Written Answers Nos. 366-380
366. Deputy Louise O'Reilly asked the Minister for Finance further to Parliamentary Question No. 240 of 7 April 2022, if further projections have been made in relation to the amount of warehoused tax debt that will be collected; the amount that may not be collected; and if it is still his projection that 25% of the warehoused tax liabilities will not be repaid. [40426/22]
View answer367. Deputy Louise O'Reilly asked the Minister for Finance further to Parliamentary Question No. 240 of 7 April 2022, the number of companies that have warehoused tax liabilities that have ceased operations or existence; and the value of the liabilities lost to the Exchequer as a result. [40427/22]
View answerI propose to take Questions Nos. 366 and 367 together.
The Debt Warehousing Scheme has offered valuable and practical liquidity support to individuals and businesses, assisting them with their cash-flow during the difficult trading periods associated with the COVID-19 pandemic. The objective of the scheme is to support the long-term economic viability and survival of the participants/businesses concerned. The Deputy will be aware that, under the scheme, participants can temporarily ‘park’ certain tax debts on an interest free basis until the end of 2022, or until 30 April 2023 for businesses most impacted by the most recent public health restrictions and who are eligible for certain Covid-19 support schemes. To remain eligible for the scheme and to avail of the significantly reduced interest rate of 3 per cent per annum that applies to the repayment of the warehoused debt, returns must be filed for all periods covered by the scheme and current taxes must be paid as they fall due.
Businesses in the scheme are obliged to contact Revenue before the end of December 2022 (or April 2023 in the case of those eligible for the extension) to make arrangements for the payment of warehoused debt. This allows Revenue and the taxpayer to devise a repayment plan over an agreed duration, taking into account the taxpayer’s particular circumstances. The time frame given to businesses to repay warehoused debts will be negotiated as part of the agreement and will take account of all relevant factors including ongoing liabilities and ability to repay.
I am advised by Revenue that the total debt eligible for the Debt Warehousing Scheme since its introduction is €31.947 billion, and 256,000 businesses were eligible to avail of the scheme. However, as at 30 June 2022, 91 per cent of that debt has been paid, leaving a balance of €2.892 billion currently in the warehouse in respect of approximately 88,000 individual entities.
I know that Revenue appreciates the challenge for businesses in paying their outstanding liabilities in a difficult economic and financial climate. Revenue has consistently encouraged businesses experiencing payment difficulties to work proactively with them when such difficulties start to arise so that an agreed solution can be found to enable them work through those difficulties.
Revenue is not in a position to say exactly how many companies that are in the Debt warehousing Scheme have ceased operations or existence. However, I am advised by Revenue that €26.4 million warehoused debt has been written off for companies that have been liquidated since the introduction of the scheme.
As the Deputy is aware, my Department makes certain assumptions and projections in preparing the annual Budget and Stability Programme Update (SPU). In that regard, SPU 2022 projections made by my Department in April also incorporated the prudent assumption that 25 per cent of the warehoused tax liabilities are not repaid, i.e., that 25 per cent of the businesses that have availed of the scheme will never be in a position to repay. This is a conservative technical assumption but it is considered better to err on the side of caution in this matter.
368. Deputy Aengus Ó Snodaigh asked the Minister for Finance the estimated cost to the State of retaining the regional uplift for the audio-visual industry at existing levels in each of the next five years. [40527/22]
View answerSection 481 provides relief in the form of a corporation tax credit related to the cost of production of certain films. The scheme is intended to act as a stimulus to the creation of an indigenous film industry in the State, creating quality employment opportunities and supporting the expression of the Irish culture.
Finance Act 2018 introduced a short-term, tapered regional uplift for productions being made in areas designated under the State aid regional guidelines. The purpose of the regional uplift is to support the development of new, local pools of talent in areas outside the current main production hubs, to support the geographic spread of the audio-visual sector.
