provided on a profit-making basis. Exemption also covers the provision of related goods.
With regards to the possibility of deducting VAT for the early years sector, Value Added Tax (VAT) is an input tax incurred by an accountable person on purchases made during the course of business. The legislative basis for VAT deductibility is section 59 of the VATCA 2010. Section 59 of the VATCA 2010 sets out conditions required before input VAT may be deducted. To note, section 59 (2) provides that VAT may only be deductible insofar as the goods and services are used for taxable supplies. Only persons making taxable supplies of goods and services or qualifying activities can reclaim VAT charged on goods and services used for the purpose of their taxable trade.
180. Deputy Pearse Doherty asked the Minister for Finance the revised revenue and deficit projections for 2022, 2023, 2024 and 2025 in view of the latest Exchequer tax returns outlined in the Fiscal Monitor for August 2021, in tabular form. [44691/21]
View answerAs the Deputy will appreciate, my Department is currently in the process of updating the full set of fiscal and economic projections as part of Budget 2022, which will be published on Tuesday, October 12th.
Updated medium-term projections for the general government balance will be produced out to 2025, and will take account of all expenditure and revenue developments in the year to date.
181. Deputy Fergus O'Dowd asked the Minister for Finance if his attention has been drawn to a pre-budget submission by an organisation (details supplied) ahead of Budget 2022; and if he will make a statement on the matter. [44696/21]
View answerI can confirm that I received the pre-Budget submission from the organisation concerned.
It was acknowledged by my officials and is being considered in the context of Budget and Finance Bill preparations..
However, as the Deputy may be aware, it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
182. Deputy Denis Naughten asked the Minister for Finance when a review of the primary medical certificate scheme will be concluded; and if he will make a statement on the matter. [44716/21]
View answerThe Disabled Drivers & Disabled Passengers Scheme provides relief from Vehicle Registration Tax and VAT on the purchase and use of an adapted car, as well as an exemption from motor tax and an annual fuel grant.
The Scheme is open to severely and permanently disabled persons as a driver or as a passenger and also to certain charitable organisations. In order to qualify for relief, the applicant must hold a Primary Medical Certificate issued by the relevant Senior Area Medical Officer (SAMO) or a Board Medical Certificate issued by the Disabled Driver Medical Board of Appeal. Certain other qualifying criteria apply in relation to the vehicle, in particular that it must be specially constructed or adapted for use by the applicant.
To qualify for a Primary Medical Certificate an applicant must be permanently and severely disabled, and satisfy at least one of the medical criteria included in Section 92 of the Finance Act 1989.
While I am very aware of the importance of this scheme to those who benefit from it, I am also aware of the disquiet expressed by members of this house and others in respect of the difficulties around access to the scheme. With this in mind I asked my officials to undertake a comprehensive review of the scheme, to include a broader review of mobility supports for persons with disabilities, and on foot of that review to bring forward proposals for consideration.
Department officials have been carrying out preliminary work, including an examination of the main issues which will frame the scope of the review. Officials have also been engaging with other Departments in the context of other ongoing work in mobility supports. In particular, the Department has engaged with the Department of Children, Equality, Disability, Integration and Youth in the context of a working group established early last year by the Minister for Justice before the work was interrupted by the Covid-19 pandemic. The group, under the National Disability Inclusion Strategy 2017-2021, was tasked with a review of transport supports encompassing all Government funded transport and mobility schemes for people with disabilities, to enhance the options for transport to work or employment supports for people with disabilities and to develop proposals for development of a coordinated plan for such provision.
It is envisaged that the review group will be established shortly and will include stakeholders from other Departments, the Disabled Drivers Medical Board of Appeal and other representative groups.
183. Deputy Matt Carthy asked the Minister for Finance if he will bring forward recommendations to address the high costs of insurance cover in the childcare sector. [36212/21]
View answerAt the outset it is important to note that neither I, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products, as this is a commercial matter which individual companies assess on a case-by-case basis. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive) which expressly prohibits Member States from doing so.
