Written Answers Nos. 121-145
121. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied regarding the durability of Ireland’s economy and its continued ability to withstand economic shocks, internal or external; and if he will make a statement on the matter. [62304/21]
View answerDue to the success of our vaccination programme earlier this year, restrictions were eased with the domestic economy recovering strongly as a result. Modified Domestic Demand (MDD) – the best measure of domestic economic activity now exceeds the level immediately preceding the pandemic (2019-Q4) by around 3 per cent. Improvements can also be seen in the labour market with the unemployment rate including PUP recipients now below 7 per cent, the lowest rate since the onset of the pandemic.
Looking forward, early indications point towards an easing in growth rates in the domestic economy in the fourth quarter. Part of this is the continued adjustment in growth towards pre-pandemic trends with re-opening effects and pent-up demand tapering off. Clearly, any further deterioration in the current epidemiological situation that results in the re-introduction of significant restrictions would hamper the economic recovery. However, with our booster campaign ramping up, and nearly a third of those who are fully vaccinated having now received a third jab, I am confident that, once we overcome the fourth wave of the virus, our economy will strengthen.
The rapid rebound in domestic economic activity however has also been accompanied by rising inflationary pressures. However, this recent rise in inflation is partly explained by global factors, many of which are expected to ease over time but may prove persistent. Needless to say, significantly higher inflation next year would have significant impacts on the wider economy and public finances. My Department will therefore continue to monitor inflationary developments closely and respond as appropriate.
Over the longer term, thanks to the strength of our economic model, including our well educated work force and pro-enterprise culture, I believe our economy will remain resilient to future economic shocks. However, we have borrowed heavily to provide support to the economy and minimise the negative effects of the pandemic. While such a counter-cyclical approach was both appropriate and necessary, the ongoing cost is significant. Going forward the Government will return our public finances to a more sustainable position, this will help us re-build our fiscal buffers and help us to withstand future economic shocks.
122. Deputy Jennifer Carroll MacNeill asked the Minister for Finance if he will report on the provision of enhanced tax relief to help remote workers offset higher home utility bills; and if he will make a statement on the matter. [62102/21]
View answerThe Programme for Government includes a commitment to facilitate and support remote working. The National Remote Work Strategy aims to make remote work a permanent feature of the Irish working experience in a way that maximises the economic, social and environmental benefits.
As part of the national remote working strategy: Making Remote Work, the Tax Strategy Group (TSG) reviewed the current tax arrangements for remote working in respect of both employees and employers. The TSG paper outlines the effects of Covid-19 on remote working in Ireland, provides an international comparison of remote working tax rules, sets out options for consideration with regard to enhancing the tax arrangements for both employers and employees in respect of remote work and evaluates those options in accordance with the Department of Finance Tax Expenditure Guidelines. The paper is published on the gov.ie website.
In line with Government policy to facilitate and support remote working, on Budget Day, I announced that an income tax deduction amounting to 30% of the cost of vouched expenses for heat, electricity and internet services in respect of those incurred while working from home can be claimed by taxpayers. This measure enhances and formalises existing arrangements that are currently operated by Revenue on an administrative basis and its legislative aspects are being provided for in Finance Bill 2021.
The amount of the relief will depend on the particular circumstances of the remote worker in terms of the level of costs incurred and their marginal tax rate. However, this measure will provide some relief for those with additional expenses arising from working from home and it will support living standards as the economy recovers.
Any amounts reimbursed or to be reimbursed, directly or indirectly to the remote worker in relation to the expenses of working from home by his or her employer should be deducted from the amount of relief being claimed.
Revenue’s online system will enable individuals claim tax relief in real time as they pay for these costs throughout the year. The enhanced relief will apply for the year of assessment 2022 and subsequent years.
As the Deputy will be aware Budget 2022 also included a substantial income tax package that will be of benefit to everyone who pays income tax and aims to help citizens when prices are rising.
The Deputy may also wish to note that the Government recently approved the establishment of the Electricity Costs Emergency Benefit Scheme under which a payment of €100 will be made to each domestic electricity customer as a once off measure to mitigate the effects of the unprecedented rise in electricity prices on domestic electricity customers.
124. Deputy Matt Carthy asked the Minister for Finance if recommendations that arise from the proposed review into extending section 664A of the Taxes Consolidation Act 1997, to include agricultural contractors for the purpose of providing them similar status as farmers regarding the carbon tax on green diesel, will be implemented prior to the relevant increase in carbon tax taking effect in May 2022. [61889/21]
View answerThe present position is that agricultural contractors are not entitled to avail of relief from increases in the carbon tax on farm diesel under section 664A of the Taxes Consolidation Act 1997. This is because farming, which is defined in section 654 of the Taxes Consolidation Act, requires the occupation of farmland. Agricultural contracting does not involve the occupation of farmland. The measure is specifically targeted at the farming sector to address the particular problems faced by family farms.
