Written Answers Nos. 106-124
106. Deputy Pearse Doherty asked the Minister for Finance if he has or will make a submission to the relaunched review of EU economic governance in particular with regard to fundamental reform of the Stability and Growth Pact; and if so, the reforms he and the Government will argue in favour of. [54425/21]
View answerAs the Deputy is aware, the European Commission published a Communication on October 19th which formally relaunched the public debate on the EU economic governance framework. Let me state at the outset that I welcome the Commission’s communication, as I believe that the timing is right for Europe to consider, and to debate, the future of our fiscal framework.
The discussions on reform of the framework will be challenging, with a wide diversity of views across Member States. While these discussions will of course involve all 27 EU countries, as President of the Eurogroup, I will be working to try and find consensus on a way forward among euro area Member States. I am, therefore, conscious of the need to listen to and reflect the diversity of views across euro area countries.
Of course, as Ireland’s Minister for Finance, I also have a national role and, on this basis, it is my intention that a submission be made to the Commission’s public consultation on the future of the EU economic governance framework.
In framing our submission, I am conscious that the upcoming discussions will take place against the backdrop of a number of fiscal challenges. The most immediate of these is the challenge posed by the impact of the Covid-19 pandemic on the public finances of EU Member States. Strong coordinated policy actions at EU and national levels (including the activation of the General Escape Clause of the Stability and Growth Pact) helped to reduce the societal and economic impact of the pandemic. While these measures were undoubtedly necessary and prudent, they have nevertheless resulted in significant increases in deficit and debt ratios throughout the EU.
Furthermore, a number of more medium-term fiscal and structural challenges were already visible on the horizon before the pandemic hit. Amongst these are the challenges posed by the so-called ‘dual transitions’ to a digital and green economy. Concurrently, population ageing over the coming decades will also have a significant impact on the public finances.
The structural budgetary challenges we are now facing, along with the economic interdependencies and risks which existed when the European Monetary Union was established, all speak to the continued need for fiscal rules at a European level. However, such rules must be appropriately calibrated in order to remain credible. The rules must also contain a degree of flexibility, to allow Governments to tackle unanticipated shocks such as the Covid-19 pandemic. Finally, any reformed fiscal framework must be able to accommodate the very significant public investment which will be needed to facilitate the dual transitions in a manner that ensures the sustainability of Member States’ public finances.
Ultimately, effective economic and budgetary coordination remains a key building block for ensuring stability and growth in the EU and for strengthening the Economic and Monetary Union. Maintaining the sustainability of public finances as an objective of the fiscal rules is essential in this respect.
108. Deputy Neasa Hourigan asked the Minister for Finance the controls he can put in place in relation to the marketing of crypto assets ahead of any EU directives coming into force, for example, the Markets in Crypto-assets and amending directive; and if he will make a statement on the matter. [54117/21]
View answerThe Central Bank has issued warnings to consumers in 2017 and 2018, with the latest advice issued in April of 2021, on the risks of buying virtual currencies.
The Central Bank warnings outline the risks of buying or investing in “virtual currencies” (VCs): extreme volatility; absence of guarantees and safeguards associated with regulated financial services; and the possibility of losing all invested capital.
The warnings clearly state that virtual currencies such as Bitcoin and Ether have no legal tender status to be used as means of payment, and are not guaranteed or regulated by the Central Bank of Ireland, or any other central bank in the EU.
As of 23 April 2021, the providers of certain services in relation to virtual assets will have to meet anti-money laundering and countering of financing of terrorism (AML/CFT) obligations, under part 4 of the CJA 2010 to 2021.
All VASPs (virtual asset service providers) established in Ireland are required to register with the Central Bank for these AML/CFT purposes.
Finally, the Competition and Consumer Protection Commission also updated their advice on purchasing and investing in digital and cryptocurrencies during June of this year, clearly outlining the risks.
109. Deputy Violet-Anne Wynne asked the Minister for Finance the schemes and supports that are available at present for disabled drivers to acquire and or adapt their own car. [53063/21]
View answerThe Department of Finance does not provide any grants, schemes or supports for the purchase of a vehicle.
