Written Answers Nos. 219-238
219. Deputy Patricia Ryan asked the Minister for Finance the reason that staff in private hospitals, that were effectively nationalised during the pandemic, have had to pay tax on their pandemic bonus payment; and if he will make a statement on the matter. [48135/22]
View answerAs the Deputy will be aware, on 19 January 2022, the Government announced a Covid-19 recognition payment for eligible frontline healthcare workers to recognise their unique role during the pandemic. The resulting “Pandemic Special Recognition Payment” of up to a maximum of €1,000 per individual was to be made by and on behalf of the Minister for Health to specified categories of frontline healthcare workers. The Minister for Health holds policy responsibility for matters relating to the specification of and payment to those cohorts.
Section 192J of the Taxes Consolidation Act 1997 provides for an exemption from income tax, USC and PRSI in respect of any payment made to eligible front-line healthcare workers under the Pandemic Special Recognition Payment scheme.
The exemption only applies to payments made under that scheme, up to a maximum of €1,000 per qualifying individual. Staff outside of the cohorts specified under the scheme do not qualify for this exemption.
220. Deputy Seán Haughey asked the Minister for Finance the rationale for the position whereby all Department of Social Protection payments are exempt from the universal social charge, while occupational pensions are indeed subject to this charge; and if he will make a statement on the matter. [48201/22]
View answerThe Universal Social Charge (USC) was designed and incorporated into the Irish taxation system in 2011 to replace two other charges, namely the Health and Income Levies. Its primary purpose was to widen the tax base and to provide a steady income to the Exchequer to provide funding for public services.
The USC is an individualised tax, meaning that a person’s liability to the tax is determined on the basis of his/her own individual income and personal circumstances. The USC is applied at a low rate on a wide base, which ensures that it is a stable and sustainable source of revenue for the State.
The USC, like the Income Levy before it, does not apply to social welfare payments, such as the contributory and non-contributory State pensions. However occupational pensions, are liable to the USC if the payment is greater than the exemption threshold. Currently individuals with incomes of less than €13,000 are exempt from USC, which can include modest occupational pensions.
Ireland has one of the most progressive personal income tax systems in the world, which plays a crucial role in the process of income redistribution. Our redistributive tax system has been acknowledged by the IMF, the OECD and the ESRI. In my view, a broad-based, progressive income tax system, where the majority of income earners make some contribution but according to their means, is the most fair and sustainable income tax system in the long term. As such, I have no current plans to amend the current treatment of pensions for USC purposes.
221. Deputy Catherine Murphy asked the Minister for Finance his plans to review the 9% VAT rate for the hospitality sector between today’s date and the expiration of the 9% rate in February 2023; and if the rate will be abolished on the last day of February 2023. [48228/22]
View answerAs the Deputy will be aware, the 9% rate for the tourism and hospitality sectors was reintroduced in Budget 2021 from 1 November 2020 to 31 December 2021 at an estimated cost of €401m. This measure was initially extended in Budget 2022 to 31 August 2022 at a further estimated cost of €251m. It was then extended again for another six months until 28 February 2023 at an additional estimated cost of €250m. This was done to provide further support to the tourism and hospitality sectors over the busy November/December period and into the early New Year.
No further extension to this measure is envisaged so the rate which applies to these sectors will revert to 13.5% from 1 March 2023.
The Deputy should note that a review was undertaken of the 9% VAT rate in advance of Budget 2019. This review found that tourism expenditure is more sensitive to income growth and the economic cycle than price changes, which reduces the relevance of the VAT rate applying to the sector.
Should the economic position or tourism demand alter, the VAT rate applicable to tourism and hospitality will be reviewed as part of the budgetary cycle.