My officials met with contractors' representatives in December 2019 and advised that my Department was intending to schedule a review of the scheme (and related aspects) in the context of a wider report on agri-tax reliefs and the Government's Climate policy.
The onset of the Covid-19 pandemic in the intervening period caused the review to be deferred and it has yet to take place. In the meantime, the status quo has remained in relation to the application and scope of section 664A. My Department is hopeful that the way will be clear for the promised review to be carried out, most likely in the first half of 2022.
It should also be noted that, currently, those who incur expenses in relation to farm diesel in the course of their trade of agricultural contracting may claim an income tax or corporation tax deduction for these expenses, including any carbon tax charged in respect of the diesel.
Finally, and as the Deputy will appreciate, decisions regarding taxation measures are made having regard to the annual Budget and Finance Bill processes, the sound management of the public finances and my Department's Tax Expenditure Guidelines. Furthermore, I must also have regard to ensuring that any tax measures are consistent with the need to meet our Climate Action Plan targets.
125. Deputy Niamh Smyth asked the Minister for Finance if he has had further engagement with a financial institution (details supplied) regarding its planned exit from the market; and if he will make a statement on the matter. [62028/21]
View answerI have engaged regularly with Ulster Bank and its parent company NatWest in relation to its planned exit from the Irish market. On 22 September, I met with Alison Rose, CEO of NatWest, Sir Howard Davies, Chair of NatWest, Jane Howard, the CEO of Ulster Bank, and Martin Murphy, the Chair of Ulster Bank, where they updated me on their progress and I emphasised the importance of an orderly withdrawal.
In this regard, I welcome the agreements which have been put in place by Ulster Bank since its initial announcement:
- On 11 June, Ulster Bank announced that a new Colleague Agreement has been reached with the Financial Services Union subject to a ballot of its members.
- On 28 June, Ulster Bank agreed a legally binding agreement with AIB in respect of a €4.2bn portfolio of performing loan products. I note that Ulster Bank expects c. 280 staff wholly or mainly assigned to this loan book to transfer also.
- On 23 July, Ulster Bank reached a non-binding agreement with PTSB for the proposed sale of €7.6bn performing loans, Ulster Bank’s Lombard Asset Finance business, and 25 Ulster Bank branch locations. I note that if this potential transaction is delivered, it is expected that between 400 and 500 Ulster Bank employees will transfer to PTSB.
At the end of October it was also helpful to see Ulster Bank signposting the next step in its closure by encouraging customers to begin considering their options, availing of supports and getting ready to choose a new banking provider. I note that Ulster Bank does not anticipate closing any branches in the first half of 2022 and will begin to phase out traditional counter/ cash services to concentrate on in-person support for customers to move bank and/ or close accounts in the second half of the year.
In terms of regulatory requirements, Provision 3.11 of the Central Bank's Consumer Protection Code 2012 applies. This requires that a regulated entity that intends to cease operating, merge with another, or to transfer all or part of its regulated activities to another regulated entity must:
- provide affected consumers with at least two months’ notice to enable them to make alternative arrangements if they so wish;
- ensure all outstanding business is properly completed prior to any transfer, merger or cessation of operations; or, in the case of a transfer or merger, inform customers as to how continuity of service will be provided following a transfer or merger; and
- in the case of a merger or transfer of regulated activities, inform customers that their details are being transferred to the other regulated entity, if that is the case.
The Central Bank’s supervision of any bank that withdraws from the market will be focused on ensuring that its customers are treated fairly, and that the bank remains in compliance with the letter and spirit of regulatory requirements.
126. Deputy Ged Nash asked the Minister for Finance his views on whether the recent divergence between reported and previously forecast Exchequer figures may mitigate against proper planning and resource use and planning in the public finances; his plans to undertake a review of his Department’s forecasting methodologies in view of this issue; and if he will make a statement on the matter. [62146/21]
View answerThe November Fiscal Monitor, published by my Department earlier this month, shows the Exchequer performance in the year to date is ahead of profile, with the bulk of over-performance driven by strong tax receipts.
I would like to highlight, however, that the profiles in the Fiscal Monitor were based on macroeconomic projections made at the time of the Stability Programme Update in April, during Level 5 lockdown, and before the strength of the economic recovery became apparent.
The Deputy will note that the projections for 2021 in Budget 2022 represented a significant upward revision on these forecasts.