The uplift originally provided an increased level of credit for four years, with 5% available in years 1 and 2 (2019 and 2020), 3% available in year 3 (2021), 2% available in year 4 (2022). However, in recognition of the detrimental impact the COVID-19 crisis had on the audio-visual sector, Finance Act 2020 amended the regional uplift to provide for an additional 5% year in 2021, in effect to replace the incentive year lost as a result of the COVID-related public health measures. The tapered withdrawal of the uplift then restarted, reducing to 3% in the current year 2022, 2% in 2023, and Nil thereafter.
I am advised by Revenue that the Exchequer cost of the regional uplift is dependent on the number and value of claims made for the relief in future. As information on future expenditure in this sector is unknown, there is no basis available to provide an accurate estimate of the future cost of the regional uplift. However the Deputy may wish to note that in 2020, the latest year for which Corporation Tax returns have been received and a year in which the uplift rate was 5%, the cost of the regional uplift was €3.9 million.
369. Deputy Marc MacSharry asked the Minister for Finance if he will clarify the regulation whereby items that have their origin in the European Union and are brought to the UK for sale but whose first ownership will be when imported to Ireland, if the purchasers of such items are exempt from custom duties or tariffs when sold in Ireland; and if he will make a statement on the matter. [40528/22]
View answerThe EU-UK Trade and Cooperation Agreement has eliminated customs duties for goods imported from GB where the goods are of UK origin. However, where the goods being imported from GB are not of UK origin, customs duty is applicable. This includes goods of EU origin that have been imported into GB and are subsequently imported into Ireland.
However, I am advised by Revenue that the Union Customs Code has a relief, Returned Goods Relief, which may apply to the scenario outlined by the Deputy.
Under Returned Goods Relief, goods can be re-imported into the EU without payment of customs Duty provided the goods:
- were originally exported from the EU
- are returned to the EU within 3 years from the date of export and
- are re-imported in the same state.
VAT relief may also apply if the goods are re-imported into the EU by the same economic entity that originally exported the goods out of the EU.
To claim the relief, documentary proof will be required by Customs on importation to Ireland including the returned goods information sheet (Form INF 3) completed by the competent authorities in the exporting Member State or a copy of the export declaration authenticated by the competent authorities in the exporting Member State. Proof that the goods are unaltered when being imported to Ireland is also required e.g. information from an inventory system or other means of tracking the goods from re-import into Ireland back to storage in the UK and back to the original export out of the EU.
370. Deputy Jim O'Callaghan asked the Minister for Finance if the roll over of tax relief under a compulsory purchase order which was removed in 2002 will be reinstated for those whose apartments are to be demolished as a result of the Metrolink and who consequently will be forced into the capital gains tax net; and if he will make a statement on the matter. [40586/22]
View answerThe acquisition of a property by way of compulsory purchase order (CPO) is the disposal of an asset for the purposes of Capital Gains Tax (CGT). Any chargeable gain arising on such a disposal may be subject to CGT at a rate of 33%. The first €1,270 of total chargeable gains in respect of an individual in any year of assessment is exempt from CGT.
“Roll-over relief” (under which the CGT payable on the proceeds of a gain was deferred if the proceeds were reinvested with the result that the tax liability is not realised until the assets are eventually sold) was abolished in Budget 2003 for disposals after 4 December 2002, including disposals as a result of a CPO. Prior to Budget 2003, CGT relief in respect of the disposal of property acquired under CPOs was available where the disposal took place because of a CPO and a replacement property was acquired.
An issue with the relief was that chargeable gains which were deferred under roll-over relief were often never ultimately taxed. Therefore re-introducing roll-over relief would be likely to affect the yield from CGT. Any proposal to introduce roll-over relief specifically for CPOs could be difficult to limit in scope and scale.