It administers the Disabled Drivers and Disabled Passengers (Tax Concessions) Scheme which provides relief from VAT and VRT (up to a certain limit) set against the purchase and use of an adapted car, and for transport of a person with specific severe and permanent physical disabilities. The Scheme also provides payment of a Fuel Grant, and an exemption from Motor Tax. 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.
The relief from Value Added Tax and Vehicle Registration Tax are generous in nature amounting to up to €10,000, €16,000 or €22,000, depending on the level of adaption required for the vehicle.
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.
To qualify for a Primary Medical Certificate an applicant must be permanently and severely disabled. The terms of the Disabled Drivers and Disabled Passengers Scheme set out six medical criteria, at least one of which is required to be satisfied in order to obtain a Primary Medical Certificate. The criteria are as follows:
- Be wholly or almost wholly without the use of both legs.
- Be wholly without the use of one of their legs and almost wholly without the use of the other leg such that they are severely restricted as to movement of their lower limbs.
- Be without both hands or without both arms.
- Be without one or both legs.
- Be wholly or almost wholly without the use of both hands or arms and wholly or almost wholly without the use of one leg.
- Have the medical condition of dwarfism and have serious difficulties of movement of the lower limbs.
110. Deputy Ged Nash asked the Minister for Finance the status of his plans regarding double tax rules for cross-Border workers (details supplied) who are based in Ireland given the temporary Covid-19 waiver on these rules ends in January 2022; and if he will make a statement on the matter. [54319/21]
View answerThe Deputy is referring to the taxation of cross-border workers who are Irish resident but commute to work in another jurisdiction and claim relief in accordance with section 825A Taxes Consolidation Act (TCA) 1997, which is commonly referred to as Trans-Border Workers’ Relief.
The relief effectively removes the foreign employment income from a liability to Irish tax where foreign tax has been paid on that income (and such foreign tax is not refundable). In simple terms, the effect of the measure is that Irish tax will only arise where the individual has income other than income from a foreign employment.
The relief applies subject to certain conditions, which includes the requirement that the duties of a qualifying employment are performed wholly outside the State in a country with which Ireland has a Double Taxation Agreement. There is an exception in respect of merely incidental duties which may be performed in the State.
I am advised by Revenue that, in light of the unprecedented circumstances arising due to the Covid-19 pandemic and the resulting public health restrictions to limit movement, for the tax years 2020 and 2021, a concessional treatment for such taxpayers would apply, whereby if employees are required to work from home in the State due to Covid-19, such days working at home in the State will not preclude an individual from being entitled to claim this relief, provided all other conditions of the relief are met. The effect of this concessional treatment allows individuals resident in the State and working for a non-resident employer, carry out their employment duties in the State and continue to pay tax in another jurisdiction.
I am aware that there have been calls to place this concessional treatment on a statutory footing so that individuals who are resident in the State, but work outside the State for a non-resident employer, can continue to avail of the relief if they exercise their duties of employment in the State.
During the debates on Finance Bill 2020, I undertook that this matter would be examined as part of the work of the Tax Strategy Group (TSG) for 2021. The resultant paper was discussed by the TSG as part of its deliberations on 8 September last. The examination encompassed very detailed consideration of all relevant matters including the equity of treatment between Irish residents who pay tax in the State, the competitive position of Irish employers and the established principles of international tax. The review identified a number of significant concerns from a policy perspective when having regard to the interest of the wider body of taxpayers encompassing Irish resident employees and employers. The full TSG paper (TSG Paper 21/04) can be located here - www.gov.ie/en/collection/d6bc7-budget-2022-tax-strategy-group-papers/.
At present, I and my Department continue to give this matter consideration having regard to the comprehensive review carried out under the auspices of the TSG and the fundamental points which the TSG paper raises.
It should also be noted that Ireland has an extensive network of Double Taxation Agreements which have the effect of eliminating double taxation on the same income source. Relief is generally afforded by way of exemption or granting relief for foreign tax paid in the country of residence of the individual.
To answer the Deputy’s specific question relating to double-tax rules for cross-border workers, in the event that an individual does not qualify for Trans-Border Workers’ Relief he/she may be entitled to relief from double taxation under the terms of the relevant Double Taxation Agreement, thus a double taxation charge would not arise in such circumstances.