While an over-performance on Budget forecasts is nonetheless likely, the vast majority of this will be related to volatile and unpredictable corporation tax receipts. My Department has frequently highlighted the challenges in forecasting this revenue stream.
On the broader question of tax forecasting, the methodologies are periodically reviewed by my Department, with the most recent full review by the Tax Forecasting Methodology Review Group published in December 2019.
The group, consisting of members of my Department, along with representatives from the Central Bank, Revenue Commissioners and European Commission, issued a comprehensive review of the Department’s tax forecasting methodology over the previous ten years.
The report found that the overall performance of the methodology was robust and in line with international best practice, although noted that the financial crisis years saw particularly large errors, reflecting the challenges of forecasting in such economic circumstances.
Projecting trends in tax revenue during an unprecedented and once-in-a-century pandemic has been similarly challenging.
Finally, I would like to highlight the medium-term expenditure rule introduced in the Summer Economic Statement and reinforced in Budget 2022. Keeping growth in permanent expenditure in line with the trend growth rate of the economy provides stability in terms of planning and resource use, and mitigates against fluctuations in revenue streams.
127. Deputy Joe Flaherty asked the Minister for Finance the number of persons in counties Longford and Westmeath, respectively, currently being supported by the employment wage subsidy scheme; the number of businesses in each county currently availing of the business resumption support scheme; the number of businesses in each county currently availing of the Covid restrictions support scheme; and if he will make a statement on the matter. [62217/21]
View answer134. Deputy Dara Calleary asked the Minister for Finance the number of persons in counties Mayo, Galway, Roscommon, Sligo, Leitrim and Donegal, respectively, currently being supported by the employment wage subsidy scheme; the number of businesses in each county currently availing of the business resumption support scheme; the number of businesses in each county currently availing of the Covid restrictions support scheme; and if he will make a statement on the matter. [62243/21]
View answer137. Deputy Michael Moynihan asked the Minister for Finance the number of persons in counties Cork and Kerry currently being supported by the employment wage subsidy scheme; the number of businesses in each county currently availing of the business resumption support scheme; the number of businesses in each county currently availing of the Covid restrictions support scheme; and if he will make a statement on the matter. [62057/21]
View answer144. Deputy Niamh Smyth asked the Minister for Finance the number of persons in counties Cavan, Monaghan, Louth and Meath currently being supported by the employment wage subsidy scheme; the number of businesses in each county currently availing of the business resumption support scheme; the number of businesses in each county currently availing of the Covid restrictions support scheme; and if he will make a statement on the matter. [62027/21]
View answer161. Deputy Seán Haughey asked the Minister for Finance the number of persons in Dublin city and county currently being supported by the employment wage subsidy scheme; the number of businesses in the city and county currently availing of the business resumption support scheme; the number of businesses in the city and county currently availing of the Covid restrictions support scheme; and if he will make a statement on the matter. [62245/21]
View answer165. Deputy Jennifer Murnane O'Connor asked the Minister for Finance the number of persons in counties Carlow, Kilkenny, Wexford and Waterford, respectively, currently being supported by the employment wage subsidy scheme; the number of businesses in each county currently availing of the business resumption support scheme; the number of businesses in each county currently availing of the Covid restrictions support scheme; and if he will make a statement on the matter. [62219/21]
View answer167. Deputy Jackie Cahill asked the Minister for Finance the number of persons in County Tipperary currently being supported by the employment wage subsidy scheme; the number of businesses in each county currently availing of the business resumption support scheme; the number of businesses in each county currently availing of the Covid restrictions support scheme; and if he will make a statement on the matter. [62241/21]
View answerI propose to take Questions Nos. 127, 134, 137, 144, 161, 165 and 167 together.
I am advised by Revenue that the number of employers and employees currently being supported by the Employment Wage Subsidy Scheme (EWSS) is as provided in the table below. This reflects payslips filed with Revenue by employers for November 2021, the most recent month for which complete data exists.
In respect of the COVID Restrictions Support Scheme (CRSS), I am advised by Revenue that 22,100 businesses (covering 25,500 unique premises) have claimed under the scheme since commencement. The table below includes the numbers of businesses supported by the CRSS, broken down by county.