I would draw the Deputy’s attention to Section 604 of the Taxes Consolidation Act, 1997, which may be relevant to the property owners referenced in his question. Section 604 provides relief from CGT on the disposal of one’s principal private residence. If an apartment is occupied by an individual as his or her principal private residence for all or part of his or her period of ownership, then full or partial relief from CGT will be available where a chargeable gain arises on the disposal of that apartment, including by way of CPO. The last 12 months of ownership of the apartment by the individual is treated as a period of occupation for the purpose of this relief. An individual cannot have more than one principal private residence at any one time.
Where the apartment was not occupied by the individual as his or her only or main residence throughout the period of ownership, only a proportion of the gain on the disposal is exempt. This proportion is the same proportion that the length of the period of owner-occupation (inclusive of the last 12 months of ownership) bears to the length of the period of ownership. The balance of the gain is chargeable to CGT in the normal manner.
The relief does not apply where the apartment was acquired wholly or mainly for the purposes of realising a gain on its disposal (i.e. an investment property) nor does it apply to any part of the gain on the disposal which is attributable to enhancement expenditure incurred wholly or mainly for the purposes of realising a gain on the disposal of the apartment.
It should be noted that the specific facts and circumstances which exist at the time of the disposal of the apartment will determine the amount, if any, of CGT which may be due.
371. Deputy Fergus O'Dowd asked the Minister for Finance the total number of prize bonds which have been issued to date that have never been cashed in; the total figure received through prize bonds since its establishment; the total figure paid out from the scheme; and if he will make a statement on the matter. [40603/22]
View answerThe NTMA on behalf of the Prize Bond Company has provided me with the following information in relation to the Prize Bond Scheme:
|
Prize Bond Data (as at 19/7/2022) |
|
|
Total value of Prize Bonds issued to date, not cashed in |
€4.6bn |
|
Total value received through Prize Bonds since its establishment |
€8.8bn |
|
Total value of repayments made from Prize Bonds |
€4.2bn |
|
Total value of prizes paid out |
€0.6bn |
372. Deputy Ivana Bacik asked the Minister for Finance if his Department is considering ending the subsidisation of jet kerosene in Budget 2023; and if he will make a statement on the matter. [40636/22]
View answer426. Deputy Richard Boyd Barrett asked the Minister for Finance the estimate full-year revenue that would be generated by introducing a levy of 33% on commercial aviation fuel; and if he will make a statement on the matter. [41576/22]
View answer427. Deputy Richard Boyd Barrett asked the Minister for Finance the estimated full-year revenue that would be generated if Ireland imposed the European Commission’s proposed tax on aviation fuel in Budget 2023 and in the case that the tax will be imposed on all flights including executive and corporate flights; and if he will make a statement on the matter. [41577/22]
View answerI propose to take Questions Nos. 372, 426 and 427 together.
Ireland’s excise duty treatment of fuel used for air navigation is governed by European Union law as set out in Directive 2003/96/EC on the taxation of energy products and electricity, commonly known as the Energy Tax Directive (ETD). The ETD is transposed into national law in Finance Act 1999 (as amended). Under the ETD, Member States are obliged to exempt from excise duty, certain mineral oils used for commercial aviation purposes.
In relation to aviation fuels, the scope of the ETD exemption covers jet fuel, also described as heavy oil, which is the most commonly used fuel type in air navigation. The exemption must encompass all jet fuel used for intra-Community and international air transport purposes. A Member State may however waive this exemption for intra-community flights but only where it has entered into a bilateral agreement with another Member State to tax fuel. Ireland has no such agreements at present and therefore the exemption from taxation is applied to all jet fuel used for commercial intra-community flights. No other Member States currently have bilateral agreements in place to allow for taxation of jet fuel.
The ETD provides that Member States may opt to fully or partially exempt from taxation jet fuel used for commercial domestic air navigation. Currently Ireland’s Mineral Oil Tax (MOT) law provides for a full relief to apply to jet fuel used for all commercial air navigation, including domestic, intra-community and international.