Nonetheless, this Government recognises the concerns felt by many groups, including in the childcare sector, regarding the cost and availability of insurance, and has therefore prioritised insurance reform through the Action Plan for Insurance Reform . As the Deputy may be aware, the Government recently published the first Implementation Report, which shows that work is progressing well to implement the Plan, with 34 of the 66 actions contained therein now completed.
One of the key achievements in the first half of this year was the implementation of the Personal Injuries Guidelines, which was realised several months ahead of schedule. These will bring more certainty to claimants and insurers, and as such will reinforce the benefits of using PIAB to settle claims. This, in turn, will reduce the costs of claims.
It is my expectation that insurers will pass on these savings to customers in the shape of reduced premiums across their product lines. Minister for State Fleming has had number of positive engagements with the CEOs of the main insurers operating here on the matter, and they have indicated that they will respond positively to the Guidelines. He will meet with them again later this year to continue to press their commitments in this regard.
Another significant achievement has been the creation of the Office to Promote Competition in the Insurance Market within the Department of Finance, which is chaired by Minister of State Fleming. The Office has held meetings with a wide range of stakeholders including insurance companies, representative bodies, civil society groups and state regulators on issues surrounding competition. Its aim is to help expand the risk appetite of existing insurers and explore opportunities for new market entrants in order to increase the availability of insurance.
Furthermore, the Department is also working closely with the IDA to encourage new entrants into the insurance market so as to improve its overall competitiveness. Officials from both are developing a customised proposal and are identifying potential providers who offer insurance in identified ‘pinch-points’ segments of the Irish market. This includes those coverage areas impacting businesses, consumers and community and voluntary groups.
Finally, I would like to take this opportunity to assure the Deputy that securing a more sustainable and competitive market through deepening and widening the supply of insurance in Ireland remains a key policy priority for this Government. In this regard, it is my intention to work with my Government colleagues to ensure that implementation of the Action Plan can have a positive impact on the affordability and availability of insurance across all sectors in the economy including the critical childcare sector.
184. Deputy Holly Cairns asked the Minister for Finance if south-west County Cork will be designated as an area for inclusion in the regional film development uplift. [33300/21]
View answerSection 481 is intended to act as a stimulus to the creation of an indigenous film industry in the State, creating quality employment opportunities and supporting the expression of Irish culture.
Finance Act 2018 introduced an additional, time-bound, tapering regional uplift to the section 481 film tax credit for productions being made in areas designated under the State aid regional guidelines and subject to conditions regarding limited availability of sufficiently skilled workers in the relevant location. The purpose of the regional uplift is to support the development of new, local pools of talent in areas outside the current main production hubs, to support the geographic spread of the audio-visual sector.
When originally introduced, the regional uplift was to be phased out on a tiered basis, with 5% available in years 1 and 2 (2019 & 2020), 3% available in year 3 (2021), 2% available in year 4 (2022), and 0% available from year 5 on. However the COVID-19 crisis had a detrimental impact on the audiovisual sector, with the majority of production companies suspending activity for a significant portion of 2020. As a result much of the intended incentive effect of the regional uplift in 2020 was lost.
Therefore Finance Act 2020 amended the regional uplift to provide for an additional 5% year in 2021, in effect to replace the incentive year lost as a result of the Covid-related public health measures. The tapered withdrawal of the uplift then restarts, reducing to 3% in 2022, 2% in 2023, and Nil thereafter.
The regional uplift is an approved State-aid. As approved, the regions which may avail of the uplift are limited to areas in Ireland sanctioned to receive regional aid under the EU Regional Aid Guidelines. This currently excludes Dublin, Cork and the Mid-East generally (i.e. Kildare, Meath and Wicklow).
Therefore I am unable to commit to amending the regions which may avail of the regional uplift as this is dictated by the EU Regional Aid Guidelines.
