Written Answers Nos. 209-229
209. Deputy John Paul Phelan asked the Minister for Finance the total number of workers who paid PAYE income tax and the total number who paid universal social charge in 2021; the total amount of PAYE income tax and USC received in 2021; and if he will make a statement on the matter. [46452/22]
View answerI am advised by Revenue that, based on payroll data submitted to Revenue in 2021, the total number of workers that paid PAYE Income Tax in 2021 is approximately 2.53 million and the total number of workers that paid Universal Social Charge (USC) in 2021 is approximately 2.63 million. It should be noted that these figures represent workers that paid Income Tax or USC through payroll in 2021, rather than representing those with a final tax liability.
Revenue publish a breakdown of net receipts by tax head which can be located at the following link - www.revenue.ie/en/corporate/documents/statistics/receipts/net-receipts.pdf
As shown in this publication, in 2021 PAYE income tax amounted to €18.7bn and PAYE USC amounted to €3.7bn.
210. Deputy John Paul Phelan asked the Minister for Finance the total number of single unmarried persons with no dependents who paid PAYE income tax or universal social charge in 2021; the total amount of PAYE income tax and USC which they paid in 2021; and if he will make a statement on the matter. [46453/22]
View answerI am advised by Revenue that taxpayers can have income from both PAYE and non-PAYE sources of income, which are combined to arrive at their gross income. A breakdown of taxpayer units based on their personal status is available in respect of their gross income, however, such a breakdown is not available solely based on one element of their gross income, such as PAYE income as requested by the Deputy. In addition, it is not possible to provide a further breakdown to account for dependents of taxpayers.
I am further advised by Revenue that the number of taxpayer units and the income tax paid broken down by Personal Status (including single persons) can be found in Revenue’s ‘Income Tax Distributions Interactive tables’ publication available on the Revenue website at www.revenue.ie/en/corporate/information-about-revenue/statistics/income-distributions/stats/Income-Tax-breakdown-by-Gross-Income.aspx. Based on the latest available data (2019), single persons accounted for 1.7m taxpayer units (58.8% of all taxpayer units) and had an income tax liability of approximately €5.9 billion (32.3% of the total income tax liability).
The equivalent information in relation to USC is also available on Revenue’s website at: www.revenue.ie/en/corporate/information-about-revenue/statistics/income-distributions/stats/Income-Tax-Distributions.aspx. Based on the latest available data (2019), single persons accounted for 1.7m taxpayer units (58.8% of all taxpayer units) and had a USC liability of approximately €1.2 billion (31.2% of the total USC liability).
It should be noted that jointly assessed couples are counted as one taxpayer unit. Data for 2020 will be available in Q4 of this year at the above links. There are currently no data available for 2021 as these statistics are compiled to include PAYE and self-assessed taxpayer units together, and the filing deadline for the self-assessment tax return (the Form 11) in relation to 2021 is in Q4 of this year.
211. Deputy Catherine Murphy asked the Minister for Finance the total amount of local property tax collected to date in 2022; and the amount outstanding to be collected for 2022. [46461/22]
View answerI am advised by Revenue that information in respect of Local Property Tax (LPT) payments for the year 2022 is published on the Revenue website with the most recent update having been made on 12 September 2022. Figures for tax collected over the course of a year can differ to tax collected in respect of a particular year, as payments of LPT can occur at different intervals.
The recent Revenue analysis shows that payment arrangements in respect of approximately €470 million in LPT have been secured already for the year 2022, of which €384.2 million has been collected to-date, including payments received in the last quarter of the calendar year 2021. This collection figure excludes amounts collected through payroll deduction for 2022 to date, as a breakdown of these payments will not be available until after year-end.
The LPT yield is estimated to be €490 million for the year 2022 when all payments have been received. This estimate is provisional and likely to be revised. In relation to tax collected to date over the course of 2022, the net receipt of LPT to end August is €327 million.
