Written Answers Nos. 121-144
121. Deputy Bríd Smith asked the Minister for Finance if he will clarify if firms who have returned a profit for the financial year ahead and that have applied for and received the temporary business energy support scheme, TBESS, will be required to return any amounts received from the State; and if he will make a statement on the matter. [55863/22]
View answer133. Deputy Ged Nash asked the Minister for Finance if any data centres have applied for and been approved to draw down support under the temporary business energy support scheme; his plans, if any, to restrict data centres and other large energy users from availing of the TBESS; and if he will make a statement on the matter. [55836/22]
View answerI propose to take Questions Nos. 121 and 133 together.
The Temporary Business Energy Support scheme (TBESS) will assist businesses with their energy costs over the winter months.
The TBESS is subject to State aid approval. Provided such approval is received in the coming weeks, it is expected that the scheme, which will be administered by the Revenue Commissioners, will be open for applications on 26 November, with the first payments being made shortly thereafter.
The TBESS is a broad based general scheme which is designed to provide aid to businesses affected by the energy crisis over the winter months.
In addition to the energy price increase condition (50% increase in unit price), businesses must meet the following criteria:
- has complied with its obligations in relation to tax registration, tax payments and filing of tax returns;
- is eligible for a tax clearance certificate throughout the claim period;
- is an eligible business during the claim period and intends to continue to be an eligible business following the end of the claim period.
There is no conditionality around the turnover, profitability or potential survival of the qualifying business. Nor is there any sectoral restrictions based on the type of business.
The scheme is a broad based scheme designed to help businesses with increasing energy prices. Part of the reason that the TBESS is not conditional is the difficulty drafting legislation that would meet the various proposals for conditionality put forward by various parties and that would be robust enough to ensure that it is not open to challenge. It could also be difficult to ensure that a condition like non-payment of dividends would not just result in dividends being delayed until after support payments are received. There could also be State aid issues with some such restrictions. The EU Temporary Crisis Framework specifically provides that “Measures targeting commercial energy users do not constitute State aid, provided such measures are of a general nature.”
123. Deputy Matt Carthy asked the Minister for Finance the results of the review into the status of farm contractors regarding the carbon tax. [55400/22]
View answerThe Finance Act 2012 introduced section 664A of the Taxes Consolidation Act 1997, which provides that a farmer may take an income tax or corporation tax deduction for farm diesel (including any carbon tax charged in respect of diesel), and then a further additional deduction for farm diesel which is equal to the difference between the carbon tax charged and the carbon tax that would have been charged had it been calculated at the rate of €41.30 per 1,000 litres of farm diesel (the 2012 baseline).
The present position is that agricultural contractors are not entitled to avail of this additional relief from increases in the carbon tax on farm diesel. This is because farming, which is defined in section 654 of the Taxes Consolidation Act 1997, requires the occupation of farmland. Agricultural contracting does not involve the occupation of farmland. The measure is specifically targeted at the farming sector to address the particular problems faced by family farms.
As indicated to the Deputy in my response to Dáil question number 115 on 27 September 2022, this measure was reviewed as part of the Tax Strategy Group and part of the Climate Action and Tax Paper. The relevant TSG paper concluded that:
"On the grounds of equity, the case for a continuation of section 664A for farmers is not a strong one. In a more benign set of circumstances for farm enterprises, a clear recommendation to remove section 664A, perhaps on a phased basis over a number of years, might be appropriate. The fact that the normal business deduction in respect of input costs would remain in place as well as the VAT refund scheme for business diesel expenditure should also be kept in mind. However, the war in Ukraine has caused fuel prices to increase and has raised concerns domestically about food security and the supply of fodder. The Minister for Agriculture, Food and the Marine has tasked a National Fodder and Food Security Committee to prepare an industry response to the emerging crisis in feed, fodder, fertiliser and other inputs, and to develop contingency plans and advice to assist farmers in managing their farm enterprises. Against this background, the 2022/2023 autumn-winter period would not seem to be the appropriate time to make a change. It may be preferable to consider signalling a policy change in the current year but to defer action until a later date. At the same time, a move to extend the scope of section 664A beyond the current cohort of beneficiaries might be seen to undermine the desired objective of putting in place a policy approach which is more aligned across different goals. If it is considered that farm contractors require support, this might best be addressed in the context of a longer-term policy for agriculture."