191. Deputy Holly Cairns asked the Minister for Finance if he will direct banks operating in Ireland to provide customers with written banking statements on a monthly basis if requested by the customer. [44901/21]
View answerAll credit institutions in Ireland are independent commercial entities and decisions in relation to the provision of bank statements are made by the boards and management of individual banks.
I am advised by the Central Bank that Chapter 6 of the Consumer Protection Code 2012 ‘Post-sale Information Requirements’ sets out the requirements that regulated entities must follow when providing statements to consumers in relation to deposit, credit and investment accounts, including the consumers right to receive statements on paper.
Provision 6.2 of the Code sets out that in relation to these accounts, a regulated entity must inform a consumer that he or she may request the statements to be provided on paper and, if requested by the consumer, the regulated entity must provide these statements on paper to the consumer.
The Code provides that the regulated entity must provide the consumer with these statements at least annually.
192. Deputy Holly Cairns asked the Minister for Finance the locations of all offices and buildings either owned or used by his Department or by public bodies and agencies that operate under his remit which are usually open to the public to access services. [44912/21]
View answerI can advise the Deputy that none of the buildings owned or used by my Department are usually open to the public to access services.
Details of those bodies under the aegis of my Department which own or use buildings that are usually open to the public to access services are as follows:
The Central Bank of Ireland has offices open to the public at New Wapping Street, North Wall Quay, Dublin 1, and at Adelphi Plaza, George’s Street Upper, Dún Laoghaire, Co. Dublin.
The Financial Services and Pensions Ombudsman (FSPO) is a tenant in Lincoln House, Lincoln Place, Dublin 2 and operates its public office from this premises.
The Irish Financial Services Appeals Tribunal (IFSAT) uses an office suite in a secured complex in Arran Square. The full address is First Floor, 4/5 Arran Square, Lincoln Lane, Arran Quay, Dublin 7. The building which contains the IFSAT offices is open to the public to access services during office hours.
The Office of the Revenue Commissioners has a number of offices usually open to the public to access information and services related to Tax and Customs matters as follows:
- The Customs House, North Block, Dublin 1
- Central Revenue Information Office, Cathedral Street, Dublin 1
- Regional Office, Fairgreen Road, Galway
- Regional Office, Linn Dubh, Blackpool, Cork
- Regional Office, River House, Charlotte’s Quay, Limerick
- Regional Office, The Glen, Waterford
The Tax Appeals Commission is open to the public for appeal services at 2nd Floor Fitzwilliam Court, Leeson Close, Dublin 2.
193. Deputy Colm Burke asked the Minister for Finance the steps being taken to resolve the issues being experienced by importers of used cars from the UK in respect of proving the preferential origin of cars manufactured in the UK prior to 2021; and if he will make a statement on the matter. [44950/21]
View answerI am advised by Revenue that it has been engaged with industry representatives in relation to this matter and that it has provided guidance and advice as to the process by which the necessary proof of origin requirements in relation to the import of used cars from the UK can be satisfied. Importers of second-hand cars from the UK into Ireland can claim a preferential tariff rate under the EU-UK Trade and Cooperation Agreement (TCA) where they can provide proof that the goods they are importing are of UK preferential origin as required by the Rules of Origin in the Agreement.
The proofs required by Revenue include a ‘statement on origin’ from the UK exporter on an invoice or any other document that describes the car in sufficient detail to identify it. Importers requesting the issue of a ‘statement on origin’ by an exporter must satisfy themselves that the exporter will be able to provide supporting documents if requested by UK customs. Alternatively, a claim for a preferential tariff rate may be made on the basis of supporting documents, or records provided by the exporter or manufacturer which are in the importer’s possession. These documents proving the originating status of the car must be available for inspection by Revenue if requested. They must be retained for a period of 3 years from the date of importation.