212. Deputy Eoin Ó Broin asked the Minister for Finance if consideration will be given to reducing VAT on print newspapers particularly local and community newspapers given the reported decrease in sales; and if he will make a statement on the matter. [46467/22]
View answerAs the Deputy will be aware, it is a long-standing practice that the Minister for Finance does not comment, in advance of the Budget, on any tax matters that might be the subject of a Budget decision.
213. Deputy Richard Bruton asked the Minister for Finance the present tax reliefs that are available to employees and to employers to support remote working; and if he will make a statement on the matter. [46498/22]
View answerAs the Deputy 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, for the tax year 2022, Remote Working Relief provides 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.
Remote Working Relief claims can be made via Revenue’s MyAccount, for years up to and including 2022. If making a claim for 2022, in real-time, the taxpayer is required to upload a readable image of his or her receipt(s) to Revenue’s Receipts Tracker during the application and the amount claimed increases the taxpayer’s current year tax credits for which he or she will see a benefit in his or her next payroll payment. For previous years, 2018 to 2021, the claim for remote working relief is made through the taxpayer’s income tax return, which can also be made through MyAccount.
The Deputy may also be aware, there is a Revenue administrative practice in place that allows employers to pay a tax-free amount of €3.20 per day to employees who work remotely and satisfy certain conditions. It should be noted that any amounts paid exceeding the €3.20 daily rate are subject to tax, PRSI and USC in the normal manner.
There is no legal obligation on the employer to make such a payment and the choice of whether to make the payment of €3.20 is at the discretion of the employer. If the employer does not make a payment of €3.20 per day, (or pays less than €3.20 per day) Remote Working Relief can be claimed, deducting any payment made by the employer.
I am advised that Revenue has published detailed guidance on this matter on their website, with comprehensive information available in Tax and Duty Manual 05-02-13 e-Working and Tax, which is available at www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-02-13.pdf
214. Deputy Pearse Doherty asked the Minister for Finance the discussions that have been held at the Eurogroup regarding a windfall tax on energy companies since October 2021; the views that he has expressed with regards to this issue at Eurogroup level; and if he will make a statement on the matter. [46500/22]
View answerThere is an energy crisis currently, affecting not only Ireland but also all of Europe. The war in Ukraine has led to volatility in energy markets and exacerbated supply constraints in the electricity market. I am well aware of the difficulties Irish households and businesses are going through arising from substantial increases in energy bills.
It is clear the increase in energy prices is leading to windfall gains for some energy companies across Europe, particularly those involved in the production of fossil fuels and those producing energy using technologies that are not dependent on gas. Where such producers sell at the current market price, they benefit from the market price inflation but without suffering any significant increase in their production costs. My officials have been working with the Department of the Environment, Climate, and Communications to attempt to quantify such gains, and to explore the potential of collecting a portion of these windfall gains to provide support to energy consumers during these difficult times.
Work in this regard is now focusing on a proposed European Commission Regulation which is under rapid negotiation. Gains to electricity producers are driven by the market structure, which determines the marginal price paid for each unit of electricity sold. For this reason, the EU Regulation proposes to include an infra-marginal price cap in the electricity market, designed to limit windfall revenues for producers that are not experiencing input cost inflation. The Regulation also includes a proposed solidarity contribution from fossil fuel producers. The proposal will be negotiated throughout the remainder of this month with a view to being approved at a meeting of the Council of Energy Ministers on 30 September. I fully support the objectives of this proposal.
The Deputy has referenced discussions at Eurogroup and I can confirm that, since last October, the Eurogroup has regularly discussed energy prices and inflation. Euro area Finance Ministers have worked to coordinate policy measures so as to continue to drive the energy transition to more sustainable sources, while also targeting Government supports towards the most vulnerable. At our most recent Eurogroup meeting on 9th September last, we agreed to work with businesses and workers to avoid a wage-price spiral, and also agreed that supernormal levels of profitability should not be experienced by some while so many are suffering the economic consequences of a war.