The current situation is that no changes have been made in the Budget or in Finance Bill 2022 to either extend or curtail the double deduction for farm diesel.
124. Deputy Paul McAuliffe asked the Minister for Finance his progress to date in insurance reform; and if he will make a statement on the matter. [55891/22]
View answerThe Programme for Government recognises that insurance is a significant issue for some businesses, motorists, and households, as well as sporting, community, and voluntary groups. Accordingly, the Cabinet Committee Sub-Group on Insurance Reform was established to prioritise further action in this area, with a focus on helping to reduce insurance costs, and increasing the availability of cover.
This reform work is being driven through the Action Plan for Insurance Reform, which sets out 66 actions across the policy areas of several Departments, including the Department of Finance. The third update on progress of the Action Plan for Insurance Reform Implementation Report shows that the majority of actions are now considered complete. These include:
- the implementation of the Personal Injuries Guidelines, with recent data from the Personal Injuries Assessment Board (PIAB) showing a 38 per cent reduction in the overall average award, compared to the previous Book of Quantum;
- the Central Bank’s ban on price walking for home and motor insurance, which will end the “loyalty penalty” imposed on some long-term customers;
- the establishment of the Office to Promote Competition in the Insurance Market, which aims to lower costs by promoting greater competition in the Irish market;
- the enactment of the Criminal Justice (Perjury and Related Offences) Act 2021, which places perjury on a statutory footing for the first time;
- the establishment of an Insurance Fraud Coordination Office within the Garda National Economic Crime Bureau; and,
- the enactment of the Competition (Amendment) Act 2022, which will enhance the enforcement powers of the Competition and Consumer Protection Commission (CCPC).
Work is also ongoing to complete the outstanding aspects of the Action Plan, including legislation to rebalance the duty of care, and to strengthen the PIAB. In addition, my Department brought forward the Insurance (Miscellaneous Provisions) Act 2022, a pro-consumer piece of legislation, which complements this ambitious reform agenda, and will further increase transparency in the insurance sector.
CSO data for September shows a continued decline in motor insurance prices during 2022, including a 10 per cent reduction year-on-year. I believe this downward trend, at a time of overall price rises, indicates that our work on insurance reform is having a positive outcome for consumers. It is my hope that the cumulative impact of this reform package will lead to further improvements in the motor insurance market, as well as improvements in insurance for other groups.
In this regard, Minister of State Fleming recently held a third series of bilateral meetings with the CEOs of the main insurers, in order to reiterate the Government’s expectation that all savings from this comprehensive suite of reform measures are passed on to customers. Government will continue to monitor the impact of reforms, including through future reports of the National Claims Information Database (NCID), which is unique in Europe in terms of the transparency it brings to the insurance sector.
125. Deputy Matt Carthy asked the Minister for Finance the taxation policies of his Department which are intended to encourage farmers to adopt rooftop solar PV. [55713/22]
View answerThe Accelerated Capital Allowance (ACA) scheme for Energy Efficient Equipment (EEE) encourages taxpayers to adopt equipment which is highly energy efficient. The scheme allows taxpayers to deduct the full cost of expenditure on eligible equipment from taxable profits for the year in which the equipment is first used for the purposes of the trade. This differs from the standard treatment applicable to capital assets, whereby wear and tear allowances are deducted at a rate of 12.5% annually, over a period of eight years. Eligible equipment is new equipment included in the list of energy-efficient equipment maintained and published by the Sustainable Energy Authority of Ireland (SEAI).