222. Deputy Eoin Ó Broin asked the Minister for Finance the details of the vacant property tax announced in budget 2023, including when it will be levied; when it will be due for payment; and the proposed exemptions. [48287/22]
View answer
223. Deputy Eoin Ó Broin asked the Minister for Finance the methodology for the estimated 400,000 renters estimated to benefit from the renters’ tax credit announced in Budget 2023; the way that this number related to the currently registered Residential Tenancies Board private rental tenancies; and if he will provide further details as to the way that and when this tax relief can be applied for; and if it will be refundable. [48288/22]
View answerAs a precise figure for the number of eligible tenants for the rent credit is currently unavailable from the Residential Tenancies Board (RTB), an estimate was arrived at using the best available data, which is published by the CSO and relates to Jan – June 2021. That release put the number of people deemed to be in the rental sector (excluding social housing tenants) at just over 600,000. Importantly, due to the method by which the data is collected (PPS numbers), the total is deemed to be overwhelmingly comprised of adults, as well as an underestimate of the actual number of people renting.
There are just over 100,000 people in supported tenancies (HAP, RAS, AHBs). When these are excluded the number of eligible tenants falls to c. 500,000. Further, according to the CSO, some 75 per cent of tenants in their dataset have employee, self-employed or director income, which would allow them to claim the credit. That brings the estimated number of eligible tenants to just under 400,000. Given the acknowledged underestimate of the base figure and the need for caution given the huge uncertainties around the data, an estimate of 400,000 was deemed an appropriate figure to use to cost this measure.
The rent tax credit will be available in respect of rent paid during the course of the 2022 year of assessment and subsequent years. I am informed by Revenue that taxpayers will be required to complete an Income Tax Return in order to make a claim in respect of rent paid during the 2022 year of assessment.
Income Tax Returns for the 2022 year of assessment will be available for completion and submission in early January 2023. Further details in relation to the information and supporting documentation taxpayers will be required to provide when making a claim in respect of rent paid during 2022 will be published to the Revenue.ie website in early January 2023. Details in relation to the claim process for rent paid during the 2023 and subsequent years of assessment will also be published in due course.
Finally, it is not proposed that the rent tax credit will be refundable. However, I am informed that a person earning less than the minimum wage annualised in either 2022 or 2023 (assuming the usual metric of 39 hours per week for 52 weeks per year) will be in a position to fully claim the relief.
224. Deputy Matt Carthy asked the Minister for Finance the projected contribution of the State to the European Multi-annual Financial Framework in each of the years 2023 to 2027; the projected receipts by specific programmes (details supplied) in tabular form; and if he will make a statement on the matter. [48309/22]
View answerIreland’s gross contributions to the EU Budget from 2023 to 2027 are forecasted to be as follows:
|
2023 |
€3.975bn |
|
2024 |
€4.075bn |
|
2025 |
€4.300bn |
|
2026 |
€4.375bn |
|
2027 |
€4.500bn |
It should be noted these forecasts were published as part of Budget 2023, and are due to be updated in the coming weeks as part of the Stability Programme Update.
Data on Ireland’s EU Budget receipts are published annually, for the previous year, in my Department’s Budgetary Statistics – i.e. 2021 receipt data will be published in Q4 2022. Therefore, it is not yet possible to confirm Ireland’s projected receipts by specific programme for the remainder of the 2021-2027 MFF. However, my Department estimates that our overall receipts from the 2021-2027 MFF will be in the region of approximately €2 billion each year.
225. Deputy Pearse Doherty asked the Minister for Finance the change in household disposable income due to cost-of-living measures across deciles, in percentage terms, as outlined in figure 2 of Budget 2023: Beyond GDP – Quality of Life Assessment, but adjusted for projected inflation. [48327/22]
View answer226. Deputy Pearse Doherty asked the Minister for Finance the change in household disposable income due to Budget 2023 measures, in percentage terms, as outlined in figure 2 of Budget 2023: Beyond GDP – Quality of Life Assessment, but adjusted for projected inflation. [48328/22]
View answerI propose to take Questions Nos. 225 and 226 together.
As the Deputy is aware, my Department’s analyses of the distributional impact of the tax and welfare measures announced at budget time are calculated on a nominal basis. As such, they do not adjust for projected levels of inflation but instead compare a baseline scenario of no-policy change against a reform scenario solely incorporating the budgetary policy changes. This is the case for both the Cost of Living package and the more traditional tax and welfare measures announced in Budget 2023.