It should also be noted that Ireland is exceptional in having section 825A of the TCA in place; such a measure does not exist in many European countries that share land borders.
111. Deputy Ged Nash asked the Minister for Finance the percentage of workers aged under 25 years of age whose wages are subsidised through the employment wage subsidy scheme; if he will provide a breakdown on an economic sector by sector basis in respect of the total number of firms in receipt of the scheme as of 1 November 2021; and if he will make a statement on the matter. [54317/21]
View answerI am advised by Revenue that there were approximately 310,000 employees supported by the Employment Wage Subsidy Scheme (EWSS) in September 2021, which is the most recent month for which complete payslip information from employers is available for analysis. Of these, 85,000 (27%) were aged under 25.
I am further advised by Revenue that there were approximately 27,000 employers supported by EWSS in September 2021, a breakdown by sector is provided in the table below.
|
Sector |
% of Employers |
|
Accommodation and food service activities |
23.6% |
|
Wholesale and retail trade |
12.4% |
|
Other services activities |
11.1% |
|
Construction |
9.2% |
|
Professional scientific and technical activities |
7.3% |
|
Human health and Social Work activities |
6.7% |
|
Education |
6.3% |
|
Manufacturing |
4.7% |
|
Administrative and support service activities |
4.3% |
|
Arts, entertainment and recreation |
4.2% |
|
Transportation and Storage |
3.5% |
|
Information and Communication |
2.5% |
|
Real estate activities |
1.4% |
|
Agriculture, Forestry and Fishing |
1.0% |
|
Financial and Insurance Activities |
0.6% |
|
Other |
1.2% |
Revenue is publishing, through its website on a weekly basis, detailed analysis of EWSS recipients and the levels of support provided to employers and employees. This analysis continues to be updated to include October and November data as it becomes available. Further details can be located at the following link: www.revenue.ie/en/corporate/information-about-revenue/statistics/number-of-taxpayers-and-returns/covid-19-support-schemes-statistics.aspx.
112. Deputy James Lawless asked the Minister for Finance the measures he is taking to bring about reduced premia in the insurance sector; and if he will make a statement on the matter. [54340/21]
View answer149. 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. [54320/21]
View answer157. Deputy Aodhán Ó Ríordáin asked the Minister for Finance if her attention has been drawn to the impact of high insurance costs in the arts sector. [47793/21]
View answer254. Deputy Matt Carthy asked the Minister for Finance his proposals to address the high insurance costs incurred by many facilities providing tourism services. [47949/21]
View answer283. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he and his Department continue to monitor developments in the insurance industry with particular reference to the need to provide insurance cover for all types of insurance at viable rates; and if he will make a statement on the matter. [54734/21]
View answerI propose to take Questions Nos. 112, 149, 157, 254 and 283 together.
I am aware that the affordability of insurance is an issue of concern for many groups, including the sectors referred to in the Deputies’ questions. As the Deputy will be aware, neither I nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products, nor do we have the power to direct insurance companies to provide cover to specific businesses or individuals. This position is reinforced by the EU Solvency II Directive framework.
However, the Government keenly understands the importance of consumers and businesses being able to access affordable insurance, and is working to improve the cost and availability of this vital financial service through 66 cross-departmental actions under the Action Plan for Insurance Reform. This work is being prioritised by the Cabinet Committee Sub-Group on Insurance Reform, which is chaired by the Tánaiste and Minister for Enterprise, Trade and Employment. The Sub-Group meets regularly to review the implementation of this reform agenda, which is progressing well. The Implementation Report published last July shows that 34 of the 66 actions were complete.
In relation to recent price changes for insurance, I would note that, according to Central Statistics Office (CSO) data for September 2021, motor insurance prices are continuing to decline. Motor insurance prices in September were 36.6% lower than their peak in July 2016; and 8.4% lower than when the Government’s Cabinet Committee Sub-Group on Insurance Reform was established in September 2020. Notwithstanding this, I would like to assure the Deputies that work remains ongoing across Government to deliver further elements of the Action Plan, which will be important for the sectors referenced in the question.