Under the TCA rules of origin for a UK originating car that is not a hybrid or electric, the value of non-originating material in the production of a car must not exceed 45% of the ex-works price of a car. Alternative product-specific rules of origin apply for electrified and hybrid vehicles with both internal combustion engine and electric motor as motors for propulsion. For these cars, until 31 December 2023, the value of non-originating material used in the production of the car must not exceed 60% of the ex-works price of the car, and from 1 January 2024 until 31 December 2026, the value of non-originating material used in the production of the car must not exceed 55% of the ex-works price of the car.
The proofs required for preferential origin in the TCA are the same as the proofs required in other trade agreements that the EU has entered into, and generally come from the exporter, via the car supplier or manufacturer. Where the supplier/manufacturer provides the exporter with the information necessary to determine the originating status of car, the supplier can do so by means of a ‘supplier's declaration’. Where the information is not provided by the supplier, the exporter can supply other evidence or supporting documents coming from other sources insofar as they contain the necessary information. Such information can include:
- a description of the originating and non-originating materials used in the production process
- the value of the product as well as the value of all the non-originating and/or originating materials used in the production.
I am advised by Revenue that the documentation presented at importation in each instance needs to provide clear assurance as to the origin of a second-hand car being imported. This evidence is assessed by Revenue on a case by case basis and it is not possible to provide approval either on the basis of specific manufacturers or vehicle types.
194. Deputy Mick Barry asked the Minister for Finance his views on the proposal outlined by the President of the European Commission in their State of the Union address to the European Parliament waiving VAT when buying defence equipment developed and produced in the EU; and if he will make a statement on the matter. [44986/21]
View answerI understand that when President von der Leyen referenced VAT it was in the context of improved interoperability for Member States. No actual proposal has been made by the Commission on this matter.
In the event that a proposal is made it will be discussed by officials from every Member State. As the Deputy will be aware proposals can be amended before agreement and and any proposal relating to tax require unanimous agreement from every Member State.
Without a proposal being advanced by the Commission I am not in a position to comment on President von der Leyen's views on waiving VAT to improve interoperability for Member States
197. Deputy Carol Nolan asked the Minister for Finance if he will consider introducing measures enabling agricultural land sales to be subject to a 3% rate of stamp duty; and if he will make a statement on the matter. [45007/21]
View answerThe current stamp duty rate for non-residential property, which includes agricultural land, is 7.5%.
Farming is first and foremost a business, and indeed section 655 of the Taxes Consolidation Act 1997 states "For the purposes of the Tax Acts, farming shall be treated as the carrying on of a trade or, as the case may be, of part of a trade, and the profits or gains of farming shall be charged to tax under Case I of Schedule D."
A range of generous and targeted reliefs from stamp duty, specific to the agricultural sector which remove in full or reduce the rate of stamp duty payable on the acquisition of farmland, are however currently available. These include the young trained farmer stamp duty relief, consanguinity relief and farm consolidation relief. These reliefs are kept under regular review by my department, and are renewed, updated and added to in line with Government policy and prevailing circumstances, when necessary.
I have no plans to introduce a special stamp duty rate for agricultural land.
198. Deputy Carol Nolan asked the Minister for Finance if he will make the young, trained farmers stamp duty relief permanent as this would provide reassurance regarding future costs for farm families planning the transfer of their farm; and if he will make a statement on the matter. [45008/21]
View answerStamp duty relief for young trained farmers provides for a total exemption from stamp duty (the normal rate of stamp duty that arises on the acquisition of non-residential property, which includes farmland, is currently 7.5%) on either the transfer by gift, or purchase, of farmland (and associated buildings) where the recipient is a trained farmer under the age of 35 and meets other specified criteria. It is legislated for in Section 81AA on the Stamp Duties Consolidation Acts 1999 (SDCA 1999), titled “Transfers to young trained farmers”,
As with all such reliefs, it is of course subject to a number of terms and conditions. Section 81AA was introduced in Finance Act 2000, has since been extended on a number of occasions, and is currently due to expire on 31 December 2021.
The primary domestic and EU policy objective of this relief is to encourage the inter-generational transfers of agricultural land, with a secondary purpose being to increase the level and rate of adoption of new more productive and more environmentally friendly farming practices.