The Business Resumption Support Scheme (BRSS) is a recently introduced support for businesses impacted by COVID-19. Registration for BRSS opened on 6 September 2021 and the closing date for applications was 30 November 2021. I am advised by Revenue that as of 9 December 2021, 2,150 businesses with 2,300 trades have availed of BRSS. The table below includes the number of businesses supported by the BRSS, broken down by county.
|
County |
EWSS-Supported Employers(November) |
EWSS-Supported Employees (November) |
Businesses Supported by CRSS (since scheme introduced) |
Businesses Supported by BRSS (since scheme introduced) |
|
Carlow |
245 |
2,805 |
270 |
15 |
|
Cavan |
315 |
3,365 |
420 |
60 |
|
Clare |
630 |
6,725 |
795 |
60 |
|
Cork |
2,600 |
26,350 |
2,615 |
235 |
|
Donegal |
950 |
9,530 |
1,095 |
70 |
|
Dublin |
7,555 |
110,720 |
4,455 |
600 |
|
Galway |
1,505 |
15,415 |
1,500 |
130 |
|
Kerry |
1,020 |
10,650 |
1,360 |
135 |
|
Kildare |
950 |
12,055 |
705 |
55 |
|
Kilkenny |
460 |
4,205 |
465 |
60 |
|
Laois |
265 |
2,805 |
280 |
30 |
|
Leitrim |
145 |
1,120 |
220 |
20 |
|
Limerick |
970 |
10,930 |
945 |
75 |
|
Longford |
170 |
1,120 |
205 |
20 |
|
Louth |
655 |
7,290 |
635 |
55 |
|
Mayo |
705 |
6,445 |
835 |
90 |
|
Meath |
850 |
8,410 |
735 |
75 |
|
Monaghan |
290 |
2,525 |
310 |
35 |
|
Offaly |
290 |
2,240 |
325 |
25 |
|
Roscommon |
245 |
2,240 |
310 |
40 |
|
Sligo |
340 |
2,805 |
350 |
25 |
|
Tipperary |
680 |
5,885 |
850 |
80 |
|
Waterford |
560 |
5,885 |
625 |
45 |
|
Westmeath |
460 |
4,485 |
470 |
40 |
|
Wexford |
730 |
8,130 |
795 |
50 |
|
Wicklow |
730 |
5,885 |
515 |
30 |
|
Total |
24,300 |
280,300 |
22,100 |
2,150 |
*Please note that some of the numbers in this table have been rounded and a small number of businesses which do not have a defined location have been included in the totals.
128. Deputy Pearse Doherty asked the Minister for Finance if he will respond to reports and analysis from a company (details supplied) suggesting that Irish tax-resident companies in scope of pillar two of the OECD two pillar solution for international tax reform could reduce their tax liability despite the minimum effective tax rate of 15%; and if he will make a statement on the matter. [62368/21]
View answerOn 8 October this year, the OECD/G20 Inclusive Framework on BEPS agreed a two-pillar solution to address tax challenges arising from the digitalisation of the economy.
Pillar Two sets out rules, known as the Global anti-Base Erosion (“GloBE”) rules, which will apply a global minimum effective tax rate to multinationals with a global turnover of at least €750 million annually. The internationally-agreed minimum effective tax rate is 15%.
To ensure consistency in the application of the rules internationally to calculate effective tax rates, as a first step the GloBE rules set out a common basis for measuring profits. The starting point for measuring profits for GloBE purposes is to take the financial accounting information for the companies concerned, subject to certain agreed adjustments. This is the case whether the companies in question are in Ireland or anywhere else in the world.
The second step in calculating the effective tax rate is to work out the amount of tax to be matched against the profits. Again, the tax figure is taken from financial accounting information, subject to certain agreed adjustments. The use of financial accounting information in both steps sets out a robust process for calculating effective tax rates.
The report which is the subject of the Deputy’s question refers to section 291A of the Taxes Consolidation Act 1997 (“Section 291A”). Section 291A provides for allowances in respect of capital expenditure on the acquisition of certain intangible assets, referred to as specified intangible assets. Section 291A claims that are based on the amortisation or impairment charge, computed in accordance with generally accepted accounting practice, in the company accounts will align with the GloBE rules of Pillar Two. Where the Section 291A claim exceeds the amount of such charge in the company accounts, the GloBE rules will intervene to limit any deduction, for minimum tax purposes, to the charge in the accounts— unless the excess is attributable to a short-term timing difference that will subsequently reverse in the company’s accounts. Section 291A allowances are made in respect of real expenditure reflected in the financial accounts and are not unique to Ireland.
The report in question also refers to the so-called double Irish structure. As the Deputy will be aware, Ireland has made changes to its corporate tax residence rules in Finance Act 2014 that are specifically designed to prevent such structures. Since 1 January this year, following a transitional period, the changes concerned have come into full effect.