Light oil, referred to as aviation gasoline, is also used as an aviation fuel, although much less commonly than jet fuel. Under the ETD, Member States may opt to fully or partially exempt aviation gasoline used for international or intra-community commercial air navigation. They may also opt to fully or partially exempt fuels used for domestic commercial aviation. MOT law currently provides for a partial exemption for aviation gasoline used for commercial air navigation. There is no distinction in national legislation between domestic, intra-community and international commercial aviation in the operation of the partial relief.
With regard to aviation fuel for commercial international transport, the scope for a Member State to take a unilateral approach on taxation of aviation fuels is limited not only by the ETD but by international law and a range of bilateral and multilateral agreements that operate under the 1944 Convention on International Civil Aviation (known as the Chicago Convention).
Jet fuel and aviation gasoline used for private pleasure flying, i.e. non-commercial purposes, are mandatorily taxed under the ETD. The relevant standard rates of MOT apply to all such fuel uses in the State.
The table below summarises the mandatory exemptions and excise duty measures for aviation fuels required under Article 14 of the Energy Tax Directive. It also summarises the MOT treatment of such fuels used for air navigation as set out in national legislation.
|
Aviation Fuel/Use |
Energy Tax Directive |
Finance Act 1999 |
|
Heavy oil (jet fuel) used for domestic commercial aviation |
No mandatory tax exemption, Member States may opt to exempt or partially exempt |
Full exemption(section 100(2)(b) Finance Act 1999) |
|
Heavy oil (jet fuel) used for used for intra-Community/international commercial aviation |
Mandatory tax exemption, except where bilateral arrangement entered into with another Member State |
Full exemption(section 100(2)(b) Finance Act 1999) |
|
Heavy oil (jet fuel) used for private pleasure flying |
Mandatory taxation |
Full MOT rate of €405.38 per 1,000 litres(section 96 Finance Act 1999) |
|
Light oil (aviation gasoline) used for domestic commercial aviation |
No mandatory tax exemption, Member States may opt to exempt or partially exempt |
Partial relief from MOT, effective rate of €233.71 per 1,000 litres (section 97B Finance Act 1999) |
|
Light oil (aviation gasoline) used for intra-Community/international commercial aviation |
No mandatory tax exemption, Member States may opt to exempt or partially exempt |
Partial relief from MOT, effective rate of €233.71 per 1,000 litres (section 97B Finance Act 1999) |
|
Light oil (aviation gasoline) used for private pleasure flying |
Mandatory taxation |
Full MOT rate of €465.98 per 1,000 litres (section 96 Finance Act 1999) |
In the context of mandatory taxation for private pleasure flying and navigation the ETD defines private pleasure as the use by an owner or the natural or legal person who enjoys the use either through hire or through any other means, for other than commercial purposes and in particular other than for the carriage of passengers or goods or for the supply of services for consideration or for the purposes of public authorities.
A proposal to revise the Energy Tax Directive is currently being negotiated at EU level, and Ireland is actively engaged in these discussions.
I am advised by Revenue, in relation to both Questions 41576/22 and 41577/22, that the consumption data required to provide an estimate of the revenue that would accrue from the introduction of a 33% levy on the cost of aviation fuel, or if Ireland imposed the European Commission’s proposed tax on aviation fuel, is not available as details on purchases of such fuels and the associated pricing are not returned to it.
373. Deputy Pádraig Mac Lochlainn asked the Minister for Finance the amount of litres of marine diesel used by the agriculture sector for each of the past ten years in tabular form; and if he will make a statement on the matter. [40654/22]
View answer374. Deputy Pádraig Mac Lochlainn asked the Minister for Finance the estimated cost to the Exchequer of reducing the cost of marine diesel by €0.20 and €0.35 per litre; and if he will make a statement on the matter. [40655/22]
View answerI propose to take Questions Nos. 373 and 374 together.
Two taxes apply to fuel supplies: excise duty, in the form of Mineral Oil Tax (MOT), and Value-Added Tax (VAT).