215. Deputy Peadar Tóibín asked the Minister for Finance if he will consider examining the backdating of the incapacitated child tax credit; if his attention has been drawn to the fact that the credit can only be awarded for four backdated years and that many have looked for services for longer than that to get their children diagnosed. [46503/22]
View answerThe Incapacitated Child Tax Credit (ICTC) is provided for in section 465 of the Taxes Consolidation Act 1997 (TCA 1997) and is available to any individual who proves that he or she has living, at any time during a year of assessment, a child who:
- if under the age of 18, is permanently incapacitated by reason of mental or physical infirmity to such an extent that there is a reasonable expectation that the child would be incapacitated from maintaining him or herself if they were over the age of 18; or
- if over the age of 18, is permanently incapacitated by reason of mental or physical infirmity from maintaining him or herself and had become so incapacitated either before attaining the age of 21 or whilst in full-time instruction at any university, college school or other educational establishment.
The credit may also be available where an individual has custody of and maintains at his or her own expense any child who fulfils the above criteria.
The Incapacitated Child Tax Credit is valued at €3,300 and a separate credit is available in respect of each child who is permanently incapacitated.
In order to claim the credit, taxpayers will be required to provide a Form ICC2 which sets out the extent of the child’s incapacity and has been certified by a medical practitioner. In some cases, Revenue may ask the claimant to provide additional supporting documentation to prove his or her entitlement to the credit.
Where a doctor certifies that a child was incapacitated for earlier periods, a claimant may be entitled to receive the credit for those earlier years of assessment. This is, however, subject to the ‘four-year rule’ provided for by section 865 TCA 1997.
Section 865 TCA 1997 provides a general right to repayment of tax where a person has paid tax which is not due, however subsection (4) sets out that that right is subject to the making of a claim within a statutory limit of four years after the end of the chargeable period to which the claim relates. That statutory limit is binding on Revenue as well as on taxpayers. Determinations of the Tax Appeals Commission in differing appellant circumstances confirm that there is no discretion in the application of the four-year rule for claiming repayments.
Section 865 was introduced in 2003 and provides a statutory general right to repayment of tax as well as payment of interest, subject to the four-year time limit. It provides that no repayment may be made based on claims submitted more than four years after the end of the chargeable period to which they relate. Prior to its introduction there was no statutory right to repayment, though a taxpayer could sue for repayment under common law. The Minister for Finance at that time indicated that, in introducing the new arrangements, he was satisfied that they achieved the necessary balance between establishing a fair and uniform system for taxpayers while providing necessary protection for the Exchequer. I am satisfied that that continues to be the position.
When section 865 was introduced, Revenue’s general right to raise assessments or make enquiries in relation to taxpayer returns was also reduced to four years, although in certain circumstances, for example where fraud or neglect is suspected or in the context of the application of general anti-avoidance rules, Revenue's right to raise assessments or make enquiries is not time limited. Previously, the general time limit on the raising of assessments by Revenue had been ten years. The provision of a four-year time limit for Revenue raising assessments and making enquiries and for taxpayers to claim a repayment of tax creates parity between both positions. An increase in one limit would have to be considered in the context of corresponding increases in other time limits in order to preserve that parity.
I have no plans at this time to amend the four-year limit in section 865.
Further information in relation to the ICTC can be found on Revenue’s website or in Tax and Duty Manual Part 15-01-05, both of which may be found at the links below:
- Revenue website: www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/children/incapacitated-child-credit/index.aspx
- Tax and Duty Manual Part 15-01-05: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-05.pdf.
216. Deputy Brendan Smith asked the Minister for Finance if he will give urgent consideration to the requests of national organisations (details supplied) in relation to the need to reduce costs for this sector through reduction in taxation; and if he will make a statement on the matter. [46504/22]
View answerAs the Deputy will be aware, it is a long-standing practice that the Minister for Finance does not comment, in advance of the Budget, on any tax matters that might be the subject of a Budget decision.
217. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which Ireland continues to be an attractive location for foreign direct investment; the regions from which most competition occur in this area; and if he will make a statement on the matter. [46530/22]
View answerIreland has long established itself as a market of choice for foreign direct investment and FDI makes a highly significant contribution to the domestic economy. Ireland’s ability to attract and retain FDI reflects our strong legal and regulatory landscape, our track record as a stable and pro-enterprise jurisdiction, and our talented and flexible workforce. These unique features continue to support our competitive advantages, which are recognised and valued by the multinational sector.
