Written Answers Nos. 1-43
14. Deputy Niamh Smyth asked the Minister for Finance the number of primary medical certificate appeals currently outstanding; if there is an update on a new board to hear such appeals; and if he will make a statement on the matter. [9686/22]
View answer79. Deputy Brendan Smith asked the Minister for Finance when it is proposed to appoint a new Medical Board of Appeal; and if he will make a statement on the matter. [9488/22]
View answer80. Deputy Pauline Tully asked the Minister for Finance if a new disabled drivers medical scheme appeals board has been appointed; if not, the timeframe for when a new board will be appointed; and if he will make a statement on the matter. [9703/22]
View answer228. Deputy Paul Donnelly asked the Minister for Finance the status of the case of a person (details supplied); when the appeals board is being appointed; when hearings will recommence; and the interim measures being considered to deal with urgent cases in order that persons in need are not disadvantaged or suffering needlessly. [9167/22]
View answer242. Deputy Mark Ward asked the Minister for Finance when persons with MS and other conditions who wish to appeal a decision regarding an application to the disabled drivers and passengers' scheme can expect an appeals committee to be in place and the processing of appeals to be resumed; and if he will make a statement on the matter. [9597/22]
View answerI propose to take Questions Nos. 14, 79, 80, 228 and 242 together.
The Disabled Drivers & Disabled Passengers Scheme (DDS) provides relief from VRT 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 who also meet one of six specified medical criteria, as a driver or as a passenger and also to certain organisations. In order to qualify for the Scheme, the applicant must hold a Primary Medical Certificate, a PMC, issued by the relevant Senior Area Medical Officer (SAMO) in the HSE. Assessments for the primary medical certificate, by the HSE, are continuing to take place. 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.
In the event that a PMC is not granted by the relevant Senior Area Medical Officer an appeal may be made to the independent Disabled Drivers Medical Board of Appeal (DDMBA) who operate out of the National Rehabilitation Hospital in Dun Laoghaire.
I have no role in relation to the granting or refusal of PMCs and the HSE and the Medical Board of Appeal must be independent in their clinical determinations.
As of 31st December 2021, there are 382 people awaiting an appeal hearing with the Disabled Drivers Medical Board of Appeal.
All members of the DDMBA have resigned. My officials engaged with the Department of Health and the Public Appointments Service to seek expressions of interest from medical practitioners to participate in the Board. I am informed that the formal notice seeking expressions of interest have been issued. It is hoped to move this process along as quickly as possible so that appeals can recommence as soon as possible.
Requests for appeal hearings can be sent to the DDMBA secretary based in the National Rehabilitation Hospital. New appeal hearing dates will be issued once the new Board is in place.
16. Deputy Cathal Crowe asked the Minister for Finance if he will report on engagements he has had with trade unions or credit union representatives on pensions. [9479/22]
View answerAs the Deputy may be aware, as Minister, I have no role in the commercial decisions made by any credit union or their representative bodies.
Decisions in this regard, including those related to pensions, are the sole responsibility of the board and management of the credit unions.
I have agreed to meet with the Financial Services Union and SIPTU to hear their perspectives on the pension updates recently communicated to members of the ILCU multi-employer scheme.
I will continue to engage regularly with representative bodies and stakeholders in the credit union sector.
19. Deputy Jim O'Callaghan asked the Minister for Finance the situation with regard to the regulation of virtual or cryptocurrencies in Ireland; and if he will make a statement on the matter. [9447/22]
View answerIt has always been my intention that any regulation in this space would be appropriately comprehensive without discouraging innovation.
In Ireland, as of 23 April 2021, providers of services of virtual assets such as digital assets or cryptocurrencies must legally meet anti-money laundering and countering the financing of terrorism obligations.
Thus, all virtual asset service providers established in Ireland are required to register with the Central Bank for anti money laundering and countering the financing of terrorism purposes.
Also, in September 2020, the European Commission published the Digital Finance Package.
This package contained measures to enable and support the development of digital finance in the European Union, while mitigating risks for consumers and the economy.
The package comprises four regulatory proposals:
1. A strategy on Retail Payments
2. A legislative proposal on a market in crypto-assets. This is known as the MICA regulation
3. A legislative proposal on digital and operational resilience. This is known as the DORA regulation
4. A legislative proposal on a pilot regime for market infrastructures based on distributed ledger technology. This is known as the DLT pilot.
On 24 November last year, the European Parliament announced that it had reached agreement with the Council on the DLT pilot scheme. So this is already in place.
The second element of the package, the MICA regulation proposal, is still under review by the European Parliament. The Council reached general agreement on this proposal under the Slovenian presidency in November of last year. The expectation is that trilogues would commence under the current French presidency.
All EU finance ministers agree to the utmost need to collaborate and approach regulation of cryptoassets in a joint, cohesive and holistic manner, in order to protect monetary sovereignty and preserve financial stability.
This sentiment is further supported by the G20 and G7 members.
My Department continues to work closely with our partners in the European Union, and globally, to ensure that the appropriate regulation recognises the risks presented by crypto assets.