However, the analysis published by the ESRI at their Post-Budget Briefing on 30 September does include comparisons with a hypothetical inflation-adjusted scenario. Specifically, the ESRI examined the distributional impact of Budget 2023 compared to the impacts on income if the tax and welfare system was indexed to an inflation rate of 7.1 per cent.
The ESRI Budget 2023 analysis also included additional measures that were not included in the analysis published by my Department and the Department of Public Expenditure and Reform. These measures include: the universal childcare subsidy, GP visit cards, free school books, and reduced VAT on newspapers.
The ESRI’s Post- Budget Briefing, with relevant distributional graphs, is available at:
esri.newsweaver.com/enewsletter/45ywtphvv12ciwo13848jk/external?email=true&a=5&p=62168701&t=26436355.
Overall, the ESRI’s analysis shows that, once Cost of Living measures are allowed for, all households see gains in their inflation-adjusted weekly disposable income as a result of Budget 2023 – see figure 1 attached. Decile 1 sees the largest gain at just under 1½ per cent. Notably, the ESRI conclude that "the Government's approach to insulating households from the recent rise in energy prices has been effective."
Again, my Department’s analysis of the one-off measures that are being introduced during the remainder of 2022, as published in figure 2 of Budget 2023: Beyond GDP – Quality of Life Assessment, was performed on a nominal basis. In terms of the ESRI analysis, it is difficult to undertake inflation-adjusted analysis on a partial-year basis. The ESRI therefore opted to examine the tax and welfare measures in Budgets 2021 and 2022, including the one-off measures introduced this year.
The Institute’s analysis shows that the lowest income deciles were largely insulated against inflation over the period since 2020 – see figure 2 attached . Overall, the distributional impact was progressive, with the first two deciles gaining the most in disposable income. More broadly, the ESRI analysis highlights the impact of the one-off measures both this year and next in cushioning incomes, particularly in low-income households.
227. Deputy Louise O'Reilly asked the Minister for Finance if the application of a zero VAT rate for automatic external defibrillators announced in Budget 2023 is inclusive of associated parts including pads and batteries; and if he will make a statement on the matter. [48371/22]
View answerAs the Deputy will be aware the required legislative changes in relation to automatic external defibrillators will be made in the Finance Bill. In line with the zero rate that exists for other medical devices I intend for the zero rate to apply to parts or accessories suitable for use solely or principally with automatic external defibrillators.
228. Deputy Louise O'Reilly asked the Minister for Finance if the temporary business energy support scheme is available to any and all businesses, providing that they meet the eligibility criteria; and if so, the protections that will be in-built into the scheme to ensure that it is not abused or accessed by businesses that do not need the supports. [48372/22]
View answerI indicated in my Budget speech that I would be introducing a Temporary Business Energy Support scheme (TBESS) to assist businesses with their energy cost over the winter months.
The TBESS will be open to businesses that carry on a Case I trade, are tax compliant and have experienced a significant increase in their natural gas and electricity costs. The scheme will be administered by the Revenue Commissioners and will operate on a self-assessment basis. Businesses will be required to register for the scheme and to make claims within the required time limits.
It is proposed that the scheme will operate by comparing the average unit price for the relevant bill period in 2022 with the average unit price in the corresponding reference period in 2021. If the increase in average unit price is more than 50% then the threshold has passed and the business is eligible for support under the scheme.
Once eligibility criteria are met, the support will be calculated on the basis of 40% of the amount of the increase in the bill amount. A monthly cap of €10,000 per trade will apply and an overall cap will apply on the total amount a business can claim. The scheme is being designed to be compliant with the EU state aid temporary crisis framework and will need to be approved by the EU Commission in advance of making payments.
The operational details of the scheme are being worked through by officials and will be available soon.
229. Deputy Louise O'Reilly asked the Minister for Finance if he plans to introduce tax relief for the purchase and repair of a medical product (details supplied). [48373/22]
View answerSection 469 of the Taxes Consolidation Act 1997 (TCA 1997) provides for relief at the standard rate of income tax (currently 20%) on qualifying health expenses incurred in the provision of health care.