There are currently 10 classes of technology which qualify for the ACA scheme, specified in Schedule 4A of the TCA. Solar panels are included under the class of technology ‘Heating and Electricity Provision’.
A minimum amount of expenditure must be incurred on providing the equipment and this varies with the particular category to which the product belongs. Farmers that incur expenditure on eligible energy-efficient equipment for use in their trade are entitled to claim the ACA in the same manner as any other companies and unincorporated businesses. Equipment that is leased, let or hired will not qualify for the allowance.
ACAs on EEE are claimed through the normal self-assessment provisions through the return of income (Corporation Tax Return (Form CT1) or Income Tax Return (Form 11)). There is no requirement to obtain prior approval for capital expenditure on the equipment.
More broadly there is also an initiative in place which is intended to encourage farmers to adopt solar PV on their lands.
Prior to Finance Act 2017 agricultural land leased for solar panels was not classified as qualifying agricultural property for the purposes of Capital Gains Tax retirement relief or agricultural relief from Capital Acquisitions Tax. Following Budget 2018, a revised approach was introduced whereby land leased for the installation of solar panels can be classified as qualifying agricultural property. A key condition is that the total area of land under lease and on which solar panels are installed does not exceed 50% of the total area of agricultural land.
126. Deputy Catherine Connolly asked the Minister for Finance his plans to phase out the help-to-buy scheme; the timeline for same; and if he will make a statement on the matter. [55839/22]
View answerI am aware that the Deputy has a particular perspective in relation to the help-to-buy scheme which was set out comprehensively in the context of the second-stage debate on Finance Bill 2022 on 25 October last.
As I indicated in my Budget 2023 address to the House on 27 September, the Help-to-Buy scheme has been a significant support for first time buyers of new homes. Since its inception in 2017, well over 35,000 first-time buyers, either singly or as part of a couple, have benefited from the scheme.
I also indicated in my address that, as with any tax expenditure, the scheme will be kept under review and that there are a number of recommendations within the recent Mazars report on the scheme which the Government will consider for future budgets.
In the meantime, however, on my recommendation, the Government has decided to continue the scheme, at current rates, until the end of 2024. The future of the measure beyond that will be considered in due course.
127. Deputy Ruairí Ó Murchú asked the Minister for Finance the measures under consideration to alleviate the huge increases in the cost of energy to small and medium businesses; and if he will make a statement on the matter. [54997/22]
View answer158. Deputy Pearse Doherty asked the Minister for Finance if his Department is considering options to amend the temporary business energy support scheme to provide additional support for smaller firms with limited resources, revenue and reserves to meet rising energy costs; and if he will make a statement on the matter. [55912/22]
View answer203. Deputy Pearse Doherty asked the Minister for Finance his views on the need for further flexibility with respect to the TBESS to support the viability of businesses struggling with their energy costs in County Donegal; and if he will make a statement on the matter. [53862/22]
View answerI propose to take Questions Nos. 127, 158 and 203 together.
Details of the new Temporary Business Energy Support Scheme (TBESS) are set out in Finance Bill 2022. The scheme will provide support to qualifying businesses in respect of energy costs relating to the period from 1 September 2022 to 28 February 2023. The TBESS will be available to tax compliant businesses carrying on a trade or profession the profits of which are chargeable to tax under Case I or Case II of Schedule D where they meet the eligibility criteria. It will also be available to certain charities and approved bodies who, but for specific exemptions, would be chargeable to tax under Case I or Case II of Schedule D. The scheme will be operated on a self-assessment basis.
Payments will be made on the basis of 40% of the amount of the increase in eligible electricity or natural gas costs between the bill amount which is the subject of the claim and the bill amount in the corresponding reference period in the previous year. Payments are generally subject to a monthly cap of €10,000 per trade, increasing to a maximum of €30,000 in certain circumstances.
In line with the EU Temporary Crisis Framework, there is also an overall cap on the amount that an undertaking can claim.