20. Deputy David Cullinane asked the Minister for Finance if his Department has updated projections for VAT receipts in 2022 relative to the estimates of receipts for the year ending 31 December 2022 as provided in the White Paper; if so, if he will provide those projections; and if his Department expects VAT receipts to be greater than previously forecast as a result of higher food and energy prices. [9715/22]
View answerIrish VAT law must comply with the EU VAT Directive, which directs that Member States must apply a standard VAT rate of 15% or more, and can apply up to two reduced VAT rates of 5% or more. Ireland applies the 23%, 13.5% and 9% VAT rates in this context.
The standard rate of 23% applies to approximately 51% of activity, including cars, petrol, diesel, alcohol, tobacco, electrical equipment and CD/DVDs.
The reduced rate of 13.5% applies to approximately 28% of activity, including fuel used for heat or light, construction, housing, labour intensive services and general repairs and maintenance.
The reduced rate of 9% applies to about 10% of activity, including holiday accommodation, restaurants, digital and print newspapers and periodicals, and sporting facilities.
A zero rate accounts for a little over 11% of activity, including to most food, books, children’s clothes and shoes, and oral medicines.
In addition a super-reduced rate of 4.8% applies to livestock registered by farmers while some activity is entirely exempt from VAT, including transport, water, education, financial services, schools and hospitals, services provided by charities, etc.
VAT receipts for 2022 were projected at €16,895 million in Budget 2022. This was slightly above the White Paper projection of €16,770 million. My Department will update the forecast for taxation revenues in the Stability Programme Update, to be published in April 2022.
21. Deputy Ged Nash asked the Minister for Finance if an update will be provided on discussions with the European Commission regarding a temporary derogation on the rate of VAT applied on energy and gas usage; if he held discussions with other European Union Finance Ministers regarding the relaxation of such rules as part of a common approach to tackling rising energy prices; and if he will make a statement on the matter. [9481/22]
View answerI am advised by Revenue that the VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. The VAT Directive obliges each Member State to have a standard rate of VAT and also allows that a Member State may choose to have no more than two reduced rates of VAT, which may be no less than 5%, and which may be applied to certain goods and services: any of those listed in Annex III of the Directive. Within this framework, Ireland currently applies a standard rate of 23% and two reduced rates of 13.5% and 9%.
As the Deputy will be aware, Article 102 of the VAT Directive provides that, after consultation with the EU VAT Committee, a Member State may choose to apply a reduced rate to the supply of natural gas, electricity, or district heating. The Commission recently indicated that this provision could be used by Member States without the requirement to consult the VAT Committee in advance. The Article 102 provision is not transposed into Irish legislation because Ireland, in line with the VAT Directive and by way of special derogation from the general rule, maintains several “standstill” provisions and derogations that allow us to maintain reduced rates to certain supplies for historical reasons. It is on this basis that Ireland applies its 13.5% reduced rate of VAT to the supply of fuel, gas, oil, and electricity services for both domestic and commercial use. The current 13.5% VAT rate applied to energy products is a ‘parked rate’, governed by Article 118 of the VAT Directive and standstill provisions from 1991 and cannot be reduced below 12%. In the event that Ireland chose to apply a reduced rate to the limited items covered by Article 102, those items could no longer rely on our derogation and those items would have to be returned to the standard rate of VAT in the future.
22. Deputy Brendan Smith asked the Minister for Finance the proposals to implement additional measures to counteract illicit trade in fuel, drink and tobacco products; and if he will make a statement on the matter. [9489/22]
View answerI am assured by Revenue that combating the threat which fuel fraud and the illicit alcohol and tobacco trades pose to legitimate businesses, consumers and the Exchequer continues to be a priority.
Steps taken by Revenue to combat the illegal mineral oils trade include the introduction of stringent supply chain controls and reporting requirements, a rigorous programme of risk focused enforcement action and the application of robust legislation. In addition, Revenue and the UK Revenue and Customs undertook a joint initiative to introduce a new marker for use in marked fuels, which came into operation in April 2015. The industry view is that the actions taken have been successful in curtailing fuel fraud.
Illicit trade in alcohol can occur through the diversion of untaxed alcohol onto the market, through the production of counterfeit alcohol and through smuggling from countries with lower taxes. I am aware that Revenue takes appropriate action where illicit activity is detected and that this action is informed by intelligence on criminal activity and risk-based examination of commercial traffic and stock in retail premises.
In relation to the tobacco trade, I am advised that Revenue uses a combination of risk analysis, profiling and intelligence, and risk-based screening of cargo, vehicles, baggage and postal packages to intercept illicit products. Action after importation includes checks at retail outlets, markets and private and commercial premises.
I am aware that Revenue and An Garda Síochána collaborate closely in acting against fuel, alcohol and tobacco crime, and also cooperate closely with their counterparts in Northern Ireland, in the framework of the Cross-Border Joint Agency Task Force. This cooperation plays a key role in targeting the organised crime groups who operate across both jurisdictions and are responsible for much of this criminality.
I am satisfied that Revenue’s work against fuel fraud and the illicit alcohol and tobacco trades has achieved a considerable level of success. I know that Revenue is very conscious of the resourcefulness of those involved and remains vigilant for, and ready to respond to, any new developments in these areas.
26. Deputy Richard Bruton asked the Minister for Finance the insights that have been gleaned from the new data reporting on insurance claims; and if he has identified scope for adding new actions to the insurance plan based on this information. [9459/22]
View answer31. Deputy Dara Calleary asked the Minister for Finance his views on more frequent reporting by the National Claims Information Database. [9678/22]
View answerI propose to take Questions Nos. 26 and 31 together.