129. Deputy Rose Conway-Walsh asked the Minister for Finance if his attention has been drawn to the fact that persons with eating disorders are currently being denied access to mortgage protection insurance policies, at times on a near permanent basis in respect to persons with long-term conditions; the steps he is taking to address the issues faced by persons unable to access life insurance; and if he will make a statement on the matter. [62348/21]
View answerI note that the questions refers to difficulties accessing life insurance for individuals with eating disorders. With regard to applications for life insurance, it is my understanding that generally, insurers use a combination of rating factors in making their individual decisions on whether to offer cover and what terms to apply. These can include age; health; family medical history; occupation; and lifestyle. In addition, these may be determined or linked to the policy duration. In the case of mortgage protection policies, these tend to be over the lifetime of the repayment schedule. In addition, my understanding is that different insurers do not use the same combination of rating factors. Accordingly, prices and availability of cover varies across the market, and will be priced in accordance with firms’ prior claims experience.
My officials have previously engaged with Insurance Ireland about accessing life insurance for individuals with medical conditions. According to Insurance Ireland, it is not standard practice to automatically decline cover for any cohort of applicants. It stated that insurers are obliged to assess the risk involved as part of any application for a life insurance policy, which will be specific to the individual applicant, and that the availability of cover depends on a number of factors. In this regard, I understand that applicants are asked questions about various conditions in order for insurers to assess the risk involved, and that all applicants are assessed against the same criteria. If higher risk is identified as a result of this assessment, Insurance Ireland has advised that the policy will be adjusted accordingly, and cover may be declined if the applicant poses a risk beyond the insurer’s threshold.
It may be useful for the Deputy to know that Insurance Ireland operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance cover, which can be accessed at feedback@insuranceireland.eu. Where somebody feels they have been treated unfairly by a particular insurance provider, they have the option of making a complaint to the Financial Services and Pensions Ombudsman (FSPO). The FSPO acts as an independent arbiter of disputes that consumers may have with their insurance company or other financial service provider. The FSPO can be contacted either by email at info@fspo.ie or by telephone at 01-567-7000.
Finally, it is important to note that neither I, nor the Central Bank of Ireland, can intervene in the provision or pricing of insurance products, nor can we compel any insurer operating in the Irish market to provide cover to specific individuals or businesses. This position is reinforced by the EU framework for insurance (the Solvency II Directive).
131. Deputy Neale Richmond asked the Minister for Finance if he has considered making tips received in the hospitality sector tax free; and if he will make a statement on the matter. [62133/21]
View answerSection 19 of the Taxes Consolidation Act (TCA) 1997 sets out that tax under Schedule E shall be charged in respect of every public office or employment of profit. Section 112 of the TCA 1997 brings into charge all salaries, fees, wages, perquisites or profits whatever arising from an office or employment. Therefore, all tips, gratuities and service charges arising from an office or employment are chargeable to income tax under Schedule E in accordance with section 112. I have no plans to change this position.
Gratuities from customers for example, service charges in hotels or tips in restaurants, paid to the employer and subsequently paid out to an employee should be included in pay for the income tax week or month in which they are paid out. These tips constitute pay for the purposes of the PAYE system. However, in a situation where an employee receives tips directly from customers, the employer is not obliged to operate PAYE and in that case, the tips and gratuities are fully taxable and should be included by the employee in his or her income tax return.
The Deputy will be aware that the Department of Enterprise, Trade and Employment is progressing legislation on tips and gratuities. It will prohibit the practice of using tips or gratuities to top up wages. It will also ensure that electronic tips and gratuities, which are much more common these days, have to be divided fairly and equitably among the staff. As well as this, it will provide transparency to customers so they will know what the policy is on tips and service charges, how they are managed and to whom they go. Further information can be located at the following link: enterprise.gov.ie/en/Legislation/General-Scheme-of-the-Payment-of-Wages-Amendment-Tips-and-Gratuities-Bill.html#:~:text=November%202021%20%7C%20Bills-,The%20Payment%20of%20Wages%20(Amendment)%20(Tips%20and%20Gratuities),up'%20contractual%20rates%20of%20pay
133. Deputy Paul McAuliffe asked the Minister for Finance the status of the publication of the credit union policy review framework. [62332/21]
View answerI thank the Deputy for his question. Work on the credit union policy review is now at an advanced stage.
Since the review began, the Department has held extensive engagement with the credit union representative bodies to seek their feedback.
The Minister of State, Sean Fleming TD, has met with a wide range of credit union stakeholders to gain further insights into areas such as collaboration and business model development in the sector.
There will be further consultation with the sector before the finalisation of the list of proposals which are aimed at supporting the credit union sector to strengthen and grow.