While large parts of the domestic economy were shut down during the Covid-19 pandemic, the resilience of the multinational sector proved remarkable, with the sector supporting the economy during the worst of the crisis and helped to bolster Ireland’s transition from the pandemic. Whilst the outlook in the domestic economy improved somewhat as restrictions were lifted at the beginning of this year, the onset of the war in Ukraine fundamentally altered the economic outlook, representing a large supply-side shock to the global economy.
The primary channel through which the conflict has impacted the Irish economy is via elevated energy and other commodity prices. Higher prices have undermined the profitability of business, with costs rising in both the Irish manufacturing and services sectors. However, higher inflation is not only affecting the competitiveness of businesses in Ireland, but is also impacting on the competitiveness of businesses in most advanced economies, with the euro area, the US, and the UK all recording inflation levels of at least 9 per cent in August.
Fortunately, Ireland has entered this period of uncertainty in a position of strength. The Irish modified current account, which strips out the distorting effects of globalisation, is in a strong position and is expected to remain in surplus over the medium term. Irish exports have recorded a robust first half of 2022, with a continued strong performance in the multinational sector and significant growth in the traditional sector. However, we cannot become complacent and I am very aware of the importance of maintaining our competitive position on the international stage.
Domestically, there is a real risk that a wage-price spiral emerges as a result of persistently-high inflation. This would damage our cost competitiveness and hamper the economy’s ability to compete in the global market place. My Department will continue to monitor risks to Ireland’s competitiveness closely, and respond as needed to protect Ireland’s attractiveness for FDI.
218. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he continues to use his influence in the European Union with a view to bringing about mortgage interest charges into line with the average applicable throughout the union; and if he will make a statement on the matter. [46531/22]
View answer226. Deputy Bernard J. Durkan asked the Minister for Finance if the average cost of mortgage borrowing here can be further brought into line with that available in the European Union; and if he will make a statement on the matter. [46540/22]
View answerI propose to take Questions Nos. 218 and 226 together.
The price lenders charge for their loans is a commercial matter for individual lenders. As Minister for Finance I cannot determine the lending policies of individual banks including the interest rates they charge for loans including mortgages.
I am aware that the general level of new lending interest rates in Ireland are higher than is the case in many other European countries. However, it should also be noted that recent trends indicate that certain mortgage rates have been falling in Ireland. For example, the interest rates on new mortgages have fallen from 4.05% in December 2014 to 2.63% in July 2022. It should also be noted that the average Eurozone new mortgage interest rate has increased in recent months and the differential between the Irish and the Eurozone mortgage interest rate has narrowed from 1.4% at end 2021 to 0.55% at end July 2022. Most new mortgages in Ireland are now fixed rate mortgages and the weighted average interest rate on new fixed rate mortgage agreements stood at 2.50% in July 2022, down from 4.11% in December 2014. There has also been a reduction in the interest rates charged on loans to SMEs and consumers over the same period.
In addition, Irish mortgages have different characteristics from those offered in other countries. For example, many Irish banks include incentives such as cash back offers, which reduce the effective Irish mortgage interest rate. Also Irish mortgages are generally not subject to upfront fees which are typically charged by banks in some other EU jurisdictions.
Separately the Central Bank introduced a number of increased protections for variable rate mortgage holders which came into effect in 2017. The enhanced measures, which are provided for in an Addendum to the Consumer Protection Code 2012, require lenders to explain to borrowers how their variable interest rates have been set, including in the event of an increase.
The measures also improve the level of information required to be provided to borrowers on variable rates about other mortgage products which could provide savings for the borrower and signpost the borrower to the Competition and Consumer Protection Commission's mortgage switching tool.
The Central Bank also introduced additional changes to the Consumer Protection Code in 2019 to help consumers make savings on their mortgage repayments, provide additional protections to consumers who are eligible to switch, and facilitate mortgage switching through enhancing the transparency of the mortgage framework.