The National Claims Information Database (NCID) was established in order to improve transparency in the insurance claims environment and to support data-driven policy making. It contains a wealth of information, including data on: the cost of premiums; the cost and frequency of claims; claims settlement; and the revenues, expenditures, and profitability of firms. Having initially focussed on the private motor insurance sector, under the Action Plan for Insurance Reform the scope of the NCID was expanded to facilitate the collection of data on employers’ liability and public liability insurance claims, with the first such report being published last July.
These NCID reports provide a valuable insight into the key insurance markets for consumers and businesses, which is vital to further developing our understanding of how claims costs impact premiums. This should enable us to better-tailor reforms to the insurance sector. For example, the recently-published General Scheme of a Bill to reform the Personal Injuries Assessment Board, which aims to increase the number of cases settled through the Board, points to NCID data which shows that claims settled by the Board are settled more quickly, and attract much lower legal costs, than those that proceed to litigation.
In addition, the NCID will allow for an assessment of the impact of the many reforms already undertaken in the insurance sector. For example, I understand from the Central Bank of Ireland that the Private Motor Report to be published in 2022 will provide initial data on the newly introduced Personal Injuries Guidelines. The NCID is also continually looking to improve the transparency and insight that can be provided through these reports, and each edition has been amended to include more information.
With regard to more frequent reporting, I understand that the Central Bank of Ireland is also looking at the merits and feasibility of collecting the information contained in certain sections of the Motor NCID Report more frequently, where this would provide additional insight. For this reason, the Bank initially plans to publish supplementary information on motor premiums on a semi-annual basis. The merits and feasibility of providing any further information on a more frequent basis will be assessed in the future. To conclude, I welcome the information already provided by the NCID, and believe it will remain an excellent tool to ensure transparency in the insurance market into the future.
27. Deputy Neale Richmond asked the Minister for Finance if he will consider raising the €3.20 per day work from home allowance given the rise in the cost of electricity and utility bills; and if he will make a statement on the matter. [9457/22]
View answer73. Deputy Alan Dillon asked the Minister for Finance if consideration will be given to additional tax relief measures in budget 2023 for those working from home; and if he will make a statement on the matter. [9669/22]
View answerI propose to take Questions Nos. 27 and 73 together.
Where e-workers incur certain extra expenditure in the performance of their duties of employment remotely or from home, such as additional heating and electricity costs, there is a Revenue administrative practice in place that allows an employer to make payments up to €3.20 per day to such employees, subject to certain conditions, without deducting PAYE, PRSI, or USC.
Revenue is statutorily independent in the performance of its functions under, or for the purposes of, tax laws. Consequently, I am precluded from giving any direction or instruction to Revenue in regard to the review of any threshold relating to e-working.
However, Revenue advises me that there are currently no plans to increase the €3.20 allowance. The value of relief allowed under the administrative arrangements is already considered sufficient to cover any legitimate additional costs incurred by workers. The level of support allowed also compares favourably internationally.
As the Deputies will be aware, in the Finance Act 2021, I enhanced and formalised the tax arrangements for working from home in line with Government policy to facilitate and support remote working. Accordingly, an income tax deduction amounting to 30% of the cost of vouched expenses for electricity, heat and broadband in respect of those days spent working from home can be claimed by taxpayers.
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. This measure will provide some relief for those with additional expenses arising from working from home.
While I have no immediate plans to increase the tax relief for working from home, I would point out that the Government recently announced a €505 million package of measures to mitigate the cost of living, including a once-off energy credit of €200 including VAT. These measures will support all payers of domestic electricity bills to help to off-set rising prices. This is a measure that will benefit all households regardless of whether they have an income tax liability or not.
29. Deputy Pearse Doherty asked the Minister for Finance if he will provide updated projections from his Department on the rate of inflation for the years 2022, 2023 and 2024; if the projections will be disaggregated by income decile and household type; and if he will bring forward an anti-inflation strategy as called for by the Tánaiste and Minister for Enterprise, Trade and Employment in response to the causes of inflation. [9695/22]
View answerAs the Deputy is aware, my Department publishes two sets of macro-economic forecasts each year, one in the spring and one in the autumn, in line with our requirements under EU law.
Our spring forecasts will be published in April and set out in the Stability Programme Update. As is the norm, this will include inflation projections for the next few years. The projections will cover headline and core inflation and, in line with standard domestic and international practice, are not disaggregated by income group or household type.
I am conscious of the acceleration in consumer price inflation over the past six months or so, with similar trends seen across advanced economies. Several factors are behind this, including higher energy prices and global supply chain disruptions. On the domestic front, the strength and speed of the economic recovery has led to a mismatch between demand and supply, including in the labour market where I note CSO figures published last week showing the highest ever level of employment in our country.
The rate of inflation is expected to ease over the course of this year as temporary factors fade, demand eases and supply catches up.
Nevertheless, the Government is very conscious of the cost of living pressures facing households and, accordingly, introduced a number of measures in Budget 2022 covering a range of costs to people; including health, income supports, family and child costs, energy, education and housing costs.
In December, the Cabinet also approved an energy credit of €100 to be made this year to an estimated 2.1m domestic electricity account holders.