This includes legislative proposals to reform the law on Occupiers’ Liability and the Duty of Care, which are expected to be brought to Government for approval shortly. The Department of Enterprise, Trade and Employment is also working to bring forward legislation to enhance the role of the Personal Injuries Assessment Board, which should lead to an increased number of claims being settled more cost-effectively. Minister of State Fleming and I will continue to work with colleagues to drive forward these reforms with a view to improving the insurance environment for consumers, businesses and community and voluntary groups.
113. Deputy Peadar Tóibín asked the Minister for Finance if his Department has made projections in relation to the expected change in corporation tax receipts. [54432/21]
View answerI am taking it that this question has been tabled in the context of Ireland joining 135 other member jurisdictions of the OECD/G20 Inclusive Framework in reaching a high level agreement on a two-pillar solution to address tax challenges arising from the digitilisation of the economy.
There are two pillars to the OECD agreement. Pillar One will see a reallocation of a proportion of profits to the jurisdiction of the consumer. This means that, in effect, corporate tax revenue streams which now flow to the Irish Exchequer will flow to the Exchequers of other countries when implemented. Pillar Two will see the adoption of a new global minimum effective tax rate of 15% applying to multinational companies (MNEs) with global revenues in excess of €750m.
My Department and the Revenue Commissioners has estimated that the cost of the agreement could be up to €2 billion annually when both pillars come into effect. This figure is included in the Stability Programme Update, the Summer Economic Statement (SES), and in the medium term forecast included in Budget 2022. Estimating the cost is an extremely challenging exercise, both in terms of timing and magnitude. For the purpose of calibrating this medium-term forecast, the impact of international tax reform is very tentatively estimated – in terms of revenue foregone – at €2 billion relative to baseline by 2025; the revenue impact is phased in from 2023.
In respect to the exercise to estimate the cost of the agreement, it is important to note that there have been significant changes in recent months to the original proposals, both in relation to Pillar One, in which there is now a higher re-allocation than was originally foreseen, and on Pillar Two through the adoption of a 15% minimum rate as well as the introduction of substance based carve-outs based on the carrying value of assets and payroll. The substance based carve-out is expected to offer relief to taxpayers from the minimum effective rate but this is difficult to estimate as it will be firm specific. Indeed, predicting how individual companies may react to a potential new tax regime is very difficult.
It should also be stressed that while there is now a broad high level agreement in place on the main features of a solution, discussions are continuing and will continue into 2022 on how the agreement will be implemented in practice. For instance, the discussions on Pillar One will need to examine the rules in respect to reallocation from entities within a group. Further, it remains to be seen what additional tax will be paid by MNEs under Pillar Two when substance based carve-out rules are applied which can reduce the effective tax rate paid by an MNE. In terms of further complexity, the final agreement on these carve-outs include a 10 year transition period where the carve-out percentage is reduced year-on-year.
A further consideration is that although there are two pillars to this Agreement, it is important to understand that they are intended as integral parts of a single agreed solution. How they interact and the degree to which this interaction influences business behaviour is very difficult to predict.
For all these reasons, I do not believe that I yet have sufficient grounds to revise the working estimate of a potential annual cost of up to €2 billion that I have used in assessing the potential impact of the agreement on the public finances.
As technical discussions on the implementation framework continue, officials from my Department and from Revenue will keep the position under review and, when and if necessary, my Department will provide an update on how the agreement is expected to impact the public finances.
114. Deputy Steven Matthews asked the Minister for Finance if discussions are expected with senior officials of a bank (details supplied) regarding the future use of its soon to be vacated units in towns and villages across Ireland; if consideration has been given to the repurposing of these units as community digital hubs; and if he will make a statement on the matter. [54245/21]
View answerAs the Deputy may be aware, as Minister for Finance, I have no role in the commercial decisions made by any bank in the State. This includes banks in which the State has a shareholding.
Decisions in this regard, including the management of branch premises, 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 Bank of Ireland Relationship Framework can be found on my department's website.
115. Deputy Richard Boyd Barrett asked the Minister for Finance if he will consider abolishing the local property tax and replace the tax with a graduated second, third, fourth and so on home tax ensuring that the family home is not subject to a property tax in view of increasing inflation; and if he will make a statement on the matter. [54398/21]
View answerThe Finance (Local Property Tax) (Amendment) Act 2021 fulfils the Programme for Government commitment to bring forward legislation in relation to the Local Property Tax (LPT) on the basis of fairness and that most homeowners will face no increase in their LPT liability. The Act provides for a cut in the main rate of the tax and widening of the valuation bands to make the changes affordable. This means that the majority of homeowners are likely to see either a decrease or no change in their LPT liability. Where increases arise, the majority will be a single band, notwithstanding the significant increases in property values since 2013.