The normal extension of tax reliefs is three years, which, if it were to be extended in the upcoming Budget (and associated Finance Bill) would see this relief next expire on 31 December 2024. There have been some calls from the farming sector for longer extensions, of this and other farming focussed reliefs.
My position remains that extending such reliefs in three year increments provides an appropriate balance between delivering a degree of medium-term certainty in respect of the availability of a relief for those planning to avail of it, as well as for those operating it, and the need for the relief to be reviewed regularly by my department (with the assistance of the Department of Agriculture, Food and the Marine) in order to ensure it remains fit-for-purpose, reflects current government policy, continues to be consistent with EU state aid policy, and other considerations.
I expect that my decision on the extension of this relief will form part of my speech introducing Budget 2022.
199. Deputy Carol Nolan asked the Minister for Finance if he will consider introducing an amendment to allow the deduction of pension contributions before the universal social charge is calculated; and if he will make a statement on the matter. [45009/21]
View answerThe Universal Social Charge (USC) came into effect on the 1st January 2011 to replace the Income Levy and Health Levy, neither of which gave relief for pension contributions. Its primary purpose was to widen the tax base and to provide a steady income to the Exchequer to provide funding for public services. It is a more sustainable charge than those it replaced and is applied at a low rate on a wide base.
The USC is an annual tax payable on an individual’s total income in a year, subject to a number of exemptions and reliefs. In particular, an individual is not liable to pay USC where his or her total income in the tax year does not exceed €13,000 and individuals aged 70 and over benefit from a lower rate of USC (provided their total income does not exceed €60,000).
Pensions, other than pensions paid by the Department of Social Protection, form part of an individual’s income for USC purposes in years in which they are paid and are charged to USC.
In computing the USC payable in a year, contributions to a pension fund are not taken into account to reduce the amount of USC payable as would be the case with income tax. As such, the USC payable by an employee is charged on the person’s gross income. The proposal to apply the USC charge after deducting pension contributions would run counter to the principle of keeping USC as broadly based a charge as possible. Its broad base helps ensure that the USC is a stable source of revenue for the State.
Finally, I might take this opportunity to note that Ireland has one of the most progressive personal income tax systems in the world, which plays a crucial role in the process of income redistribution. Our redistributive tax system has been acknowledged by the IMF, the OECD and the ESRI. It is my view that a broad-based, progressive income tax system, where the majority of income earners make some contribution but according to their means, is the most fair and sustainable income tax system in the long term.
200. Deputy Carol Nolan asked the Minister for Finance if his attention has been drawn to the fact that the current 33% rate of capital gains tax continues to act as a significant deterrent to farm investment; if he will provide for a significant reduction in the 33% rate currently applicable to all chargeable gains; and if he will make a statement on the matter. [45010/21]
View answerAs the Deputy may be aware, there are existing reliefs from CGT in relation to the disposal of farming assets and farm restructuring relief.
Farming assets are relieved from CGT where the person disposing of the asset(s) is aged 55 or over and both owned and used the asset(s) for the ten years prior to the disposal. While this relief is commonly referred to as Retirement Relief, it is not necessary to retire from the business or farming in order to qualify. The operation of the relief, as well as the various thresholds available, differ between the disposal of a farm to a child and disposals to anyone other than to a child.
Relief from CGT is also available where an individual disposes of or exchanges farmland in order to consolidate an existing holding. To qualify for the relief, the first sale or purchase must occur between 1 January 2013 and 31 December 2022. The next sale or purchase must occur within 24 months of the first sale or purchase.
In relation to your query regarding a reduced rate of CGT, there are doubts as to the potential level of additional yield this could raise and its sustainability over time. The current economic environment may increase the uncertainty around any potential Exchequer impact. Furthermore, there is a significant risk of deadweight arising from a reduction in the CGT rate, as many assets would be sold regardless of the rate at a particular time.
