Thursday, 31 Mar 2022

Written Answers Nos. 219-229

Inflation Rate

Questions (219)

Pearse Doherty

Question:

219. Deputy Pearse Doherty asked the Minister for Finance the level of inflation in each of the years from 2016 to 2021. [17190/22]

Written answers

Minister for Finance

Both the Consumer Price Index (CPI) and the Harmonised Indices of Consumer Prices (HICP) are used to measure consumer price inflation in Ireland. The HICP however is a harmonised measure and is used for comparison across EU Member States. The two series are broadly consistent, though small differences arise due to the slightly different composition of each price basket, the main difference being the inclusion of mortgage interest in the CPI basket.

The below table, the data for which are also publicly available from the CSO, shows the annual rate of CPI and HICP inflation over the period 2016-2021.

Annual inflation rate	CPI	HICP
2016	0.0	-0.2
2017	0.4	0.3
2018	0.5	0.7
2019	0.9	0.9
2020	-0.3	-0.5
2021	2.4	2.5

Inflation Rate

Questions (220)

Pearse Doherty

Question:

220. Deputy Pearse Doherty asked the Minister for Finance the impact that inflation in 2021 and 2022 will have on the real value of the public debt; the impact that it will have in reducing the debt to GDP ratio; and if he will make a statement on the matter. [17191/22]

Written answers

Minister for Finance

Consumer price inflation picked up sharply over the second half of last year and in February stood at 5.7 per cent. Almost every advanced country in the world is in a similar position, with inflation reaching a record high of 5.9 per cent in the euro area in February.

This pick-up in inflation, ceteris paribus, may reduce the ‘real’ burden of the outstanding stock of public debt in the short-term. On the other hand, the impact of rising inflation increases the risks related to the trajectory of the debt-to-income ratio and the long-term sustainability of the public finances.

Firstly, significant rates of inflation can lead to slower economic growth by increasing business and household costs and negatively impacting upon disposable income. As highlighted in the Annual Report of Public Debt in Ireland 2021, published by the Department of Finance, the debt-to-income ratio trajectory is very sensitive to the path of economic activity. As such, a slowdown in output could have a negative impact on the public debt ratio.

Secondly, given that the European Central Bank’s primary objective is to maintain price stability (2 per cent over the medium-term) and that it has signalled its intention to end the Pandemic Emergency Purchase Programme at the end of March, it is likely that the costs of borrowing will increase. The maturity structure and dominance of fixed rate instruments mean the public debt-to-income ratio trajectory is not particularly sensitive to fluctuations in the interest rate in the short-term. However, higher interest rates now will lead to increases in debt servicing costs down the line.

More broadly, while the inflationary impact of Russia’s unprovoked invasion of Ukraine could not have been anticipated, the possibility of such unexpected economic shocks speaks to the need to pursue prudent budgetary policies which provide the fiscal space for Government to respond to unforeseen events.

As the Deputy will be aware, my Department will set out updated scenarios for inflation and the debt-to-income ratio as part of comprehensive macroeconomic and fiscal forecasts in the Stability Programme Update, to be published in the coming weeks.

Bonds Redemption

Questions (221)

Pearse Doherty

Question:

221. Deputy Pearse Doherty asked the Minister for Finance the yield and interest rate on the Irish ten-year bond from 2019 to the latest date possible, disaggregated by month, if possible. [17192/22]

Written answers

Minister for Finance

I am informed by the National Treasury Management Agency (NTMA) that the below tables show the generic 10-year Irish bond yield at each month-end since 2019. The figure for March 2022 is as of 30th March. The data is sourced from Bloomberg.

2019	Month	Jan-19	Feb-19	Mar-19	Apr-19	May-19	Jun-19	Jul-19	Aug-19	Sep-19	Oct-19	Nov-19	Dec-19
	Yield	0.87%	0.82%	0.55%	0.55%	0.42%	0.17%	0.08%	-0.09%	-0.04%	0.00%	0.04%	0.11%

2020	Month	Jan-20	Feb-20	Mar-20	Apr-20	May-20	Jun-20	Jul-20	Aug-20	Sep-20	Oct-20	Nov-20	Dec-20
	Yield	-0.15%	-0.17%	0.06%	0.04%	0.08%	0.00%	-0.12%	-0.05%	-0.17%	-0.26%	-0.27%	-0.31%

2021	Month	Jan-21	Feb-21	Mar-21	Apr-21	May-21	Jun-21	Jul-21	Aug-21	Sep-21	Oct-21	Nov-21	Dec-21
	Yield	-0.19%	0.10%	0.05%	0.18%	0.20%	0.16%	-0.07%	0.00%	0.18%	0.33%	0.11%	0.24%

2022	Month	Jan-22	Feb-22	Mar-22
	Yield	0.51%	0.75%	1.23%

Since the start of 2019, the NTMA has launched, by syndication, four new 10-year benchmark bonds; in January 2019, June 2020, January 2021 and most recently in January of this year.