The LPT legislation provides for the possibility of deferring the charge to LPT in certain circumstances to assist individuals who may have difficulty paying the tax. A qualifying person may opt to defer, or partially defer, payment of the tax. Where a person qualifies for a full deferral then 100 per cent of the liability can be deferred. Where a person qualifies for partial deferral, then 50 per cent of the liability can be deferred. The balance of 50 per cent of the tax must be paid. The deferred tax remains as a charge on the property and must be paid before a sale or transfer can be completed. Interest is charged on the deferred amount. The Finance (Local Property Tax) (Amendment) Act 2021 provides that for 2022 the deferral thresholds will increase to €18,000 for a single owner and €30,000 for a couple. The thresholds for 50 per cent relief are €30,000 (single) and €42,000 (couple). In addition, the rate of interest charged on deferred LPT liabilities will reduce from 4 per cent to 3 per cent annually.
Where a liable person does not qualify for or does not wish to avail of a deferral, phased payment of LPT can be used to assist with budgeting. The Government is aware of the difficulties facing many individuals and families, and for this reason a wide variety of methods for payment of the LPT is available from which liable persons can choose the method most suited to their individual circumstances. Throughout the pandemic, Revenue has engaged extensively with individual taxpayers experiencing financial pressures due to the pandemic to agree flexible arrangements that best suit their circumstances, including in respect of LPT liabilities and will continue to fully engage with taxpayers facing financial difficulties.
The LPT is an effective, stable and sustainable source of revenue for the Local Government Sector. All property owners benefit from the essential local services LPT helps to fund. Accordingly, it is equitable that the cost of providing the services should be shared by as broad a spectrum of owners as possible. It is unlikely that a charge levied solely on second and subsequent homes would generate sufficient income to replace the revenue from LPT. This funding gap would ultimately need to be met by the Exchequer in the form of increased general taxation. Landlords faced with the prospect of increased charges could, in turn, pass on the resulting costs to tenants. This would exacerbate the already difficult housing situation, particularly in large urban centres.
I have no plans along the lines suggested in the Deputy’s question.
117. Deputy Neale Richmond asked the Minister for Finance the measures taken in the Finance Bill to adjust tax bands; and if he will make a statement on the matter. [54310/21]
View answer121. Deputy Jennifer Carroll MacNeill asked the Minister for Finance the changes that have been made to tax bands and tax credits; the expected benefit of same to persons; and if he will make a statement on the matter. [54342/21]
View answerI propose to take Questions Nos. 117 and 121 together.
In Budget 2022 I announced a substantial income tax package and some changes to the Universal Social Charge (USC) that will ensure that every income-earner paying income tax or USC in 2022 will see an increase in their net income in 2022, all other factors being equal. This will support living standards as the economy continues to recover, while preserving a broad and stable income tax base, to ensure that our personal taxation system is both competitive and resilient.
From 1 January 2022, it is proposed that the main tax credits, that is, the personal tax credit, the employee tax credit and the earned income credit will be increased by €50 each to €1,700, broadly a 3% increase. In addition, it is proposed that the standard rate cut-off point for a single person will be increased by €1,500 to €36,800 (4% increase), with commensurate increases in the bands applying to married persons and civil partners.
In relation to the USC, to ensure that a full-time worker on the minimum wage, who will benefit from the increase in the hourly minimum wage rate from €10.20 to €10.50, will remain outside the top rates of USC, the ceiling of the band for the 2% rate of USC will be increasing from €20,687 to €21,295 with effect from 1 January 2022. In addition, the reduced rate of USC for medical card holders will be extended for a further year.
To answer the Deputy's specific question regarding the expected benefit of these changes, I would note that the precise amount by which an individual will benefit will be dependent on their personal situation, such as their earnings, marginal tax rate and the tax credits they are eligible to claim based on their individual circumstances. However the changes announced in the Budget will ensure that, all those income earners currently paying income tax and/or USC should expect to see a benefit.