Consumers may reduce average pricing in the mortgage market by availing of switching options to ensure that recent and potential future price reductions through increased competition pass through to the greatest number of customers possible. Indeed a Central Bank study in 2020 estimated that three in every five ‘eligible’ mortgages for principal dwelling homes stand to save over €1,000 within the first year if they switch and €10,000 over the remaining term.
I appreciate that greater sustainable competition in the credit market will be of benefit to consumers and other borrowers. Accordingly, the review of the retail banking market which is now underway in my Department will consider how the banking system can best support economic activity, assess competition and consumer choice in the market for banking services and consider options to further develop the mortgage market. I expect that the review will be published before the end of the year.
219. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which borrowing for capital or non-capital works here continues in line with the policy of the European Central Bank; and if he will make a statement on the matter. [46532/22]
View answerI understand the Deputy is interested in Ireland’s borrowing and the monetary policy of the European Central Bank (ECB).
The National Treasury Management Agency (NTMA) borrows to meet the Exchequer’s Borrowing Requirement regardless of whether the ultimate expenditure is capital or non-capital in nature. It should be noted that current and capital expenditure in Ireland is funded through a combination of borrowing and taxation receipts. The NTMA has informed me that so far this year, it has issued €7bn of Government bonds. It issued a new 10-year benchmark bond via a syndicated transaction in January and held three dual bond auctions, the most recent of which was on 1 September.
At €7bn year-to-date, issuance is well below the levels seen in recent years as the impact of the covid-19 pandemic on the public finances unwinds and the Exchequer returns to a position of surplus on foot of strong tax revenues. The issuance was completed at a weighted average yield of just under 1.1% and a weighted average maturity of close to 15 years.
In terms of the factual position, the ECB has no role in determining the use of Exchequer expenditure (whether sourced from borrowing or taxation receipts). The Deputy will be aware that at the most recent meeting of the Governing Council, on 8 September 2022, the ECB decided to raise the three key ECB interest rates by 75 basis points.
The ECB has publicly indicated that, based on its current assessment, over the next several meetings the Governing Council expects to raise interest rates further to dampen demand and guard against the risk of a persistent upward shift in inflation expectations.
At the 8 September meeting the ECB also publicly announced that it intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the Asset Purchase Programme (APP) for an extended period of time past the date when it started raising the key ECB interest rates and, in any case, for as long as necessary to maintain ample liquidity conditions and an appropriate monetary policy stance. As concerns the Pandemic Emergency Purchase Programme (PEPP), the Governing Council intends to reinvest the principal payments from maturing securities purchased under the programme until at least the end of 2024. In any case, the future roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance. Redemptions coming due in the PEPP portfolio are being reinvested flexibly, with a view to countering risks to the monetary policy transmission mechanism related to the pandemic.
220. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which borrowing for capital or non-capital works here continues in line with the policy of the International Monetary Fund given Ireland’s indebtedness to the fund; and if he will make a statement on the matter. [46533/22]
View answerI would like to clarify that Ireland has no outstanding loans to the IMF. On 20 December 2017, the National Treasury Management Agency (NTMA) completed the early repayment of the full loan under the IMF's Extended Fund Facility (EFF).
221. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which borrowing levels in this country comply with the requirements of those lending institutions to which Ireland appealed during the financial crisis whilst a programmed country; and if he will make a statement on the matter. [46534/22]
View answerThe EU-IMF financial assistance programme for Ireland, formally agreed in late 2010, was a joint financing package in the amount of €85 billion and was made up of contributions from the International Monetary Fund (IMF), the European Union (EU), bilateral loans from the United Kingdom (UK), Sweden and Denmark, and Ireland own resources.
The €85 billion programme was financed as follows:
- €22.5 billion was provided by the IMF.
- from EU partners, the European Financial Stabilisation Mechanism) (EFSM) provided €22.5 billion and the European Financial Stability Facility (EFSF) €18.4 billion.
- €4.8 billion was provided by bilateral loans from UK, Sweden and Denmark.