Household Debt

Questions (222)

Pearse Doherty

Question:

222. Deputy Pearse Doherty asked the Minister for Finance to provide the change in household disposable income by income decile in percentage terms (details supplied), adjusted for rates of inflation of 2.2% and 6.7%, in tabular form. [17193/22]

Written answers

Minister for Finance

The table to which the Deputy refers, which was contained within the Distributional Analysis of Budget 2022 published by the Departments of Finance and Public Expenditure and Reform, shows the changes in weekly equivalised household disposable income as a result of the Budget’s tax and welfare measures. The analysis is conducted using SWITCH, the ESRI’s tax-benefit microsimulation model, and ITSim – an indirect tax microsimulation model developed jointly by the Department of Finance and the ESRI. As with previous years, the Departments' analysis estimates the changes in disposable income compared purely to a pre-Budget position and does not, therefore, adjust for projected inflation.

The ESRI’s own distributional analysis, published on 14 October 2021, does provide an analysis of the Budget’s tax and welfare measures against an inflation-adjusted estimate of disposable incomes. The ESRI’s October analysis is based upon a projected rate of inflation of 2.2 per cent in 2022 and is available at www.esri.ie/news/budget-2022-measures-compensate-most-households-for-rising-prices.

The ESRI has not updated this analysis to reflect revised projections for inflation in 2022 and I understand that this presents a number of technical and analytical challenges. However, the ESRI recently published a box in its Quarterly Economic Commentary which examines the distributional effects of inflation through a comparison with projected changes in income growth broken down into contributory components across the income distribution. This analysis has been prepared using inflation rates from January 2021 to January 2022, reflecting an annualised rate of inflation of 5.2 per cent.

It is evident from the QEC analysis that much of the impact of inflation is expected to be mitigated by income growth, which is projected to stand at 4.8 per cent on average. The analysis finds that earnings growth is the largest single contributor to disposable income growth, but that Budget 2022 is the next largest contributor to household income growth, with larger effects for low-income and elderly households. I also note that the QEC finds that lowest income households benefit most from the Government’s overall package of policy changes, namely the tax and welfare policy changes in Budget 2022, the February Cost of Living package, and the March reduction in excise duty.

Tax Reliefs

Questions (223)

Ivana Bacik

Question:

223. Deputy Ivana Bacik asked the Minister for Finance the annual cost to the Exchequer of the Bike to Work scheme in each of the years 2016 to 2021, in tabular form. [17216/22]

Written answers

Minister for Finance

As the Deputy will be aware, section 118(5G) of the Taxes Consolidation Act 1997 (TCA 1997) provides for the Cycle to Work scheme. This scheme provides an exemption from benefit-in-kind (BIK) where an employer purchases a bicycle and associated safety equipment for an employee and was introduced in 2009.

The cycle to work scheme operates on a self-administration basis. Relief is automatically available provided the employer is satisfied that the conditions of their particular scheme meet the requirements of the legislation.

There is no notification procedure for employers involved. This approach was taken with the deliberate intention of keeping the scheme simple and reducing administration on the part of employers. Therefore the cost of the existing scheme can only be estimates.

Tax expenditure reports prepared by my Department have estimated the cost in the full years referenced at €4 million but have been clear that this figure was an estimate as separate returns are not required.

An estimated additional tax expenditure of €0.5m in 2020 and €1.5m in 2021 is expected to arise on foot of the changes made to the scheme by Section 9 of the Financial Provision (Covid-19)(No.2) Act 2020. This increased the allowable expenditure from €1,000 to €1,500 in respect of e-bikes and €1,250 in respect of bicycles and allowed the purchase of a new bicycle every 4 years instead of 5.

Financial Services

Questions (224)

Peter Burke

Question:

224. Deputy Peter Burke asked the Minister for Finance if the acquirer of a regulated entity authorised under section 10 of the Investment Intermediaries Act 1995 must notify the Central Bank. [17226/22]

Written answers

Minister for Finance

For convenience I set out below the response I provided to the Deputy on this question on 19 January 2022.