135. Deputy Michael Moynihan asked the Minister for Finance the status of his recent engagement with the Central Bank regarding the difficulties faced by the credit union sector. [62058/21]
View answerMinister Fleming, Minister of State with responsibility for credit unions, last met with the Central Bank in November. This meeting afforded him the opportunity to gain feedback on regulatory issues.
Legislative or regulatory amendments alone will not solve the financial challenges arising from the low/negative interest rate environment, muted credit demand, strong savings growth, and high operating costs. To address these issues, credit unions must develop their business models and enhance collaboration.
Officials in the Department of Finance continue to actively engage with the Central Bank in addition to the Central Bank conducting its own extensive stakeholder engagement.
136. Deputy David Stanton asked the Minister for Finance if research is being undertaken by his Department regarding the potential impact on motor tax revenue arising from an increased take-up of electric vehicles; and if he will make a statement on the matter. [62068/21]
View answerThe 2021 Climate Action Plan and the Programme for Government set out ambitious commitments for emissions reductions. Road transport is a sector earmarked for radical decarbonisation, and motor vehicle taxation is an important policy lever in achieving these goals. A significant uptake in electric vehicles (EVs) forms a key part of targets on emissions reductions from road transport, and the motor tax system reflects this ambition. The rates structure increases progressively according to the emissions profile of a vehicle; EVs are therefore liable to motor tax at the lowest rate. As the national fleet becomes increasingly electrified this will lead to a decline in motor tax revenue, and as such the regime is kept under constant review. The future of vehicle and road taxation has been assessed in previous tax strategy group papers and work will continue in this area.
As set out in the Programme for Government, the Commission of Taxation and Welfare has been established to independently consider how the taxation and welfare systems can be used to support economic activity, stimulate employment and prosperity, and provide for the costs of public services and supports. The Commission’s terms of references specify that it will “examine how the taxation system can be used to help Ireland move to a low carbon economy as part of the process of meeting its climate change commitments as set out in the Climate Action and Low Carbon Development (Amendment) Bill 2021. This will include ensuring the sustainability of environmental tax revenue resulting from decarbonisation of the economy.” The report will be submitted to the Minister for Finance in mid-2022 and its findings will inform any policy considerations on the future of motor tax policy.
138. Deputy James Lawless asked the Minister for Finance his views on the impact of a new forum (details supplied) on the Irish financial services sector. [62105/21]
View answer'Technology and innovation' is an important part of the whole-of-government strategy for the international financial services sector. This key strategy, known as the Ireland for Finance Strategy is a multi-year strategy with published annual action plans which monitor progress and highlight specific goals for the coming year. By way of background, the use of innovative technology to deliver financial services is also known as 'fintech' (a combination of the words 'financial' and 'technology') and the use of innovative technology to deliver certain sectoral financial services like insurance is know as 'insurtech'.
Insurance Ireland have led on actions in successive Action Plans under the Ireland for Finance strategy to develop an insurtech hub in Ireland and considerable progress has been made on this initiative in 2021.
Insurance Ireland commissioned a study to assess feasibility and benchmark against international best practice and this study was completed in April 2021. Insurance Ireland have since developed a comprehensive Insurtech Strategy and have set up the InsTech.ie hub to bring this strategy forward.
I understand that the objectives of creating this hub include:
- facilitating connections for members
- developing a database of local and international exemplars
- pairing firms with curated Start-ups
- events – access global best practice
- promoting Ireland as an Innovation hub
- preparing talent / skills for the future
- collaborating with policymakers on innovation.
The Insurance Ireland Working Group reached out to external bodies and members to assess the appetite to become part of the group and 12 founding members have joined forces to promote the country as an EU hub for the growing insurtech industry.
Instech.ie was officially launched by the 12 founding members in July 2021 and in November of this year, they appointed a CEO of Instech.ie.
Finally, Minister of State Fleming and departmental officials have also engaged with a range of other stakeholders across the insurtech sector to review the potential impact on competition and availability of insurance, and will continue to monitor developments in this space as they occur. Work is at an early stage but we will continue to be active in relation to this matter.
139. Deputy Brian Leddin asked the Minister for Finance if his Department plans to apply reduced VAT rates on the supply and installation of highly efficient low-emissions heating systems as per Annexe 3 in view of the agreement reached on 7 December 2021 by the Council of the European Union (details supplied); and if he will make a statement on the matter. [62408/21]
View answer149. Deputy Marc Ó Cathasaigh asked the Minister for Finance if his Department intends to apply reduced VAT rates on the supply, rental and repair of bicycles including e-bikes in view of the agreement reached on 7 December 2021 by the Council of the European Union (details supplied); and if he will make a statement on the matter. [62252/21]
View answer155. Deputy Marc Ó Cathasaigh asked the Minister for Finance if, in view of the agreement reached on 7 December 2021 by the Council of the European Union (details supplied), his Department intends to apply reduced VAT rates to solar panels in line with section 4a; and if he will make a statement on the matter. [62253/21]
View answerI propose to take Questions Nos. 139, 149 and 155 together.