- €17.5 billion was sourced from Ireland’s own resources (treasury and national pension reserve fund).
In December 2013, Ireland successfully exited the EU-IMF financial assistance programme, with the vast majority of policy conditions under the programme substantially fulfilled and market confidence restored.
Ireland’s loans from the IMF, together with the bilateral loans from Sweden, Denmark and the UK, have subsequently been repaid in full.
With the IMF and bilateral loans now fully repaid, four of the six loans that made up the programme of financial assistance are now repaid. The remaining programme-related debt is as follows:
- EFSM: €22.5 billion
- EFSF: €18.4 billion
While the programme loan agreements do not prescribe levels of borrowing or debt that Ireland must comply with, we will remain under Post Programme Surveillance until 75% of financial assistance has been repaid, which is expected to be in 2031. Under the repayment schedule, Ireland will finish repaying the remaining loans to the European Financial Stability Facility (EFSF) and European Financial Stabilisation Mechanism in 2042.
Sixteen Post Programme Surveillance missions to Ireland have taken place during this time, with the most recent mission having taken place in late March 2022. The Commission’s Staff Report for this mission was published in May.
Since the first mission to Ireland in early 2014, Post Programme Surveillance has marked the progress Ireland has made getting back on track after the EU-IMF programme. My officials and I consider Post Programme Surveillance to be an important ongoing two-way dialogue and partnership with the European institutions, the Commission and the European Central Bank as well as the European Stability Mechanism, which participates in the review missions for the purposes of its Early Warning System.
In the Post Programme Surveillance process, there generally is a high degree of consensus between the Irish authorities and the European institutions in relation to the challenges and risks facing Ireland, and it is beneficial to hear the views of the European institutions on an ongoing basis. In addition, the Commission’s staff report following each review mission is helpful, from the Irish authorities’ perspective, to hear an expert external view regarding some of the challenges and risks that we face as a country.
A key purpose of Post Programme Surveillance is to assess Ireland’s ability to repay outstanding programme loans. The Commission’s conclusions in its staff reports to date have been positive regarding Ireland’s capacity to repay. In this regard, the Commission most recent Staff Report for the 16th PPS concluded that the risks to Ireland’s capacity to service its debt to the EFSM and EFSF are low.
The 17th Post Programme Surveillance mission to Ireland is scheduled to take place in early October and I will continue to ensure that Ireland continues to fully comply with all Post Programme Surveillance obligations.
222. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which Ireland remains in a safe position in terms of borrowing to meet the current international crisis; and if he will make a statement on the matter. [46535/22]
View answerWhile public debt increased sharply during the Covid-19 pandemic, the strides that had been made in the years prior to the crisis, alongside the low interest rate environment, meant that the State could borrow sustainably to mitigate the worst economic impacts of the necessary public health restrictions. Similarly, Ireland’s quick rebound in economic growth following the pandemic, accompanied by strong tax revenue performance, will allow the Government to respond appropriately in the year ahead to the current energy crisis.
A key determinant of fiscal sustainability is, of course, the State’s ability to make repayments on the debt that it has borrowed. An environment of increasing interest rates has now commenced following a sustained period of low and even negative interest rates, and the European Central Bank has signalled that this will continue as long as inflation rates remain elevated. This means that interest rates will undoubtedly increase on any national debt issued in the coming years and on current national debt on variable interest rates.
However, Ireland’s starting position with regards to current financing costs is relatively favourable. The effective interest rate on the national debt is very low, with nearly three quarters of Ireland’s debt at an interest rate of 2 per cent or lower, the bulk of which is, importantly, at fixed rates. Additionally, the vast bulk of Irish debt is in the form of Government bonds, which tend to have a relatively long maturity profile, and around half of outstanding debt instruments are owned by domestic residents, providing additional insulation against adverse shocks.
Notwithstanding this favourable financing position, excessive borrowing at a time of increasing rates will erode the progress made in recent years with regards to fiscal sustainability. The debt ratio will have to be kept on a downward trajectory if we are to tackle the medium term challenges of the digital and climate transitions alongside the fiscal costs of an ageing population.
223. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which pressure from other countries for an increase in corporation profits tax here remains constant; and if he will make a statement on the matter. [46536/22]
View answerI would like thank the Deputy for raising this important issue.
From the outset, I would like to reaffirm that I remain fully committed to OECD Agreement. My long-standing position is that the international tax system needs to keep pace with changes in how business is conducted globally, and the overriding premise of the OECD agreement, signed by over 135 countries, is that a global agreement is needed to properly address the taxation of large corporates in a globalised world. The agreement achieved at the OECD is a fine balance that provides the certainty and stability required for economic growth while at the same time protecting the interests of small countries such as ours. This agreement will come at a cost in terms of reduced tax receipts but I believe it is a price that is worth paying for the stability and certainty it will bring to the global international tax framework.
I am fully supportive of the EU efforts to agree the EU Minimum Tax Directive and I expect the file to be agreed in due course. While full political agreement has not yet been achieved, I am fully supportive of the Czech Presidency’s efforts to resolve the political impasse and it remains my hope that the Directive will be agreed soon. I think it is in everybody's interest to have the EU Minimum Directive agreed, and implemented, on a consistent basis by all 27 Member States.
A public consultation on the technical implementation of the Directive in Ireland has already taken place. At a domestic level work is ongoing to prepare for transposition into Irish law before the end of 2023. I am aware that this process is being replicated in many other jurisdictions globally, as we collectively prepare to implement the OECD Agreement.
The implementation timeframe for these new rules is ambitious. However, it is important that we work towards this agreed timetable on the assumption that countries globally will move together.
225. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which investment funds are currently funding the house building markets at higher-than-average interest rates; his views on whether this market should be filled by the Irish pillar banks; and if he will make a statement on the matter. [46539/22]
View answerThrough the implementation of the Housing for All strategy, the Government plans to increase the supply of housing to an average of 33,000 per year over the next decade. This is an ambitious plan which will provide increased housing supply and affordability.
While the plan is backed by unprecedented State investment, the Government cannot deliver on this programme alone. The only way we can deliver housing at the substantial scale we need is by also attracting private capital to the market.
Through modelling undertaken by the Department of Finance, it is estimated that €12 billion of development funding per annum, comprising both debt and equity, will be required to develop the Housing for All target of an average of 33,000 homes per year. Of this €12 billion per annum, an estimated €10 billion will be required from private capital sources. While a portion of this will come from our domestic banks, the majority will be required from international sources.
Domestic banks set risk limits around the type and nature of lending activity, resulting in selective and prudent lending practices. It is not desirable that domestic banks provide senior debt at unsustainable levels and levels of debt should appropriately reflect the risk profile of development projects.
As a result, we will attract and welcome inward investment to our housing market, as we have successfully done with investment in other sectors of our economy. This private and patient capital coming from well-established investors such as pension funds is a normal facet of housing investment in many of our European neighbours and beyond.
A substantial increase in the supply of new homes is the only route to solving Ireland’s housing crisis. This will require significant private investment alongside our public investment and is necessary to meet the targets set out in the Housing for All strategy.
227. Deputy Bernard J. Durkan asked the Minister for Finance his views on whether Brexit is having a financially negative impact on this jurisdiction and the island of Ireland; and if he will make a statement on the matter. [46541/22]
View answerMy Government colleagues and I remain alert to the challenges and the potential economic impacts arising from Brexit, including paying particular attention to the effective implementation of the Trade and Cooperation Agreement (TCA) and to the Withdrawal Agreement, which includes the Protocol on Ireland and Northern Ireland. Following the appointment of a new UK Prime Minister and her Government, discussions are resuming on the implementation of the Protocol.
Brexit will have a negative impact on the Irish economy compared to when both Ireland and the UK were members of the European Union. That said, the disruption to the domestic economy from Brexit is playing out more slowly than the fast-moving shocks we have also experienced in terms of Covid-19 and the impact of the situation in Ukraine.