The Central Bank of Ireland is designated as the supervisory authority with respect to the Investment Intermediaries Act 1995 ('the IIA').

Section 39(1) of the IIA sets out that any person proposing to make an "acquiring transaction" (as defined in section 38(2) of the IIA) of an authorised investment business firm shall notify the supervisory authority in writing of the proposal and include with the notification specified information concerning the proposed acquiring transaction.

Furthermore, Section 40 of the Act sets out that the acquiring transaction cannot proceed without the supervisory authority informing the authorised investment business firm and the party making the acquiring transaction in writing that it approves of the acquiring transaction or until three months have elapsed during which the supervisory authority has not refused to approve of the acquiring transaction, whichever first occurs.

Vehicle Registration Tax

Questions (225, 227)

Marian Harkin

Question:

225. Deputy Marian Harkin asked the Minister for Finance if he will provide statistics relating to VRT compromise penalty refunds (details supplied) for the years 2015 to 2021, in tabular form. [17257/22]

Marian Harkin

Question:

227. Deputy Marian Harkin asked the Minister for Finance if he will provide VRT enforcement statistics for January and February 2022 (details supplied) in tabular form. [17259/22]

Written answers

Minister for Finance

I propose to take Questions Nos. 225 and 227 together.

I am advised by Revenue that the number of vehicles seized for Vehicle Registration Tax (VRT) related offences and the number of cases where a compromise penalty was paid for each of the years 2015 to 2021 is set out in Table 1 below. A breakdown of compromise penalties refunded by number and by value is not available as information is not recorded on Revenue systems in this manner.

Table 2 below sets out the information requested by the Deputy in respect of VRT related compliance activity in January and February 2022

Table 1

YEAR	SEIZURES	NO. OF COMPROMISE PENALTIES PAID	Value
2015	1,133	1,097	€698,721
2016	1,384	1,282	€1,023,263
2017	1,304	1,225	€825,706
2018	1,223	1,160	€820,755
2019	1,265	1,200	€826,453
2020	410	392	€290,398
2021	443	428	€335,693

Table 2

2022	WARNINGS	DETENTIONS	SEIZURES	COMPROMISE PENALTIES PAID	VALUE
January	9	0	75	68	€55,703
February	13	0	88	87	€61,783

Tax Residency

Questions (226)

Marian Harkin

Question:

226. Deputy Marian Harkin asked the Minister for Finance if the Revenue Commissioners, when determining State residence for the purposes of S.I. No. 60 of 1993, use criteria that the presence of an individual in the State on the first day of the month and the last day of the month constitutes State residence for the entire month; and if so, if the same criteria are used when determining State residence for the purposes of section 819 of the Taxes Consolidation Act 1997. [17258/22]

Written answers

Minister for Finance

The query relates to the criteria for eligibility for exemption from the requirement to be registered with the Revenue Commissioners for Vehicle Registration Tax (VRT) purposes where a vehicle is temporarily brought into the State. I am informed by Revenue that it may grant a vehicle temporary exemption from the requirement to register a vehicle in the State for VRT if it is owned or registered abroad by a person established outside the State. In the case of an individual, he/she is established outside the State when he/she has his/her normal residence outside the State.

Normal residence, where referenced in Statutory Instrument (S.I.) No. 60/1993, is clearly defined within the S.I. as meaning the place where a person usually lives, that is where she/he lives for at least 185 days in each year because of personal and occupational ties, or, in the case of a person with no occupational ties, because of personal ties. However, the normal residence of a person whose occupational ties are in a different place from her/his personal ties and who consequently lives in turn in different places situated in two or more countries shall be regarded as being the place of her/his personal ties provided that such person returns to the place of her/his personal ties regularly. This proviso shall not apply where the person is living in a country in order to carry out a task of a duration of less than one year.

I am further informed by Revenue that the criteria for temporary exemption from the registration of vehicles as outlined in S.I. No. 60/1993 does not give any specific weighting to the presence of an individual in the State on any specific days of the month or year.

‘Ordinarily resident’ for tax purposes and ‘normal residence’ for VRT purposes are defined differently and treated differently. Tax residence status depends on the number of days a person is present in Ireland during a tax year.

Section 819 Taxes Consolidation Act, 1997 sets out the statutory residence test for tax purposes. It provides that an individual is resident in the State for tax purposes for a tax year if he or she is present in the State for:

- 183 days in that tax year, or

- 280 days between that tax year and the previous tax year, with a minimum of 30 days in each year.