The following tables set out the increases to the tax credits, tax bands and USC thresholds as announced in Budget 2022.
Further details can also be located on Revenue's website- www.revenue.ie/en/corporate/press-office/budget-information/2022/budget-summary-2022.pdf.
Tax Credits
|
Tax Credit |
2021 € |
2022 € |
|
Single Person |
1,650 |
1,700 |
|
Married or in a Civil Partnership |
3,300 |
3,400 |
|
Employee Tax Credit |
1,650 |
1,700 |
|
Earned Income Tax Credit |
1,650 |
1,700 |
|
Widowed Person or Surviving Civil Partner (without qualifying child) |
2,190 |
2,240 |
Tax Rates and Tax Bands
|
Personal Circumstances |
2021 € |
2022 € |
|
Single or Widowed or Surviving Civil Partner (without a qualifying child) |
35,300 @20% Balance @40% |
36,800 @20% Balance @40% |
|
Single or Widowed or Surviving Civil Partner (qualifying for single person child carer credit) |
39,300 @20% Balance @ 40% |
40,800 @20% Balance @ 40% |
|
Married or in a Civil Partnership, one Spouse or Civil Partner with income |
44,300 @ 20% Balance at 40% |
45,800 @ 20% Balance @ 40% |
|
Married or in a Civil Partnership, both Spouses or Civil Partners with income |
44,300 @ 20% With increase of 26,300 max. Balance @ 40% |
45,800 @ 20% With increase of 27,800 max. Balance @ 40% |
USC Thresholds
|
2021 € |
Rate |
2022 € |
Rate |
|
Income up to 12,012 |
0.5% |
Income up to 12,012 |
0.5% |
|
Income from 12,012.01 to 20,687 |
2.0% |
Income from 12,012 to 21,295 |
2.0% |
|
Income from 20,687.01 to 70,044 |
4.5% |
Income from 21,295.01 to 70,044 |
4.5% |
|
Income above 70,044 |
8.0% |
Income above 70,044 |
8.0% |
119. Deputy Róisín Shortall asked the Minister for Finance his views on whether Ireland’s tax system is consistent with Ireland's stated commitment to equitable development and working with poorer countries to move beyond a reliance on aid given the recent revelations by an organisation (details supplied) regarding the tax avoidance activities of a company which show definitively that taxable profits are being siphoned from poorer countries such as Nepal and Ethiopia; and if he will make a statement on the matter. [45481/21]
View answer159. Deputy Neasa Hourigan asked the Minister for Finance the plans his Department has to address the apparent tax avoidance identified in research by an organisation (details supplied); and if he will make a statement on the matter. [54116/21]
View answerI propose to take Questions Nos. 119 and 159 together.
As I stated previously in a prior parliamentary question 45726/21 in September.
I am aware of recent media report regarding a publication concerning the tax arrangements of an individual taxpayer. From the outset, I must state that it is not appropriate for the Minister for Finance to comment on the tax affairs of individual businesses.
I am informed by the Revenue Commissioners that Revenue uses a range of resources to identify instances of tax avoidance, which would include tax avoidance arising from the arrangements described in the Agreement between the Competent Authorities of Ireland and Malta.
Those arrangements involved an exploitation of a mismatch of Irish and Maltese rules in relation to company residence and domicile, which could have led to income falling out of charge in Ireland and in Malta, resulting in double non-taxation of the income concerned. I cannot comment on the arrangements of any specific taxpayer. However, arrangements as described in the Christian Aid report are not arrangements that involve a mismatch of residence and domicile rules that would lead to double non-taxation, through amounts falling out of charge in both Ireland in Malta.
The purpose of the Ireland-Malta Competent Authority Agreement was to deter the arrangements described in the Agreement. The Christian Aid report appears to confirm that the Agreement was effective in achieving that purpose— and I am informed by the Revenue Commissioners that they have not identified information that would suggest otherwise. As regards those arrangements or any other aggressive tax planning, I have repeatedly stated that I will not hesitate to propose legislation to address tax avoidance, where it may not be possible to address arrangements within the existing code. The Revenue Commissioners liaise with my Department on that basis, in relation to potential loopholes they identify.