Ireland’s excise regime for fuel is governed by European Union law as set out in Directive 2003/96/EC, commonly known as the Energy Tax Directive (ETD). The ETD prescribes minimum tax rates for fuel with which all Member States must comply. Finance Act 1999 provides for the application of excise duty, in the form of Mineral Oil Tax (MOT), to specified mineral oils, such as petrol, diesel, and kerosene, that are used as motor or heating fuels. The standard rate of MOT, currently €405.38 per 1,000 litres, applies to diesel used in road vehicles. Other uses of diesel, such as in agricultural tractors, qualify for a reduced MOT rate of €111.14 per 1,000 litres. Certain uses of diesel, including commercial sea navigation/fishing, are fully exempted from MOT. By contrast, the standard rate of MOT applies to diesel used for other marine purposes, such as for non-commercial navigation or for non-commercial sea fishing.
I gather that the Deputy is asking about diesel used for commercial sea navigation/fishing, which is exempt from MOT. I am advised by Revenue that the total amount of such diesel use over the last 10 years is as set out in the following table:
Diesel used for Commercial Sea Navigation/Fishing (exempt from MOT)
|
Year |
Volume '000s Litres |
|
2021 |
159,711 |
|
2020 |
146,930 |
|
2019 |
129,118 |
|
2018 |
127,133 |
|
2017 |
112,876 |
|
2016 |
120,313 |
|
2015 |
105,783 |
|
2014 |
110,217 |
|
2013 |
94,892 |
|
2012 |
93,467 |
I understand that the Deputy is also asking about the Exchequer cost of potentially reducing the price of diesel used for marine purposes. As explained, there is already a full exemption from MOT in respect of diesel used for commercial sea navigation/fishing, so there is no scope to reduce the excise further, and consequently no Exchequer cost would arise. The question of reducing the market price for users of such diesel is a commercial matter between the users and their suppliers.
In relation to VAT, the VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. In general, the EU VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they fall within categories of goods and services specified in Annex III of the VAT Directive, in respect of which Member States may apply a lower rate from VAT. Within its rates structure, the EU VAT Directive also allows for historic VAT treatment to be maintained under certain conditions on certain goods and services not provided for in Annex III. Currently Ireland has a standard VAT rate of 23% and two reduced rates of 13.5% and 9%. Ireland also holds a number of derogations, under which it is permitted to retain some historic VAT arrangements, under strict conditions.
One of these arrangements that Ireland retains is the application of one of the reduced rates of VAT, currently 13.5%, to the supply of certain fuels including marine and tractor diesel. However under the Directive this rate cannot be reduced below 12%, and furthermore it would not be permitted to reduce the rate to 12% for one item alone (for example, diesel used for marine purposes) without also changing the rate for all the other goods and services that are currently charged at the 13.5% rate.
Notwithstanding this, there is another relief that will be of interest to the Deputy. Under the Value-Added Tax (Refund of Tax) (no. 16) Order,1983, VAT unregistered fishers can claim a repayment of VAT paid on the purchase or importation of marine diesel for use on a registered sea-fishing vessel. Under the standard rules in the VAT regime, VAT-registered fishers can recover VAT on their inputs, including their use of diesel for fishing. Therefore, fishers are already entitled to recover VAT on their diesel for fishing vessels, so there is no scope for further relief.
376. Deputy Pauline Tully asked the Minister for Finance if he will review the process by which recipients of illness benefit are liable for tax on this benefit but are not reimbursed once an insurance claim has paid and the illness benefit is repaid to the Department of Social Protection; and if he will make a statement on the matter. [40668/22]
View answerAs the Deputy may be aware, Illness Benefit is a short term, weekly income support provided by the Department of Social Protection (DSP) for those who cannot work due to illness and have the required number of Pay Related Social Insurance (PRSI) contributions. Section 126(3) of the Taxes Consolidation Act 1997 (TCA) provides that Illness Benefit is a taxable payment; it is liable to Income Tax (IT) but not the Universal Social Charge (USC) or PRSI. Additional payments made to claimants for qualifying children, i.e. Child Dependant increases, are exempt from IT, USC and PRSI.