An individual is regarded as being resident in the State for a day if he or she is present in the State at any time during the day. The fact that an individual may be present in the State on particular days is immaterial for the purposes of these tests. Instead, it is the total number of days that an individual is present in the State in a tax year that determines if he/she is resident or not for tax purposes for that year.

Question No. 227 answered with Question No. 225.

Banking Sector

Questions (228)

Brendan Smith

Question:

228. Deputy Brendan Smith asked the Minister for Finance if his attention has been drawn to the widespread difficulties facing bank customers who have to change bank due to the withdrawal of banks (details supplied) from this State; if the 2016 code of conduct of the Central Bank is being adhered to by these banks in facilitating customers to change to new banks; and if he will make a statement on the matter. [17306/22]

Written answers

Minister for Finance

My Department is in regular contact with both KBC and Ulster Bank. In all engagements it is emphasise the need for an orderly withdrawal. Both Ulster Bank and KBC will be providing me with regular updates, in the months ahead, regarding account numbers and any issues consumers are encountering with moving their account.

My Department is also in regular contact with key stakeholders, including the Central Bank of Ireland, the Competition and Consumer Protection Commission, and the Banking & Payments Federation of Ireland, to ensure consumers are kept informed regarding all their options regarding moving their accounts.

Both the Central Bank and I expect that all retail banks have plans in place to manage the impact of the broader changes and consolidation in the retail banking sector. It is the responsibility of the individual banks to ensure that they are putting their customer first, ensuring fair treatment of customers and that customers understand what the changes mean for them. On 25 June 2021, the Central Bank engaged with all banks on their expectations of how they manage issues and consumer risks during this period of change, and it is actively monitoring compliance with these expectations.

In 2016, the Central Bank issued a Code of Conduct on the Switching of payment accounts with Payment Service Providers (“The Switching Code”). The Switching Code is designed to ensure switching accounts is easy and straightforward for the consumer. The Switching Code sets out the process that all Payment Service Providers (including Banks) that offer payment accounts in Ireland are required to follow when a consumer wants to switch accounts. This includes making a switching pack available to customers, timelines for completing the switching process and the actions to be taken by both the existing and new payment service provider when the customer seeks to initiate the switching process.

All customers that currently have an account with KBC Bank and Ulster Bank will be notified by their respective bank, with sufficient notice, to switch their accounts and how the banks will assist them to do this. However, customers do not have to wait for their banks to contact them and could decide at an earlier stage to move to alternative providers, in advance of any notice period. Where customers are considering switching in advance of the notice period, they should make contact with their current provider before closing their account to ensure they understand any product benefits that may be related to their existing current account.

Gender Equality

Questions (229)

Holly Cairns

Question:

229. Deputy Holly Cairns asked the Minister for Finance the steps he is taking to identify and address gender pay disparity in his Department and public bodies and agencies that operate under his remit; and if he will make a statement on the matter. [17357/22]

Written answers

Minister for Finance

The Gender Pay Gap Information Act 2021, once regulations are made, will require certain employers to publish information relating to the remuneration of their employees by reference to the gender of such employees for the purpose of showing whether there are differences in such remuneration referable to gender.

My Department continually seeks to grow its people and enhance its culture to deliver an inclusive place to work and an environment where talented people are engaged, valued and choose to work to provide a world class service and expertise to the State. In line with Civil Service pay policy, all staff within my Department are paid according to a fixed pay scale for their relevant grade, regardless of gender.

My Department, through its Secretary General, is a member of the 30% Club, which is a global campaign supported by Board Chairs and CEOs of medium and large organisations committed to achieving better gender balance at leadership levels and throughout their organisation, for better business outcomes. Furthermore, my Department has hosted talks for staff by the 30% Club on achieving gender balance in the public sector.

State bodies under the aegis of my Department and which have employees have provided the following responses:

The Central Bank, which also provides staff for the Investor Compensation Company DAC, has been publishing an annual Gender Pay Gap Report since 2018. The published gender pay analysis and profile has been based on annualised base pay effective 1 January each year. All employees are aligned to pay grades which provide for equal pay for equal work irrespective of gender. Their pay structures are informed by public sector guidelines, are fully transparent and published on their website. As at 1 January 2021 in its most recent Gender Pay Gap Report, the gender pay profile is 2.2% in favour of male employees. The Bank is committed to continually reflecting on and enhancing its approach to all aspects of Diversity & Inclusion, including undertaking specific targeted actions aimed at improving gender representation and consequently gender pay gap reduction. The Bank will publish its Gender Pay Gap Report 2022 later this year in accordance with the Gender Pay Gap Information Act 2021. Looking ahead, gender forms a central part of the Bank’s Diversity and Inclusion Strategy 2022-2026 and the 2022 Action Plan.