The Revenue Commissioners cannot comment directly or indirectly on the arrangements of a specific taxpayer. I am informed by the Revenue Commissioners – as a general statement and without their reference to, or implication in respect of, any specific case – that they do not provide confirmations or opinions to taxpayers on matters in respect of which they suspect there may be a tax avoidance purpose.
Revenue is strongly committed to identifying and challenging tax avoidance, including schemes that would seek to rely on Ireland’s Double Taxation Agreements. Revenue has reviewed Ireland’s Double Taxation Agreement (DTA) network in relation to the possibility of arrangements, similar to those addressed by the Ireland-Malta Competent Authority Agreement, being implemented using a different DTA. Specifically, Revenue has considered Ireland’s DTA with the United Arab Emirates (UAE), which has been cited in that regard.
I am further informed by the Revenue Commissioners that, in the absence of a generally-applicable corporate tax in the UAE, the UAE DTA contains provisions designed to prevent companies from qualifying as residents of the UAE for the purposes of the DTA. While Revenue will remain vigilant for indications of avoidance, they consider that DTA has been designed to prevent such possible use and that the risk of implementation of arrangements, similar to those addressed in the Competent Authority Agreement with Malta, is low in relation to the UAE DTA and other DTAs designed for restricted application.
For my part, I have repeatedly demonstrated that I am committed to taking action to ensure the Irish tax code is in line with new and emerging international tax standards as agreed globally. The January 2021 Update to Ireland’s Corporation Tax Roadmap highlights the actions that have already been taken and will continue to be taken in this process of corporation tax reform.
In this respect, it is important to remember that in recent Finance Acts, the Oireachtas has;
- substantially progressed transposition of the Anti-Tax Avoidance Directives through the introduction of Controlled Foreign Company rules, and anti-hybrid rules;
- introduced defensive measures against listed jurisdictions through enhanced Controlled Foreign Company Rules;
- updated transfer pricing rules;
- introduced legislation for OECD BEPS measures on mandatory disclosure rules; and
- substantially widened the scope of the Exit Tax regime — with the result that, on the migration of a company from Ireland to another country of residence, the increase in the value of assets to the date of the company’s departure will be chargeable to Irish tax.
It should also be recognised that Ireland has a longstanding General Anti-Avoidance Rule, which goes beyond the standard required in the EU Anti-Tax Avoidance Directives.
Further, in the Finance Bill 2021, we will complete the transposition of the Anti-Tax Avoidance Directives, with the introduction of interest limitation rules and anti-reverse hybrid rules. It is intended that these rules will take effect from 1 January 2022.
This reform is not complete. As set out in the update to the Corporation Tax Roadmap, there are commitments over the coming years to introduce a series of measures to further reform our corporate tax code, including through the introduction of measures to apply to outbound payments, further measures in regard to listed jurisdictions, as well as publishing a tax treaty policy statement with a particular focus on developing countries.
120. Deputy Pearse Doherty asked the Minister for Finance the total number of employees with gross pay in excess of €100,000, €200,000 and €300,000 who availed of tax relief on their pension contributions in 2019; his views on whether this is a judicious use of resources; if he will consider a review of the tax relief on pension contributions; and if he will make a statement on the matter. [54429/21]
View answerI am advised by Revenue that data in relation to incomes for 2019 is still being processed and consolidated. Once completed, analysis can be carried out as requested by the Deputy, reconciling taxpayers to a taxpayer unit basis (where jointly assessed couples are counted as one unit) and accounting for all income sources and pension contributions made. This analysis, which is necessary to estimate a cost associated with employee pension contributions at a taxpayer unit level, is anticipated to be completed by end 2021.
As this is new data provided for by PAYE Modernisation, 2019 will be the earliest year for which this data will be available.
To answer the Deputy’s question if tax relief on pension contributions in respect of certain salary ranges is a judicious use of resources, I would make the following general observations. Like the majority of OECD countries, in terms of the tax treatment of supplementary pensions, Ireland operates an Exempt, Exempt, Tax (EET) system. This means that contributions to pensions are exempted from income tax (subject to age-related percentage and income limitations), pension fund gains are exempted from income tax but income from pension drawdown is taxed.