The Government announced another €290 million package on February 10th to further assist households, bringing the overall package including the aforementioned energy credit, to €505 million. The measures include an increase in the energy credit to €200 per household including VAT and an additional one-off payment of €125 for all those in receipt of the fuel allowance in March. The Drugs Payment Scheme contribution threshold will be reduced to €80 per month, while the €10 increase to the weekly income threshold of the Working Family Payment will be brought forward to April from June. Public transport fares will be reduced from April until the end of the year, while school transport family caps will be reduced at both primary and post-primary level.
In summary, the Government’s response has been timely and forceful and will help to alleviate cost pressures for households, in particular those on low incomes.
30. Deputy Louise O'Reilly asked the Minister for Finance the steps his Department is taking to uncover, address and reduce bogus self-employment from a taxation and Revenue Commissioners perspective, especially in State-funded agencies or in areas in which public moneys are spent; and if he will make a statement on the matter. [7298/22]
View answer“Bogus self-employment” is the description commonly given to a scenario where an individual engaged to do a job is wrongly classified as being self-employed by an employer who seeks to avoid employment related obligations. From a tax perspective, this relates to income tax, Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) (including Employer’s PRSI) collected through the PAYE system. The implication for the individuals is that they do not have the benefit of certain employment related entitlements such as rates of pay, holiday pay, sick pay and certain social welfare benefits. It must be borne in mind that a worker’s employment status is not a matter of choice; it depends on the terms and conditions of the job. While it is usually clear whether an individual is employed through a ‘contract of service’ or self-employed through a “contract for service”, it is not always obvious. The question of employment versus self-employment status arises in three different areas: tax where it is determined by Revenue, Social Welfare where it is determined by the Department of Social Protection, and employment rights where the Workplace Relations Commission (WRC) makes the determination.
A revised Code of Practice on Determining Employment Status was published by the Minister for Social Protection in July 2021. The purpose of the Code is to provide an enhanced understanding of employment status, taking into account current labour market practices and developments in legislation and case law. These developments include, for example, new forms of work such as platform work and the gig economy. It is a ‘living document’, which will continue to be updated to reflect relevant changes into the future. During the four years 2018 – 2021, Revenue staff, either on a standalone or joint-agency basis, visited 3,786 construction sites interviewing 14,968 contractors, sub-contractors, and employees at their site to make them aware of their compliance and other statutory obligations. As a result of these activities, 864 individuals were registered as new employees for PAYE and an additional 360 sub-contractors were reclassified as employees. In addition to construction site visits, Revenue staff carried out a further 8,232 visits across a range of businesses in connection with normal shadow economy activity or compliance activity relating to Covid-19 support schemes.
Revenue applies a data-driven, risk-based approach to compliance interventions, utilising the information provided by all principal contractors on relevant contracts and payments to subcontractors to refine their risk focus. This applies to both private and publicly funded projects. In addition to its compliance activity, Revenue provides customer service support to public bodies, assisting those bodies with voluntary compliance, so that the public bodies can be satisfied that they apply the correct treatment under the Code of Practice on Determining Employment Status. Lastly, Revenue officials regularly meet with counterparts in the Department of Enterprise, Trade and Employment, the Department of Social Protection and the WRC to discuss matters of mutual interest relating to employment/self-employment and recent focus has been on consideration of improvements that could be made in dealing with bogus self-employment.
The Deputy may also wish to note that the EU Commission has recently published a draft Directive that is aimed at providing significant new rights to "platform workers" across all Member States.
32. Deputy Ged Nash asked the Minister for Finance if he plans to reverse recent cuts to the bank levy given that a potential rise of European Central Bank rates will boost the incomes of Irish banks; and if he will make a statement on the matter. [9484/22]
View answerThe Finance (No.2) Act 2013 introduced the Financial Institutions Levy for the three-year period 2014 to 2016 with the purpose of enabling the banking sector to contribute to economic recovery. Finance Act 2016 extended the levy to 2021. The annual yield of this levy has been approximately €150 million.
In advance of Budget 2022, and in light of the then pending lapse of the Levy, I took a decision to extend it for another year and to apply it only to those banks that will continue to operate in the Irish market going forward. This was announced in Budget 2022, and provided for in legislation is section 60 of Finance Act 2021.
Under the relevant provision, the banks remaining in the market will not pay anymore in 2022 than they paid in 2021. This means that the levy is expected to generate in the region of €87 million in 2022. The reason, I adopted this approach was due to my concern that any extra levy placed on these banks would be passed directly onto their customers.
My decision to exclude the two banks who are leaving the Irish market, Ulster Bank and KBC, was taken in order to minimise the potential for disruption to bank customers that could arise from a possible accelerated exit if they were made subject to the levy in 2022.
In relation to the future of the levy, I have asked my officials to examine the matter and to present me with options for my consideration in advance of Budget 2023.
It would not be appropriate for me to comment on the possible outcome of that work at this time.
33. Deputy Alan Dillon asked the Minister for Finance the status of the strategy for the development of Ireland’s international financial services sector action plan 2022; and the way work by both IDA Ireland and Enterprise Ireland is supporting regional development in this sector. [9670/22]
View answerThe Ireland for Finance Action Plan 2022 was approved by the Government at its meeting on 25 January 2022. My colleague, the Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Deputy Seán Fleming, published Action Plan 2022 on 3 February 2022.