While the Trade and Cooperation Agreement provides for tariff-free trade between the EU and the UK, non-tariff barriers – such as regulatory checks – will weigh on cross-border trade. The UK has announced the postponement of the introduction of further import controls to the end of 2023. As a result, the full impact of Brexit will not be evident for some time, however this will not lessen the impact on the Irish economy.
Building on its early and extensive contingency planning and analysis work which started even before the 2016 referendum, the Government has dedicated substantial resources to preparing for Brexit and the systems in place are working well. We have invested significantly in new infrastructure, systems and staff, and continue to engage intensively with stakeholders and to provide a range of financial, upskilling and advisory supports for impacted sectors and businesses.
Ireland will be the largest beneficiary from the Brexit Adjustment Reserve (BAR), receiving €1.165 billion, the aim of which is to provide financial support to the most affected Member States, regions and sectors to deal with the adverse consequences of Brexit. Funding will be directed at areas such as enterprise supports; supports for the agri-food and fisheries sectors, reskilling and retraining; and checks and controls at our ports and airports. Work is continuing across Government, with all Departments examining measures that need to be taken to counteract the negative consequences of Brexit. Further allocations from the BAR will be made as the impacts of Brexit are worked through.
It remains important that we continue to prepare for any unforeseen consequences over the coming period, including as discussions continue on the implementation of the Protocol on Ireland and Northern Ireland. The Government is committed and remains focused on protecting our economic and financial interests, and will continue to work to minimise the disruption that Brexit will have on the economy and peoples’ livelihoods to the greatest extent possible.
228. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he is satisfied that Ireland’s economic progress will continue unimpeded notwithstanding the challenges in the aftermath of Covid-19 and Brexit; and if he will make a statement on the matter. [46542/22]
View answerEarlier this year, Ireland make a significant step forward by removing all remaining Covid-19 restrictions. With little evidence of permanent economic scarring, it seemed as though our economy would rebound strongly this year. However, the outlook quickly changed with Russia’s invasion of Ukraine, sparking an energy supply crisis and ensuing inflation.
Our economy is now faced with significant headwinds, the most prominent being the cost of living challenges faced by individuals and businesses in Ireland. Consumer price (HICP) inflation rose to 9 per cent in August. The inflationary shock has been mainly driven by energy price rises, but spillover effects to core (non-energy) inflation are now evident. The government is committed supporting individuals and businesses to face these inflationary challenges. As part of Budget 2023 next week, the Government will set out a series of targeted once-off measures to be introduced over the course of the winter to help alleviate cost of living pressures. While there will be a significant support package included in the budget, it must be stressed that the government cannot absorb the full impact of inflation and we must ensure that we do not inadvertently add further to inflationary pressures.
Despite the challenging nature of this economic cycle, Ireland’s economic fundamentals remain strong, especially in the labour market with 2 ½ million people currently in employment, and the unemployment rate falling to just 4.3 per cent in August. Despite the challenges posed by Brexit, the external side of the economy also continues to perform strongly, with strong export growth in the ICT and pharmaceutical sectors.
229. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which Ireland can retain its A1 financial status in the international markets notwithstanding any challenges as yet unseen; and if he will make a statement on the matter. [46543/22]
View answerIreland enjoys an AA rating from all the major ratings agencies, with the exception of Moody’s, reflecting our track record of sound fiscal management.
As the Deputy alludes to, we are living in deeply uncertain times. We have emerged from an unprecedented pandemic and now face a new challenge as the Russian war in Ukraine has resulted in inflation at levels not seen in many decades.
However, I would also note that we have, supported by Government fiscal policy, experienced a remarkable recovery from the pandemic. There are now more people at work in Ireland than ever before, and, despite the many challenges we face, our economy remains fundamentally strong.
The best way in which we can maintain the confidence of market participants in these uncertain times is to keep our public finances on a sustainable pathway, rebuilding our fiscal buffers while intervening, when necessary, to protect our economy from external shocks.
Budget 2023 will strike the balance between providing support today and reinforcing our future stability, helping to ensure that we maintain our positive position in the markets.