Revenue has advised me that when an employee is absent from work due to illness and receives Illness Benefit, the tax on such benefit is collected through the PAYE system. The DSP notifies Revenue of the amount of taxable Illness Benefit in respect of the employee concerned and the tax due is collected through the reduction of the employee’s tax credits and tax bands. Revenue issues an amended Revenue Personal Notification (RPN) with reduced tax credits and rate bands to the employer so that they can collect any tax due. If there is any change or reduction to the taxable amount to be collected from the employee, then the DSP will report the update to Revenue who will amend the employee's RPN. Any refund of tax due will then be reimbursed by the employer to the employee through the employee's wages.
I am advised by the DSP that Illness Benefit is one of the illness and disability related income supports which fall under the Recovery of Benefits and Assistance (RBA) scheme. Where a compensation award for loss of earnings is made to the injured person as a consequence of a personal injuries claim, the RBA scheme allows the DSP to recover from the compensator (the liable entity) an amount up to or equivalent to the value of the illness-related payments received by the injured person. As the injured person’s actual illness-related payments are not being repaid, DSP advise that there is no implication for any refund of tax.
378. Deputy Darren O'Rourke asked the Minister for Finance the estimated yield if the local property tax rate increased to 0.30% for properties valued at over €700,001 and increases to 0.50% for properties valued at over €1 million and 1% for houses valued at over €1.4 million. [40753/22]
View answerI am advised by Revenue that it is not possible to provide an accurate estimate of the rate changes mentioned as the valuation provided in the LPT return is the LPT valuation band and not the exact valuation of the property. However, on the basis of certain assumptions regarding the distribution of property values within LPT bands, a tentative estimate of the increased yield from applying a rate of local property tax of 0.3% to property values between €700,001 and €1 million, a rate of 0.5% for values between €1 million and €1.4 million and a rate of 1% for values in excess of €1.4 million is €59 million per annum.
379. Deputy Louise O'Reilly asked the Minister for Finance the estimated first and full-year revenue that would be raised in taxes by increasing the national minimum wage for those aged under 18, aged 18 and 19 years to €10.50 in line with the rest of the workforce; and if he will make a statement on the matter. [40767/22]
View answerI am advised by Revenue that they are unable to calculate the revenue effects sought by the Deputy, as they do not hold the necessary information in relating to hours worked by any particular age cohort.
380. Deputy Holly Cairns asked the Minister for Finance the steps that he is taking to enable the credit union movement to grow as a key provider of community banking in the country. [40780/22]
View answerThis Government recognises the importance of credit unions. The Programme for Government contains commitments to:
- Review the policy framework within which credit unions operate;
- Enable and support the credit union movement to grow;
- Support credit unions in the expansion of services, to encourage community development; and
- Enable the credit union movement to grow as a key provider of community banking in the country.
With regard to fulfilling the commitments in the Programme for Government for credit unions, the Review of the Policy Framework has been completed. The Government recently approved the drafting of legislation to implement the proposals, which have received broad support from all of the representative bodies.
The policy proposals contained in the Review address five key objectives:
1. Recognition of the role of credit unions
2. Supporting investment in collaboration
3. Supporting Governance
4. Improving member services
5. Transparency of regulatory engagement
Cumulatively, the desired outcome of these objectives is to strengthen the role of credit unions as a provider of community banking and to further enable credit unions to focus on priorities that will better position the sector to face the challenges and opportunities of the future.
In developing these proposals Minister Fleming has met the Irish League of Credit Unions, the Credit Union Development Association, the Credit Union Managers Association, the National Supervisors Forum, the Registrar of Credit Unions, the Credit Union Advisory Committee, the CEO Forum, collaborative ventures and many individual credit unions.
In total as part of the Review process Minister Fleming has held over 50 stakeholder meetings with the credit union sector and considered well over 100 proposals.