One of the five themes Minister Fleming has identified for Action Plan 2022 is ‘Regionalisation and promotion’. IDA Ireland and Enterprise Ireland hold pivotal roles in delivering the regional policy commitments in the Ireland for Finance strategy. Currently, employment is at the highest level it has ever been in the international financial services sector, with over 30 per cent of these jobs located in the areas outside Dublin. Although it is the business owners and investors who are the final decision makers on where to establish operations, the State’s enterprise agencies provide information, financial supports, and some of the physical infrastructure to enable and encourage balanced regional development. IDA Ireland is focused principally on promoting regional locations in Ireland to investors in international markets, and Enterprise Ireland provides a range of developmental supports to regionally based Irish owned companies in the sector, at all stages of development, who are looking to grow in international markets. Both enterprise agencies also provide valuable inputs to the development of policies and programmes by other state bodies in areas such as planning and education to ensure that policy on regional development is coordinated and well informed.
I would highlight to the Deputy that regional development is at the centre of IDA Ireland’s new strategy ‘Driving Recovery and Sustainable Growth 2021–2024’, which will target half of all investments for regional locations. As such, IDA Ireland is committed to the pursuit of more balanced, compact regional development, which can deliver complimentary efficiency and equity gains, with the overall impact of helping to advance national development. Underpinning this strategy, IDA Ireland will target potential investment that advances regional development, as follows:
(a) win investment that drives recovery and supports development in regional locations,
(b) partner with existing regional clients to transform through innovation and upskilling,
(c) seek to support transformation, spill overs, and linkages through cluster initiatives,
(d) collaborate with clients and stakeholder to facilitate remote working opportunities, and
(e) Continue to roll-out a regional property programme essential to regional delivery of investments.
During 2021, IDA Growth in Regions was particularly strong with 53% or 133 projects of the 249 investments won going to regional locations. Employment growth was recorded in every region of the country. IDA continues to prioritise regional locations for the IFS sector and has won a number of significant regional investments since 2020 across the sub-sectors of Fund Servicing, Insurance, Fintech and Payments. The increase in remote and hybrid working is increasing access for IDA clients to a broader national talent pool and this presents an opportunity for further regional development.
Strengthening regional enterprise development also remains a key focus for Enterprise Ireland as part of its new strategy for 2022 to 2024. Its responses will reflect the varying needs and opportunities of enterprise at all stages of development, across different regions including financial services and fintech. This will encompass working directly with new and existing companies throughout the regions, supporting increased enterprise collaboration, and working in collaboration with regional stakeholders. Enterprise Ireland’s supports are integrated with a national network of nine regional offices in Ireland and over 30 Enterprise Ireland offices in international locations that facilitate access to more than 60 countries.
At the launch of the Ireland for Finance Action Plan for 2022, Minister of State Fleming announced that the Department of Finance will be carrying out a mid-term update of the strategy to maintain the growth of the international financial services sector. The review will run alongside the implementation of the 2022 Action Plan, will inform the prioritisation of work and strategic direction in the future while building on the success achieved to date.
34. Deputy Mairéad Farrell asked the Minister for Finance if his Department is considering new laws and regulations with respect to buy now pay later services which are entering the Irish market and raise considerable consumer protections concerns; and if he will make a statement on the matter. [9706/22]
View answerAddressing the issue that firms offering consumer credit at the point of sale does not require authorisation by the Central Bank has been a key element of the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Bill 2021.
Committee Stage of the Bill is due to take place on the 23rd of February 2022 and the Government will put forward an amendment to the Bill that will capture within the scope of the Consumer Credit Act ‘Buy Now Pay Later’ (BNPL) credit agreements provided to consumers, including where such agreements do not levy interest or impose any other charge on a consumer that are advertised to consumers.
This in turn will mean that the providers of those agreements will fall within the scope of Central Bank regulation.
This will be in line with the intended Government policy that both the direct and indirect providers of credit to consumers should be subject to Central Bank regulation and, therefore, the Central Bank will be able to apply the relevant provisions of its Consumer Protection Code (and where considered necessary other relevant codes or regulations) to all entities which advertise the provision of BNPL agreements (including interest and cost free BNPL agreements) to consumers.
35. Deputy Michael Moynihan asked the Minister for Finance the engagement he has undertaken as part of the policy review for credit unions. [9308/22]
View answerSince June 2021, Minister of State Fleming, who has responsibility for credit unions, has held 26 meetings with various credit union stakeholders including;
- the Representative Bodies;
- various collaborative ventures;
- the Registrar of Credit Unions;
- the Credit Union Advisory Committee and
- individual credit unions
These meetings have proven to be very informative and their outputs have fed into the Review of the Credit Union Policy Framework.
Separately, Department Officials from the Credit Union Policy Team have very regular engagement with sector stakeholders, including quarterly stakeholder roundtables, the next of which will take place before the end of February.
They also act as secretariat to the Credit Union Advisory Committee, which meets on a monthly basis.
36. Deputy Jackie Cahill asked the Minister for Finance the status of the publication of the credit union policy review framework. [9441/22]
View answerWork on the Review of the Policy Framework is well advanced and we intend to issue proposals emanating from the Review for consultation shortly.