As the Deputies will be aware, the Commission issued its original proposal to amend a Council directive on the common system of value added tax as regards rates of value added tax on 18 January 2018.
The compromise text agreed at ECOFIN has been amended significantly in comparison to the original proposal so the EU Parliament will once again be consulted for their opinion.
Once the Parliament has issued its opinion on the proposal, the Council will formally adopt the directive. It will then enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
Officials in my Department will be reviewing the options now available to Ireland in setting VAT rates.
Future tax changes are generally taken in the context of the Budget. Deputies will be aware that my officials prepare a series of papers containing tax options for the Tax Strategy Group to be considered in the context of the budgetary process, alongside a wide range of submissions from various stakeholders and lobby groups.
140. Deputy Steven Matthews asked the Minister for Finance the position regarding the zoned land tax; the provisions being put in place to facilitate its introduction; if a timeline will be provided for its roll-out; and if he will make a statement on the matter. [62213/21]
View answerThe Finance Bill introduces Part 22A into the Taxes Consolidation Act 1997, which gives effect to the measure I announced on Budget day regarding the Residential Zoned Land Tax. This measure is a part of the ‘Housing for All’ Strategy published by the Department of Housing, Local Government and Heritage in September 2021.
The Residential Zoned Land Tax is designed to prompt residential development by owners of land that is zoned for residential or mixed use purposes and that is serviced, and its primary objective is to increase the supply of housing rather than to raise revenue.
The Residential Zoned Land Tax is an annual tax, calculated at 3% of the market value of the land. The legislation provides that each local authority will prepare and publish a map identifying land within the scope of the tax. These maps will be updated annually for changes in zoning and servicing of the land. Landowners will have an opportunity to submit an appeal against inclusion on the map to the local authority in the first instance, and subsequently to An Bord Pleanála where the local authority upholds their original decision.
A number of exclusions from the scope of the tax have been provided for, including existing habitable
dwellings and the curtilage, certain infrastructure or facilities, a site which is designated as a derelict site and liable for the Derelict Sites Levy, land zoned residential but used by a business to provide services consistent with a residential area, and land in an area zoned for a mixture of uses, where it is used for business purposes - in other words it is not deemed to be vacant or idle.
In relation to the Deputy's question regarding a timeline for the rollout of the measure, an owner who has land which was zoned and serviced on 1 January 2022, and who has not commenced development of the land before 1 February 2024, will be subject to a charge which will be due and payable in May 2024. Where the land is zoned or serviced after 1 January 2022, tax will be chargeable in the third year after it comes within scope.
The Residential Zoned Land Tax will operate on a self-assessment basis and will be administered by the Revenue Commissioner. The legislation requires landowners to maintain detailed records so that the Revenue Commissioner may verify tax payable as well as claims for exemption, abatement or deferral of the tax.
143. Deputy Brendan Smith asked the Minister for Finance if he has had recent discussions with the Central Bank in relation to the need to ensure adequate banking services throughout all parts of the country; and if he will make a statement on the matter. [62333/21]
View answer158. Deputy Brendan Smith asked the Minister for Finance if his attention has been drawn to the widespread concerns in many parts of rural Ireland in relation to the loss of banking services; if he will ensure that the needs of rural communities are taken into account in the review of banking; and if he will make a statement on the matter. [62334/21]
View answerI propose to take Questions Nos. 143 and 158 together.
The retail financial services sector is undergoing a major period of change. This year we have seen a number of announcements from the main retail banks in relation to their operations in the state and their branch networks around the country. While decisions relating to the business model of regulated firms are a commercial matter for the boards of those firms, the Central Bank and I expect them to take a consumer-focused approach in respect of any decision that affects their customers.
Under Provision 3.12 of the Consumer Protection Code 2012 (the Code), any bank that intends to close, merge or move a branch must:
1. notify the Central Bank immediately;
2. provide at least two months’ notice to affected consumers to enable them to make alternative arrangements;
3. ensure all business of the branch is properly completed prior to its closure, merger or move, or alternatively inform the consumer of how continuity of service will be provided; and
4. notify the wider community of the closure, merger or move in the local press in advance
Once notified, the Central Bank engages with the regulated entity to ensure the impact of the decision has been carefully considered across its full customer base and at the appropriate levels. The Central Bank expects entities to provide affected vulnerable customers with the assistance necessary to ensure that those customers can retain full access to basic financial services, albeit in many cases at another branch location.