For the purposes of the section “health care” means prevention, diagnosis, alleviation or treatment of an ailment, injury, infirmity, defect or disability, and includes care received by a woman in respect of a pregnancy other than routine maternity care, but does not include routine ophthalmic treatment or routine dental treatment.
I am advised by Revenue that “routine dental expenses” are defined as “the extraction, scaling and filling of teeth and the provision and repairing of artificial teeth or dentures”. These items are excluded from relief even if there is an underlying medical condition which gives rise to the dental treatment, or if the treatment in a particular case is considered to be of a non-routine nature.
Non-routine dental treatment generally includes major interventions including, but not limited to, endodontics (root canal treatment), periodontal treatment for gum disease and orthodontic treatment
The rationale behind income tax relief for health expenses is broadly intended to provide assistance for those expenses of a significant or exceptional nature. The exclusion of expenses incurred in respect of routine dental treatment has been in place since the relief’s inception in 1967 and I am satisfied that the legislation as drafted and implemented provides sufficient flexibility for expenses that should qualify. There are no plans to change these arrangements at this time.
Further guidance on claiming tax relief for qualifying health expenses can be found in section 13 of Tax and Duty Manual Part 15-01-12, which can be accessed using the following link: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-12.pdf
230. Deputy Paul Murphy asked the Minister for Finance if his Department takes a different view from the Department of Social Protection on the employment status of workers (details supplied) recently adjudged to be employees through the Department of Social Welfare on the one hand, and through the Eversheds Report on the other. [48408/22]
View answerAs the Deputy is aware, employment classification is a complex area and questions of employment status impact the work of three different Government bodies. The Department of Social Protection (DSP) has responsibility for the PRSI system and determines employment status for social insurance purposes; the Workplace Relations Commission (WRC) determines employment status when adjudicating on employment rights matters; and Revenue may determine a worker’s employment status in the context of his/her treatment for income tax purposes and in allocating the income earned to the appropriate Schedule under the Taxes Consolidation Act 1997.
With regard to the details supplied, Revenue advises me that, by virtue of section 851A of the Taxes Consolidation Act 1997, it is statutorily bound to confidentiality in respect of taxpayer information and is prohibited by law from disclosing such information to third parties.
231. Deputy Fergus O'Dowd asked the Minister for Finance if consideration will be given to cases in which a person with a disability is left an inheritance (details supplied); if a mechanism will be put in place to ensure that the disabled recipient can benefit from the entire inheritance without losing the capital gains tax due which takes significant amount away from the registered disabled person who may need the money for their future care needs; and if he will make a statement on the matter. [48463/22]
View answerIt is assumed that the Deputy is referring to tax on an inheritance in the form of capital acquisitions tax (CAT) rather than capital gains tax.
For CAT purposes, the relationship between the person giving a gift or inheritance (the disponer) and the person who receives it (the beneficiary) determines the maximum amount, known as the “Group threshold”, below which a charge to CAT does not arise. Any prior gift or inheritance received by a beneficiary since 5 December 1991 from within the same Group threshold is aggregated for the purposes of determining whether any CAT is payable on a benefit. Where a person receives gifts or inheritances that are in excess of the relevant Group threshold, CAT at a rate of 33% applies on the excess. There are three Group thresholds:
- the Group A threshold (currently €335,000) applies, inter alia, where the beneficiary is a child (including adopted child, stepchild and certain foster children) of the disponer;
- the Group B threshold (currently €32,500) applies where the beneficiary is a brother, sister, nephew, niece or lineal ancestor or lineal descendant of the disponer;
- the Group C threshold (currently €16,250) applies in all other cases.
Accordingly, where a person receives a gift or inheritance from his or her aunt or uncle, the Group B threshold of €32,500 will apply. CAT will be payable by the person at a rate of 33% to the extent that the benefit received, when aggregated with any prior gift or inheritance received since 5 December 1991, exceeds this threshold, unless a specific relief or exemption applies.