As part of the Review of the Policy Framework, Minister of State Fleming has conducted extensive stakeholder engagement, meeting with the representative bodies, collaborative ventures, service providers, the Credit Union Advisory Committee, the Registrar of Credit Unions and individual credit unions. The information gained from these meetings will help inform the next steps taken by Government.
In terms of supporting the sector to provide essential financial services to local communities, the following are some recent developments which highlight the potential of the sector to grow and fulfil a role in relation to community banking. Lending and Investment The Central Bank has in recent years reviewed both the lending and investment frameworks. Since 1 January 2020, credit unions now have a combined capacity to provide up to €1.1 billion in additional SME and mortgage loans, with further capacity available to credit unions who can comply with certain conditions or on approval by the Central Bank. As of September 2021, credit unions had a combined mortgage and SME loan book of circa €387 million, an increase of 19% year-on-year. Credit unions are permitted to place their surplus funds that have not been lent to members in a range of investments including Tier 3 Approved Housing Bodies (AHBs). I am pleased to share with the Deputy that three credit union backed funds have received approval from the Central Bank. Credit unions will be able to invest up to €900 million in these regulated funds, which will subsequently lend to AHBs. SME Lending Nineteen credit unions were approved in early 2021 for participation in the Covid-19 Credit Guarantee Scheme. Further, in November five credit unions were announced as participants in the Brexit Impact Loan Scheme (BILS). The BILS provides low-cost loans of €25,000 to €1.5m to eligible Brexit-impacted businesses. In total, SME lending has grown 6.9% year on year to end September 2021. Further development of SME lending in a controlled manner could also assist credit unions in growing and diversifying their loan book.Access to Finance for Retrofit The Government significantly increased the funding available to support retrofit. My officials have been engaging with stakeholders to support increased credit union participation in retrofit loan schemes. Other Services Other than member savings and lending, in order to provide “additional services”, a credit union must receive approval from the Central Bank. 66 credit unions are approved to provide current accounts. The Central Bank has prescribed a list of exempt services which may be provided without requiring approval. The Central Bank is undertaking a review of the Exempt Services Schedule to ensure that the services listed reflect the current financial services landscape. The Central Bank has commenced a public consultation seeking views from stakeholders on the proposed changes arising from this review.
37. Deputy Richard Boyd Barrett asked the Minister for Finance if he will now consider abolishing the universal social charge and replacing it with a high-income social charge given the very severe impact of inflation and the rising cost of living, which is disproportionately impacting on low- and middle-income workers; and if he will make a statement on the matter. [9672/22]
View answerThe Universal Social Charge (USC) was designed and incorporated into the Irish taxation system in 2011 to replace the Health and Income Levies. Its primary purpose was to widen the tax base and to provide a steady income to the Exchequer to provide funding for public services. The USC is an individualised tax, meaning that a person’s liability to the tax is determined on the basis of a persons own individual income and personal circumstances. It is a more sustainable charge than those it replaced and is applied at a low rate on a wide base.
The USC has played a vital part in meeting the many expenditure demands placed on the Exchequer, and USC receipts have been central to the current stability of the public finances since March 2020, despite the challenges arising from the Covid-19 pandemic.
Receipts from the USC in 2021 amounted to €4.4 billion – 16.5% of total income tax receipts or 6.4% of total Exchequer receipts. The projected USC yield for 2022 is broadly similar.
If USC were to be abolished, it would be necessary to raise approximately €4.4 billion from other sources. The Deputy suggests replacing the USC with a high income social charge but the Deputy has not specified an appropriate level/rate for this charge or what income level would be considered a high income.
In any event, such a proposal would significantly narrow the income tax base and would expose our economy to significant risks in the event of a future economic downturn. Currently, it is estimated that 29.5% of taxpayer units have incomes greater than €50,000 and will pay 86.4% of the total income tax and USC for 2022. Furthermore, 8.3% of taxpayer units have incomes greater than €100,000 and will pay 55.5% of the total income tax and USC in 2022. A high income social charge could increase the marginal tax rate, which could create a clear disincentive to work and impact on the competitiveness of our tax code.
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 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.
As such, I have no plans to abolish the USC and replace it with a high income social charge.
39. Deputy Jackie Cahill asked the Minister for Finance his views on the impact the ban on price walking will have on insurance premiums. [9440/22]
View answerIn line with commitments in the Programme for Government, the Action Plan for Insurance Reform contains a number of actions that aim to lower insurance costs for consumers. In this regard, under the Action Plan, my Department was tasked with examining the Central Bank’s Review of Differential Pricing in the Motor and Home Insurance Markets and taking any appropriate actions as deemed necessary in light of the Bank’s final report.
As the Deputy is aware, the Central Bank published its final report, along with a public consultation on proposals to strengthen the consumer protection framework in July 2021. Among the Bank’s proposals is a ban on “price walking” in the motor and home insurance markets for personal consumers. Price walking is a form of differential pricing whereby consumers are charged higher premiums, relative to the expected cost, the longer they remain with an insurance provider. As such, it represents a de facto “loyalty penalty” on long-serving customers, with the Bank’s findings showing that the premiums paid by certain policyholders deviate significantly from the expected costs to the insurer.