In terms of the cost of changing the headline rate of CGT, each 1% reduction / increase in the headline rate of CGT is estimated to be €33 million, assuming no behavioural change. A 5% reduction in the CGT rate in a single Budget would have an Exchequer impact of €164 million, assuming no behavioural change.
As with all taxes, CGT is subject to ongoing review, which involves the consideration and assessment of the rate of CGT and the relevant reliefs and exemptions from CGT. I currently have no plans to make a significant reduction in CGT rates at the this time.
201. Deputy Carol Nolan asked the Minister for Finance if he will ensure that low emission slurry spreading equipment has no VAT applied at purchase to encourage the further uptake of these spreading techniques; and if he will make a statement on the matter. [45011/21]
View answerThe VAT rating of goods and services is subject to the requirements of the EU VAT Directive, with which Irish VAT law must comply. In general, the VAT Directive provides that all taxable goods and services are liable to VAT at the standard rate unless they fall within Annex III of the Directive, in respect of which Member States may apply either one or two reduced rates of VAT.
The supply of low emission slurry spreading equipment is not listed in Annex III. There is no provision under the Directive to apply a reduced VAT rate to this equipment.
202. Deputy Carol Nolan asked the Minister for Finance if he will consider introducing measures that provide for the introduction of a new stock relief measure in which farmers would be allowed 100% stock relief on additional expenditure of up to €100,000; and if he will make a statement on the matter. [45012/21]
View answer203. Deputy Carol Nolan asked the Minister for Finance if he will introduce measures enabling farmers to be allowed to write-off capital expenditure on farm buildings and plant and machinery over a period of between three and eight years with a floating allowance of up to 50% allowable in any one year to promote farm investment; and if he will make a statement on the matter. [45013/21]
View answerI propose to take Questions Nos. 202 and 203 together.
When considering the introduction or extension of any tax relief, I must be mindful of the public finances and the many demands on the Exchequer. Tax reliefs, no matter how worthwhile in themselves, lead to a narrowing of the tax base. Under my Department's Tax Expenditure Guidelines, the introduction of new tax incentive measures, or the continuation of measures which are due to terminate, should only be considered in circumstances where there is a demonstrable market failure and where a tax based incentive is more efficient than a direct expenditure intervention.
However, the issues raised in the Deputy's questions are matters that would fall to be considered in the context of the Budget and Finance Bill process, and, as she will appreciate, with three weeks to go to Budget day, it would not be appropriate for me to comment on them at this time.
204. Deputy Carol Nolan asked the Minister for Finance if he has deleted text messages or email correspondence related to Government or official communications at any point since January 2020 to date; and if he will make a statement on the matter. [45036/21]
View answerI wish to indicate to the Deputy that I do not delete text messages or email correspondence related to Government or official communications. However, on occasion, I have deleted texts when they relate to minor operational matters which have been completely dealt with.
205. Deputy Cormac Devlin asked the Minister for Finance if he will consider extending eligibility of the cycle to work scheme to persons who are retired by introducing a self-assessed tax credit in Budget 2022; and if he will make a statement on the matter. [45075/21]
View answerSection 118(5G) of the Taxes Consolidation Act 1997 (TCA 1997) provides for the ‘Cycle to Work’ scheme. This scheme provides an exemption from benefit-in-kind (BIK) where an employer purchases a bicycle and associated safety equipment for an employee.
Under section 118B TCA 1997 an employer and employee may also enter into a salary sacrifice arrangement under which the employee agrees to sacrifice part of his or her salary, in exchange for a bicycle and related safety equipment.
Where a bicycle or safety equipment is purchased under the ‘Cycle to Work’ scheme or through a salary sacrifice arrangement certain conditions must be met, for example:
- The exemption applies to the first €1,250 of expenditure incurred by the employer in obtaining a bicycle and related safety equipment. This exemption limit is increased to €1,500 for pedelecs or ebikes and related safety equipment. Employers may incur costs in excess of these limits, but any such excess will not qualify for the exemption and will be liable to tax. A salary sacrifice arrangement is subject to the same monetary limits.