The changes currently taking place in the Irish retail banking sector are a reflection of the wider challenges the banking sector is facing, not only in Ireland but also abroad. It is because of these changes that I have instructed my Department to undertake a broad-ranging review of the retail banking sector.
The Retail Banking Review has commenced its work and is currently in its research phase and is developing its project plan. It will be undertaking a survey of consumers in the coming months to ascertain their experience and perceptions of the retail banking sector in Ireland. The survey sample will include consumers in rural areas.
There will also be a public consultation process in 2022 where members of the public can make a submission to the Department of Finance on issues that fall within the Terms of Reference. In advance of the Public consultation the Review team will contact a wide range of stakeholders to draw their attention to the Review and to tell them that the Review team is happy to receive submissions on issues that fall within the Terms of Reference at any time at bankingreview@finance.gov.ie.
The issue raised by the Deputy will be considered by the Review as part of its work assessing the current landscape for the provision of retail banking services in Ireland and its likely evolution over the coming years. The team will also look at the size and structure of the sector in Ireland and in similar size open economies in the EU and the OECD to see what lessons can be learned from initiatives and practices in those jurisdictions.
145. Deputy Catherine Connolly asked the Minister for Finance his plans for a review of the special assignee relief programme; and if he will make a statement on the matter. [62329/21]
View answerThe Special Assignee Relief Programme (SARP) is designed to help reduce the cost to employers of assigning skilled individuals in their companies from abroad, to take up positions in the Irish-based operations of their employer or an associated company, thereby facilitating the creation of jobs and the development and expansion of businesses in Ireland. The scheme currently has a sunset date of 31 December 2022.
Ireland’s enterprise policy is based on export-led growth. Foreign Direct Investment (FDI) has been and continues to be an integral part of Ireland’s economic development. SARP is part of our FDI policy which allows our country to be competitive and attract certain senior decision-makers here to particular companies. This is fundamental to the creation and retention of other jobs.
The existence of an incentive like SARP is an acknowledgement that we are competing on a global basis for highly skilled and mobile executives. The competition for this talent is intense, particularly for the types of skills required to facilitate the development and expansion of businesses in Ireland. If we cease this scheme, it makes what we offer uncompetitive versus the offerings from competitor jurisdictions, for example France, Portugal, the Netherlands and Italy – to name but a few.
The existence of similar (and indeed more attractive) special assignee type tax reliefs in competitor jurisdictions creates a market failure that would not be addressed, but for the continued existence of SARP.
On Budget Day, the annual Revenue report on SARP for 2019 was published. It found a significant reversal in the overall cost of the scheme in 2019 (€38.2m) as compared with 2018 when the cost was €42.4m. This is attributable at least in part, to my decision to introduce a salary cap of €1m on the amount of a person's income that can benefit from the scheme in Finance Act 2018. The change applied from 1 January 2019 for new entrants and from 1 January 2020 for existing recipients.
Furthermore, the aggregate number of jobs that were reported as created and retained as a result of the scheme has increased since 2018. There were 379 additional employees compared with 236 in 2018 and the number of employees retained was 483, compared with 348 in 2018. This combined total of 862 SARP-related jobs in 2019 represents a cost of €44,000 per job created or retained, a decrease in cost per job compared with 2018, when there were 584 SARP supported jobs at an average cost of €73,000 each. This represents a decrease in cost of over 39%.
The benefits of SARP, aside from enhancing our international competitiveness, are detailed clearly in the Indecon report and they include:
- Increased employment and retention of staff within SARP companies;
- Associated additional investment in the economy of the order of €25 million;
- Additional Corporation Tax receipts;
- Additional PAYE receipts; and
- R&D spill-over activity.
In 2019, I commissioned an independent review of the scheme. The report of the review confirmed to me the strong policy rationale for the continued relevance of SARP to the Irish economy. The report is available on the Department of Finance website.
The review highlights the following data regarding companies that availed of SARP for the year 2017:
- they paid over €2.5 billion in corporation tax;
- they employed over 155,00 individuals; and,
- they paid over €1.9 billion in PAYE taxes.
I recognise that there is, of course, a balance to be struck between the principle of horizontal equity within the tax system and the need to compete internationally for highly skilled and mobile personnel. In this regard, and in order to seek to ensure that the appropriate balance is maintained, the issue is kept under regular review through detailed examinations of the type carried out by Indecon in 2019. As the scheme sunsets next year, there will be a further opportunity for review.