I therefore welcome the proposal to ban this practice, as I believe it will protect those customers who prefer to stay with their current insurer from being unfairly penalised for doing so in terms of the premium paid. As set out in its final report, I understand that the Bank’s intention is to apply this ban on price walking from the point of second renewal, meaning that consumers who wish to switch provider would still be able to benefit from discounts for new business customers. As such, I believe it represents a balanced approach that is well-calibrated to the Irish market and the preference of consumers here.
In summary, I believe that the proposed ban on price walking is a very significant development which would ensure fairness and further strengthen protections for consumers in the motor and home insurance markets. In order to ensure that this is the case, my Department is currently advancing legislation which would require the Bank to report on the impact of this ban, or any other measures taken to target price walking, within 18 months of the measure coming into effect. This would provide timely oversight, thereby allowing the Government to act swiftly if further intervention is needed in order to protect consumers from any unfair loyalty penalty.
40. Deputy Éamon Ó Cuív asked the Minister for Finance the amount of revenue raised each year since its inception by the universal social charge; the estimated amount to be collected in 2022; if consideration has been given to exempting all those earning the equivalent of a standard 39-hour week on the minimum wage from this charge; the estimated cost of doing so; and if he will make a statement on the matter. [9475/22]
View answerThe amount of revenue raised by the Universal Social Charge (USC) each year since its inception in 2011 is available on the Revenue website at the following link:
www.revenue.ie/en/corporate/documents/statistics/receipts/net-receipts.pdf
For the convenience of the Deputy, the following table sets out the USC net receipts from 2011 to 2021.
USC Net Receipts
|
Year |
€ Millions |
|
2011 |
3,114 |
|
2012 |
3,790 |
|
2013 |
3,930 |
|
2014 |
3,647 |
|
2015 |
4,147 |
|
2016 |
3,968 |
|
2017 |
3,724 |
|
2018 |
3,738 |
|
2019 |
3,797 |
|
2020 |
3,832 |
|
2021 |
4,399 |
The estimate yield for 2022 is €4,400m.
The USC was designed and incorporated into the Irish taxation system in 2011 to replace two other charges, namely the Health and Income Levies. Its primary purpose was to widen the tax base and to provide a steady income to the Exchequer to provide funding for public services.
The USC is an individualised tax, meaning that a person’s liability to the tax is determined on the basis of his/her own individual income and personal circumstances. The USC is applied at a low rate on a wide base, which ensures that it is a stable and sustainable source of revenue for the State.
Currently individuals with incomes of less than €13,000 are exempt from USC. For 2022, it is estimated that 28% of all taxpayer units will be exempt from USC.
As regards the Deputy’s suggestion to exempt all those earning up to the equivalent of a standard 39-hour week on the minimum wage from this charge, c. €21,295, it is estimated that such a proposal would cost €64m and €75m on a first and full year basis, respectively. It would also narrow the tax base by exempting approximately 39% of taxpayer units from the charge.
I would note that in recent Budgets, including Budget 2022, this Government actively increased the USC ceiling for the 2% rate in line with increases to the national minimum wage, to ensure that a full-time adult worker who benefits from the increase in the hourly minimum wage rate would remain outside the top rates of USC.
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. In my view, 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.
41. Deputy Darren O'Rourke asked the Minister for Finance if he will consider the introduction of a refundable tax credit available to renters in the private rental market valued against their monthly rental payments with an appropriate cap in place; and if he will make a statement on the matter. [9708/22]
View answerThe previous tax relief in respect of rent paid was abolished in Budget 2011 and it is no longer available to those who commenced renting for the first time from 8 December 2010. This followed a recommendation in the 2009 report by the Commission on Taxation that rent relief should be discontinued. The view of the independent Commission was that, in the same manner in which mortgage interest relief increases the cost of housing, rent relief increases the cost of private rented accommodation. Accordingly, the result of reintroducing this relief would very likely be a transfer of Exchequer funding directly to landlords, which would not have the intended effect of reducing the cost pressure on tenants.
At the time of its abolition, the rental tax relief cost the Exchequer up to €97m per annum, and it is likely that this figure would be even higher today were a similar scheme to be put in place. The refundable element mentioned by the Deputy would potentially add further to the cost.
Proposals for new tax incentive measures are assessed in accordance with my Department's Tax Expenditure Guidelines. These make clear that it is important that any policy proposal which involves tax expenditures should only occur in limited circumstances. In particular, they provide that a tax-based incentive should only be considered where it would be more efficient than a direct expenditure intervention.
Having regard to these considerations, the case for introducing a refundable tax credit as outlined by the Deputy is not a strong one from my Department's perspective.
Finally, as the Deputy will be aware, the 'Housing for All' strategy is intended to deliver more homes of all types for people with different housing needs, including those who wish to rent at an affordable price. The strategy which was published by the Minister for Housing, Local Government and Heritage sets out a number of specific initiatives in relation to the rental market.
42. Deputy Pádraig O'Sullivan asked the Minister for Finance if consideration will be given to introducing a scheme to assist first-time buyers of homes that are not new builds, similar to the help-to-buy scheme and who cannot afford to purchase a new build; and if he will make a statement on the matter. [9690/22]
View answer227. Deputy Niamh Smyth asked the Minister for Finance if there are schemes open to persons who are not a first-time buyer (detail supplied); if he will provide further details on such a scheme; and if he will make a statement on the matter. [9150/22]
View answer235. Deputy Joe Flaherty asked the Minister for Finance if he will consider extending the current help-to-buy scheme to cover second-hand houses for those counties such as County Longford in which there are no new build houses available (details supplied). [9343/22]
View answerI propose to take Questions Nos. 42, 227 and 235 together.