- The bicycle and related safety equipment must be new and must be purchased by the employer.
- The bicycle and related safety equipment must be used by the employee or director mainly for the whole or part of their journey to or from work.
- An employee or director can only avail of the ‘Cycle to Work’ scheme once in any 4 year period. A salary sacrifice arrangement is subject to the same time limits and any salary sacrifice arrangement entered into must be completed within a 12 month period.
The ‘Cycle to Work’ scheme is only applicable where the bicycle and safety equipment is provided by an employer to either a director or someone in its employment. Thus, where an employer-employee relationship does not exist, for example, in the case of retired individuals such individuals can’t qualify for the scheme. Likewise, salary sacrifice arrangements may only be entered into between an employer and a director or employee.
206. Deputy Cormac Devlin asked the Minister for Finance if he will consider extending tax relief for counselling and psychotherapy as a qualifying health expense in Budget 2022 and the application of VAT exemption now rated at 13.5% on earnings over €37,500 for counsellors and psychotherapists from 2022; and if he will make a statement on the matter. [45076/21]
View answerSection 469 of the Taxes Consolidation Act 1997 provides for tax relief in respect of qualifying health expenses. Section 469 defines "health expenses" as "expenses in respect of the provision of health care including the services of a practitioner".
A practitioner is defined in the section as "any person who is:
- a. registered in the register established under section 43 of the Medical Practitioners Act 2007,
- b. registered in the register established under section 26 of the Dentists Act, 1985, or,
- c. in relation to health care provided outside the State, entitled under the laws of the country in which the care is provided to practice medicine or dentistry there".
In the case of counselling or psychotherapy, the relief is available where the counsellor, psychologist or psychotherapist carrying out the treatment is a qualified practitioner, or where a patient is referred by a qualified practitioner for a diagnostic procedure.
This is similar to the position that applies to other medical expenses, and I am satisfied that the legislation provides sufficient flexibility for expenses that should qualify for tax relief. Accordingly, there are no plans to change these arrangements at this time.
Comprehensive guidance material on medical expenses can be found on Revenue’s website in Tax and Duty Manual Part 15-01-12 www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-12.pdf
With regards to the application of VAT exemption now rated at 13.5% on earnings over €37,500 for counsellors and psychotherapists, the VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. Under domestic legislation, professional medical care services recognised as such by the Department of Health are exempt from VAT. Professional medical care services recognised by the Department of Health are generally those medical care services supplied by health professionals who are enrolled, registered, regulated, or designated on the appropriate statutory register provided for under the relevant legislation in force in the State or equivalent legislation applicable in other countries. This includes health professionals registered under the Medical Practitioners Act 2007, the Nurses Act 1985 and those engaged in a regulated profession designated under Section 4 of the Health and Social Care Professionals Act 2005.
Statutory Instrument No. 170 of 2018 (Health and Social Care Professionals Act 2005 (Regulations 2018) of 2 July 2018 designates psychotherapists and counsellors as a regulated profession and established the Counsellors and Psychotherapists Registration Board. Professional counselling and psychotherapy services provided by persons registered by this Board are exempt from VAT from the date of their registration.
The thirteen members of the Counsellors and Psychotherapists Registration Board were appointed with effect from 25 February 2019.
The Board has begun the substantial body of work which must be undertaken before it is in a position to open its registers. Questions on the establishment of the Counsellors and Psychotherapists Registration Board and their progress in opening their register are a matter for the Minister for Health.
208. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he foresees inflation impacting Ireland’s finances in the foreseeable future; the corrective measures to be taken in this context; and if he will make a statement on the matter. [45154/21]
View answer224. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the causes of inflation have been identified and can be remedied; and if he will make a statement on the matter. [45262/21]
View answerI propose to take Questions Nos. 208 and 224 together.