The Financial Services and Pensions Ombudsman (FSPO) has noted the provisions of the Gender Pay Gap Information Act 2021 and the imminent regulations and will take all necessary steps to ensure its compliance with reporting requirements, both in compliance with the Act and in the interests of transparency. The FSPO also fully recognises its obligations and responsibilities with regards to the Employment Equality Acts 1998-2015, and is committed to enabling access to employment for all persons. It operates its recruitment campaigns in compliance with the Codes of Practice for Appointment to Positions in the Civil Service and Public Service and is committed to a policy of equal opportunity for prospective candidates. The FSPO has emphasised the requirement to achieve an inclusive and diverse workplace over the course of the next strategic period. This will include the development of a dedicated HR strategy as well as work to implement identified actions for improvement in accordance with the Irish Human Rights and Equality Commission Act 2014, whereby the Public Sector Duty places a statutory obligation on public bodies to eliminate discrimination, promote equality of opportunity and protect the human rights of to service users and staff alike.

The Irish Fiscal Advisory Council is an equal opportunities employer. Salary grading is in line with the Department of Public Expenditure and Reform circulars on public sector pay. It’s Recruitment Policy and Procedures defines equality of opportunity at the Fiscal Council in respect of recruitment, equality of participation in the workplace and assurance that no one will receive less favourable treatment because of gender, marital status, family status, sexual orientation, religious belief, age, disability, race or membership of the Traveller community.

The National Treasury Management Agency (NTMA) continues the implementation of its Gender Balance Strategy, which focuses on fostering the representation of women at senior levels and enhancing women’s professional growth so that it can attract, retain and develop female employees. This is achieved through activities in the areas of learning and development, external partnerships and leave policies. The NTMA continues to monitor and consider initiatives to address possible or potential causes of gender pay disparity. It assigns staff to Home Building Finance Ireland, the National Asset Management Agency and the Strategic Banking Corporation of Ireland, each of which is also a body under the aegis of my Department.

The Office of the Comptroller and Auditor General is an equal opportunities employer. Its recruitment and promotion is undertaken in accordance with the Public Service Management (Recruitment and Appointments) Act 2004 and the code of practice issued by the Commission on Public Service Appointments. Pay rates for all staff are determined by the Minister for Public Expenditure and Reform. All staff are remunerated on the basis of incremental salary scales for each grade. There are no bonus payments. In 2021, there was a 50:50 ratio of female to male employees. For the third consecutive year, there was no material, i.e. 2% or more, difference in pay rates for female and male employees of the Office in 2021.

The Office of the Revenue Commissioners published in 2020, for the first time, an analysis of their gender pay gap based on 2019 pay and staffing levels. This research documents the pay gap in Revenue and the factors that result in differences in pay levels between men and women. The analysis includes a statistical model that breaks down the gender pay gap into its constituent parts. Gender differences by grade are the leading cause of pay gap in Revenue, as women are over represented at more junior grades, and women are five times more likely to work part-time. The analysis shows there is no unidentified explanation, such as wage discrimination, for the existence of Revenue’s gender pay gap. In 2022, Revenue updated this analysis based on 2021 data. €47,800 is the average annual gross pay for men in 2021; for women the average is €42,300. Revenue’s gender pay gap in 2021 is estimated to be €5,500 or 12%. Furthermore, the analysis shows that Revenue’s gender pay gap is narrowing, it has reduced by a quarter since 2019, from 16% in 2019 to 12% in 2021.

Revenue has also advised that changing gender shares across grades is identified as a key cause of the stronger pay growth for women and the associated reduction in the pay gap in 2021. The impact of changing grade shares is primarily due to hiring and retirements, with promotion of existing staff playing a limited role in the explanation. The reduction in the gap between 2019 and 2021 is due to the share of women in more senior grades increasing (while their share in more junior grades decreased) and increases in the share of women working full-time. The pay gap has also reduced within the cohort of workers who work full-time, reducing from 12% to 8%.

The Tax Appeals Commission has maintained gender pay parity since its formation in 2016.