The Help to Buy (HTB) incentive is a scheme to assist first-time purchasers with the 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.
In relation to Deputy O'Sullivan's question, an increase in the supply of new housing is fundamental to resolving the current housing crisis. The HTB scheme is specifically designed to encourage an increase in demand for new build homes in order to encourage the construction of an additional supply of such properties. A move to introduce a similar scheme for second-hand properties would not achieve this aim; on the contrary, it could serve to dilute the incentive effect required in terms of encouraging additional supply of new properties. In passing, I might note that the number of housing commencements for 2021 at over 30,700, and up from 21,686 in 2020, is very encouraging. As the Deputies may be aware, the Housing for All Strategy has as a target the construction of an average of at least 33,000 new homes per year out to 2030.
With regard to the suggestion by Deputy Flaherty that the HTB scheme be extended to second-hand properties in Longford, I refer to my point above regarding the intended incentive effect of the scheme to increase overall supply by encouraging new builds. Furthermore, it would not be possible or equitable for me to amend the scheme in favour of any particular county or region.
As the Deputies will appreciate, decisions regarding taxation measures are usually made in the context of the annual Budget and Finance Bill process. Such decisions must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines. The guidelines make clear that any policy proposal which involves tax expenditures should only occur in limited circumstances where there are demonstrable market failures, where a tax-based incentive is more efficient than a direct expenditure intervention.
In relation to Deputy Smyth's question, matters regarding housing initiatives are, in the first instance, a matter for the Minister for Housing. However, I can confirm that the only tax-based scheme relevant in this case is HTB and it is restricted to First-Time Buyers. Section 477C of the Taxes Consolidation Act 1997 requires that applicants for the scheme must be first-time buyers. This includes circumstances where there is more than one person involved in the purchase or building of a new home. The definition of first time buyer under HTB is as follows:
" first-time purchaser' means an individual who, at the time of a claim under subsection (3) has not, either individually or jointly with any other person, previously purchased or previously built, directly or indirectly, on his or her own behalf a dwelling; "
The intention is to target the HTB scheme on those who have not had the opportunity to build up equity in another property which could be used to purchase the second or subsequent property.
Finally, and as the Deputies may be aware, I announced in my Budget 2022 address that a formal review of the scheme will take place in 2022. The review will be fundamental in nature and will inform decisions for Budget 2023 and Finance Bill 2022. Issues related to the terms of reference and a specific timeline for completion as well as the question of who will carry out the review are being considered by my Department at present and the matter is expected to be moved forward shortly.
43. Deputy Joe Flaherty asked the Minister for Finance the action being taken to reduce the cost of motor insurance premiums. [9310/22]
View answer48. Deputy Dara Calleary asked the Minister for Finance the amount by which motor insurance premiums have fallen since the current Government entered office in June 2020. [9679/22]
View answerI propose to take Questions Nos. 43 and 48 together.
The Government recognises that the cost of insurance is a significant issue for many groups, including motorists, and is therefore continuing to prioritise this issue through the work of the Cabinet Committee Sub-Group on Insurance Reform. In this regard, the Sub-Group is pursuing 66 cross-departmental actions, as set out in the Action Plan for Insurance Reform, including a number of key measures that should help to improve costs for motorists.
Chief among these was the delivery, last year, of new Personal Injuries Guidelines to replace the Book of Quantum, which should provide greater certainty regarding award levels. The Guidelines have significantly reduced awards for many common injuries, and should also help to lower legal fees by encouraging greater use of the Personal Injuries Assessment Board (PIAB) in settling claims. As a result, consistent implementation of the Guidelines should reduce the cost of claims, in turn leading to lower premiums.
Another key development with respect to motor insurance is the proposal by the Central Bank, following its extensive review of differential pricing, to ban the practice of “price walking” in the motor and home insurance markets for personal consumers from July this year. This is a very significant move, as it would end the “loyalty penalty”, whereby motorists and other consumers are charged higher premiums, relative to the expected cost, the longer they remain with an insurance provider.
According to the latest CSO Consumer Price Index data for January 2022, the price of motor insurance is now 11% lower than in June 2020, when this Government was formed, and has fallen by about 10% since the Insurance Reform Sub-Group was established in September 2020. This reflects a downward trend seen in recent years, with motor insurance prices having decreased by 38% from their peak level in mid-2016. At a time of other inflationary pressures in the economy, I believe this significant decline in prices indicates that past reforms by the Cost of Insurance Working Group, as well as the more recent achievements under the Action Plan, are contributing to positive developments in motor premiums.
Minister Fleming and I, along with officials, will continue to work with colleagues to complete the outstanding reforms under the Action Plan, with a view to improving the affordability of insurance for all groups. For example, the Department of Enterprise, Trade and Employment has recently published legislative proposals to enhance the role of the PIAB, which should bolster the advantages accruing from the Personal Injuries Guidelines, and further help to reduce the overall cost of claims. Both Minister of State Fleming and I remain committed to holding the industry to account so as to ensure that the benefits of this series of reform measures are reflected in the price of insurance, including for motorists.