There is an exemption from CAT, provided for in section 84 of the Capital Acquisitions Tax Consolidation Act 2003, for gifts and inheritances taken exclusively for the purpose of discharging qualifying expenses of an individual who is ‘permanently incapacitated’ by reason of physical or mental infirmity.
Permanently incapacitated in this context, means being unable to support oneself by earning an income from working. Qualifying expenses mean expenses relating to medical care including the cost of maintenance in connection with such medical care. A gift or inheritance of this nature will be exempt from CAT where Revenue is satisfied that it will be used for such purposes. Accordingly, if an aunt or uncle through a legal will leaves large sums of monies to a niece or nephew, the relief will be available to the niece or nephew if he or she is permanently incapacitated by reason of physical or mental infirmity and it can be established that the monies were taken exclusively for the purposes of discharging the medical expenses of the niece or nephew.
As noted above, the gift or inheritance must be taken exclusively for the purposes of discharging the medical expenses of the incapacitated person. In this regard, Revenue will consider the intention of the person providing the gift or inheritance in determining whether the exemption is available, by reference to appropriate evidence. While such evidence may include the existence of a trust to provide for the ongoing medical care of an individual, Revenue may also accept other evidence, such as a letter of wishes accompanying a will.
Further information on this exemption is available in the Capital Acquisitions Tax Manual Part 22, which can be found on the Revenue website at www.revenue.ie/en/tax-professionals/tdm/capital-acquisitions-tax/cat-part22.pdf
232. Deputy Richard Boyd Barrett asked the Minister for Finance the reason that karate classes for children pay a higher VAT rate than other classes such as yoga, fitness classes and pilates; and if he will make a statement on the matter. [48468/22]
View answerI am advised by Revenue that the VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. In general, the EU VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they fall within the categories of goods and services specified in Annex III of the VAT Directive, in respect of which Member States may apply a lower rate of VAT. 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 is also permitted to retain some historic VAT arrangements, under strict conditions.
Services consisting of the care of the human body supplied in the course of a health studio business or similar business, such as a yoga studio, are liable to VAT at 13.5% on the basis of a historical derogation. In the absence of this derogation, these business would pay the standard 23% rate of VAT. Unfortunately, karate classes do not fall within the aforementioned derogation, thus explaining why they pay a higher rate of VAT.
234. Deputy Ged Nash asked the Minister for Finance the estimated projected cost of extending the 9% VAT rate on electricity and gas for the remainder of 2023; the estimated cost for the extension in January and February 2023; the estimated additional average cost to a household and a business from the higher VAT rate applying for the remaining ten months in 2023; and if he will make a statement on the matter. [48530/22]
View answerI am advised by Revenue that traders are not required to identify the VAT yield generated from the supply of specific goods or services in their periodic VAT returns. Therefore, it is not possible to provide an accurate costing for the potential measures outlined.
However, tentative estimates using third-party data of the total cost arising from extending the current arrangements, whereby electricity and gas supply are subject to the second reduced rate of VAT, are contained in the first three rows of the table below.
Revenue do not have the necessary data to estimate average household or business costs, but an estimate of the total VAT revenue raised from applying the higher rate (13.5 per cent) for the ten months from 1 March to 31 December 2023 is also provided in the final row.
|
- |
Electricity |
Gas |
|
Period |
€m |
€m |
|
Cost of extending 9% VAT rate: 1 October to 31 December 2022 |
23.6 |
6.7 |
|
Cost of extending 9% VAT rate: 1 January 2023 to 28 February 2023 |
18.5 |
5.4 |
|
Cost of extending 9% VAT rate: 1 March to 31 December 2023 |
88.2 |
17.8 |
|
Revenue raised from 13.5% VAT rate: 1 March to 31 December 2023 |
264.7 |
53.5 |
235. Deputy Ged Nash asked the Minister for Finance the estimated projected cost of the Special Assignee Relief Programme in 2023; the reason that no cost has been attributed to extending the Programme in Budget 2023 documentation; and if he will make a statement on the matter. [48531/22]
View answerThe Special Assignee Relief Programme (SARP) is an income tax incentive designed to help reduce the cost to employers of assigning skilled individuals in their companies from abroad, to take up positions in the Irish-based operations of their employer or an associated company, thereby facilitating the creation of jobs and the development and expansion of businesses in Ireland.