The Inter-Departmental Pension Reform and Taxation Group (IDPRTG) recently reviewed the cost of funded supplementary pensions to the Exchequer. In its report published in November 2020, it noted that in common with most developed countries, fiscal support for private pension saving exists in Ireland. This support is provided by way of tax relief, with its inclusion in the tax code predating the foundation of the State.
It observed that in providing incentives, States are motivated by the policy objective of increasing aggregate savings or encouraging citizens to provide for their retirement, by deferring a sufficient amount of income and consumption today to provide for their later years. This is based on an assumption that individuals require an incentive to lock-up savings until they retire given that alternative saving vehicles allow on-going access.
It also noted that the tax treatment of pensions represents one of the largest Exchequer tax expenditures. However, in common with other countries operating an EET system, the exact cost of this is difficult to quantify due to the general nature of tax expenditures and also specific pension-related challenges, such as limited data availability on some features of the pension regime in Ireland.
Overall, the policy objective for tax relief on pension contributions is to encourage individuals to save for retirement, to meet a target level of supplementary pension coverage and an income replacement target, and to assist in preventing an over reliance of State support for people in later life.
In my view, we should seek to make overall progress in the area of pension provision in a manner that is comprehensive and surefooted. That broad approach is what has informed recent action in this area including the Roadmap for Pensions Reform 2018-2023 which, in turn, led to the work of the Interdepartmental Pensions Reform and Taxation Group and the separate work of the Pensions Commission. Indeed, the Commission on Taxation and Welfare has also been charged with considering the output from the Pensions Commission regarding sustainability and eligibility issues in respect of State Pension arrangements.
122. Deputy Colm Burke asked the Minister for Finance the number of persons who have availed of the help-to-buy scheme in Cork city and county in each of the years 2018 to 2020 and to date in 2021, in view of the extension to the scheme in Budget 2022; and if he will make a statement on the matter. [54375/21]
View answerThe Help to Buy (HTB) incentive is a scheme to assist first-time purchasers with a deposit they need 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 limits outlined in the legislation. Section 477C Taxes Consolidation Act (TCA) 1997 outlines the definitions and conditions that apply to the HTB scheme.
I am advised by Revenue that there have been approximately 3,500 applications for the Help to Buy (HTB) scheme in Cork city and county that have reached claim stage since the inception of the scheme in 2017 (500 in 2017, 550 in 2018, 800 in 2019 and 800 in 2020). There have been 850 claims in the first 9 months of 2021.
Revenue publishes detailed annual and monthly statistics on the update of the HTB on its website, available at www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/htb/htb-yearly.aspx. and www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/htb/htb-monthly.aspx.
As the Deputy will be aware, in my recent Budget speech, I indicated that Finance Bill 2021 would include a provision extending the Help to Buy scheme for one further year to the end of 2022 and that the scheme will be formally reviewed in the course of 2022.
124. Deputy Joe Flaherty asked the Minister for Finance if he will report on recent engagements he has had with the insurance sector in relation to the high cost of insurance; and if he will make a statement on the matter. [54349/21]
View answerFirstly, I wish to reassure the Deputy that I understand the difficulty facing individuals, businesses and community and voluntary groups, regarding the cost and availability of insurance. Accordingly, Government has prioritised insurance reform through the Action Plan for Insurance Reform. As the Deputy may be aware, the first Action Plan Implementation Report was published last July, and 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. Early data from PIAB suggests the Guidelines are having desired impact with awards level down by over 40%. It is my expectation that insurers will pass on these savings to customers in the shape of reduced premiums across their product lines, which is a public commitment they previously made to members of the Oireachtas. Minister Fleming also has had number of positive engagements with the CEOs of the main insurers operating here on the matter, and he intends to meet with them again later this month to review their ongoing progress and to remind them of commitments made.
The Deputy may also be aware that the Central Bank recently published the first National Claims Information Database (NCID) report on employers' liability (EL), public liability (PL) and commercial property insurance. It demonstrated that while many businesses in Ireland are accessing affordable insurance, some are encountering difficulties. This report is a rich source of data which will assist in further policy formation. In addition to this, Government recently agreed the drafting of legislation which will help increase transparency and provide enhanced protections for consumers.
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.