While Covid-19 had a deflationary impact both in Ireland and internationally last year, inflation has picked up since the beginning of this year. The annual rate of HICP inflation rose to 3 per cent in August – the highest rate since 2008. Similar trends have been observed across advanced economies, with inflation rates of 5.3, 3.2 and 3 per cent recorded in the US, UK and euro area in August.
However, the increase in inflation since the beginning of this year is largely explained by temporary factors, which are expected to fade over time, including ‘base effects’ associated with the normalisation of oil prices following their collapse last spring. More fundamentally, on the demand side the easing of restrictions led to a rapid rebound in consumer spending, in particular spending on goods, in the second quarter. As the economy continues to re-open, demand will pivot towards contact-intensive service sectors.
Supply by contrast has recovered more slowly, with labour shortages in service sectors putting upward pressure on prices. Indeed, signs of ‘opening up’ inflation are already evident, with strong increases in prices in the transport and hospitality sectors recorded in July and August. Shipping bottlenecks and shortages of inputs (e.g. semi-conductors, timber) have also raised production costs, putting further upward pressure on prices. Higher trade costs as a result of Brexit may also have contributed to the recent rise in inflation.
The emergence of inflationary pressures has prompted a debate regarding the likely persistence of these price dynamics as consistently higher inflation could trigger monetary policy changes by the ECB, with implications for the cost of Government borrowing. Looking beyond the short-term, however, it seems likely that these temporary factors will fade as demand stabilises and supply pressures ease. Consistent with this view, the ECB recently reiterated that the current inflationary pressures are largely temporary and inflation in the euro area is still expected to remain below 2 per cent over the medium term. Nevertheless, my Department will continue to closely monitor and analyse inflationary developments and will publish updated inflation and economic forecasts alongside the Budget in the autumn.
210. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that the economic fundamentals continue to be met notwithstanding possible taxation changes or inflation; and if he will make a statement on the matter. [45156/21]
View answerPrior to the pandemic Irish economic fundamentals were strong, with robust growth, a labour market close to full employment, and surpluses in the underlying current account and the public finances. The outbreak of the pandemic turned the economy on its head in the space of a few weeks however, with the introduction of Covid-19 restrictions resulting in a sharp contraction in economic activity last year. However, in keeping with the pattern seen in other countries, the economy rebounded as restrictions were eased.
As restrictions were lifted in the second quarter the domestic economy recovered strongly. Modified domestic demand, a proxy for the domestic economy, grew by almost 8½ per cent and surpassed the level immediately preceding the pandemic for the first time since the start of the crisis. This rebound in the economy was supported by consumer spending which increased by 12½ per cent in the second quarter, and the construction sector which grew by 23 per cent as restrictions were eased.
Although the fundamentals of the domestic economy remain strong there are challenges ahead involving possible international taxation changes and the risk of more persistent inflation. Government is currently planning for an expected impact on receipts from forthcoming changes to the international tax regime, with my Department estimating a loss of €2 billion in corporation tax revenue by 2025. As I have stated on many occasions, this underlines the importance of not building permanent expenditure commitments on volatile windfall revenue. Base broadening policy reforms have made Ireland’s tax system far more stable and resilient to external shocks – despite an unprecedented global pandemic, tax receipts only fell by 3.6 per cent last year.
Inflation is another potential concern with the annual rate of HICP inflation rate rising to 3 per cent in August – the highest rate since 2008. However, the recent rise in inflation is largely explained by one-off and temporary factors, which are expected to fade over time. Consistent with this view the ECB recently reiterated that the recent rise in euro area inflation has largely been driven by temporary factors and while inflation will likely remain elevated this year and next, it is expected to remain below 2 per cent over the medium term.
I am optimistic that the economic recovery will continue as our well educated work force and pro-enterprise culture mean that the long term fundamentals of our economy are strong and will facilitate continued growth. While the effects of Covid-19 have been severe, our resilience and strength comes from being an economy that remains open to investment and facilitates trade across our borders. This has proven to be the fundamental strength of the Irish economy over decades and is still the case today.