The following table sets out the Exchequer cost of SARP in each of the years from 2012 to 2020 (the most recent year for which data are available):
|
Year |
€m |
|
2012 |
0.1 |
|
2013 |
1.9 |
|
2014 |
5.9 |
|
2015 |
9.5 |
|
2016 |
18.1 |
|
2017 |
28.1 |
|
2018 |
42.4 |
|
2019 |
38.2 |
|
2020 |
36.6 |
The cost of SARP is accounted for in the tax base. As such, it is appropriate to indicate a nil cost against the extension of the measure as per the Tax Policy Change booklet for Budget 2023.
As regards the increase in the threshold income to avail of SARP from €75,000 to €100,000 for new entrants, my Department considers that, over time, all other things being equal, the eventual yield from this change could be of the order of €5 million. However, it is likely to be some years before such savings might materialise.
236. Deputy Ged Nash asked the Minister for Finance the reason that the projected cost of the help to buy scheme is listed as €83 million in Budget 2023 documentation given that the full-year cost in 2022 will be substantially more; the expected underlying level of applications for the help to buy scheme in 2023; the estimated average payment for same; and if he will make a statement on the matter. [48533/22]
View answerHelp to Buy is a demand-led scheme which may be subject to a broad range of variable factors.
As such, it is not possible to forecast with certainty for 2023 the expected number of applications or the estimated average payment for approved claims. Neither is it possible to give a precise estimate of cost outturn for 2023.
For the purposes of the Budget 2023 documentation, a figure of €175 million was estimated as the cost of the Help-to-Buy scheme for each of the next two years, 2023 and 2024.
This estimate was derived using published Revenue annual statistics for the scheme for 2021 (www.revenue.ie/en/corporate/documents/statistics/tax-expenditures/help-to-buy-annual-report-2021.pdf) and the end-August monthly Revenue statistics which were the most up-to-date available (www.revenue.ie/en/corporate/documents/statistics/tax-expenditures/help-to-buy-stats.pdf).
Assessed together, the data contained in these reports indicated that the cost of the scheme for the first 8 months of 2022 was some €116.3 million. An extrapolation of this cost out over 12 months provided an estimated figure of €175 million for the full year 2022.
The extension of the scheme is indicated at €83 million in the Budget 2023 documentation as a portion of the cost is considered to be accounted for in the tax base.
238. Deputy Ged Nash asked the Minister for Finance the estimated cost of pre-letting expenses for landlords at the €5,000 cap in 2020, 2021 and those projected for 2022, respectively; and the rationale for the projected cost of €1 million in the first year, and €2 million in a full year are grounded on; and if he will make a statement on the matter. [48535/22]
View answerSection 97A TCA, introduced in Finance Act 2017, allows a deduction (capped at €5,000 per premises) from rental income for certain pre-letting expenditure on properties which have been vacant for at least 12 months and are subsequently let. To qualify, the expenditure must be incurred in the 12 months immediately prior to the letting.
As the Deputy is aware, in Budget 2023, I indicated my intention to increase the expenditure cap for pre-letting expenses from €5,000 to €10,000 with effect from 1 January 2023. Additionally, the period for which a property must be vacant before being let will be halved from twelve months to six months.
At the time of preparation of Budget 2023, the year 2018 was the most recent year for which Revenue data were available in respect of the cost of the existing measure.
In the last few days, cost data relating to 2019 have become available. These indicate that in 2019 the tax cost has remained broadly of the same order (€0.8 million).
It is estimated that for 2023, the cost of the measure will be of the order of €1 million. This estimate allows for an increase in deductible expenditure of the order of 30% next year. The cost is expected to potentially double to €2 million in 2024.