Claims must be made through the Revenue Online Service (ROS). Subject to receiving State aid approval it is expected that the TBESS system will go live by end-November, enabling businesses to register for and claim under the scheme.
Revenue have published comprehensive guidelines on their website on the operation of the scheme.
The Government and I recognise that we cannot fully mitigate the increase in energy prices incurred by businesses and the percentage payment and monthly caps reflect this. The caps have been put in place in order to target the support at SMEs which are the backbone of the Irish economy. However we also recognise that the energy price market is fluctuating. Accordingly, I have put forward an amendment, which will be discussed at Committee stage, that would allow the Minister for Finance, to increase or decrease the monthly caps by Ministerial order where it is considered necessary to ensure that the scheme is meeting its objectives.
128. Deputy David Stanton asked the Minister for Finance the way the fishing industry is being supported through taxation measures to mitigate the high cost of fuel; his further plans, if any, in this regard; and if he will make a statement on the matter. [55885/22]
View answerAt the outset, the Deputy should note that 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 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 €425.45 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 non-commercial sea navigation/fishing. As there is already a full relief, there is no scope to further reduce the MOT rate in respect of diesel used for commercial sea navigation/fishing. Section 100(2)(a) of Finance Act 1999 provides that a full repayment of MOT may be claimed on tax-paid diesel used for commercial sea navigation/fishing.
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 diesel for marine use, referred to as marine diesel. Under the Directive this rate cannot be reduced below 12% nor would it be permitted to reduce the rate to 12% for one item alone (for example, marine diesel) 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 VAT relief that will be of interest to the Deputy.
Under the Value-Added Tax (Refund of Tax) (No. 16) Order, 1983 (S.I. No. 324 of 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.
I am advised by Revenue that a guide to the commercial sea navigation reliefs described above is available at www.revenue.ie/en/tax-professionals/tdm/excise/mineral-oil-tax-and-carbon-charges/mineral-oil-manuals/commercial-sea-navigation-relief-guide.pdf.
129. Deputy Rose Conway-Walsh asked the Minister for Finance if he will consider instructing the Revenue Commissioners to collect and publish data on tax collected on rental income from non-tax residents; and if he will make a statement on the matter. [55898/22]
View answerI am advised by Revenue that a taxpayer’s Income Tax liability is calculated on their total income from all sources, rather than being separately calculated for each source of income (such as rental income) and having regard to any relevant reliefs or credits. For this reason, it is not possible to identify and publish tax paid arising from rental income alone.
130. Deputy Thomas Gould asked the Minister for Finance the estimated number of properties the proposed vacant homes tax will return to use; and if he has considered an annually increasing approach to the tax. [55825/22]
View answerAs the Deputy is aware, the Vacant Homes Tax (VHT) is a new measure announced in Budget 2023, which aims to increase the supply of homes for rent or purchase to meet demand. Further detail on this measure is set out in the Finance Bill, which was published on 20 October.
The introduction of this tax follows from my Department's commitment under Housing for All to collect data on vacancy with a view to introducing a vacant property tax. The Finance (Local Property Tax) (Amendment) Act 2021 facilitated the collection on data on vacant property through LPT returns.
A preliminary analysis of the vacancy data was published by Revenue in July this year, following the LPT revaluation in November 2021, and can be found at: www.revenue.ie/en/corporate/documents/statistics/lpt/lpt-vacant-properties-report.pdf
In arriving at the estimates for the Budget documentation, certain assumptions were made based on the Revenue data and took into account the number of long-term vacant properties (those unoccupied for greater than 12 months), their valuation band, as well as their reasons for lying vacant which may correspond with an exemption from the tax. It is tentatively estimated that less than 15% of the total properties reported as vacant may be in scope of the tax. Ultimately, the number of properties in scope and VHT payable will depend on the self-assessed returns submitted by property owners, the number of properties declared as liable and the number of property owners entitled to claim exemption from the tax.
As stated in my Budget speech, this measure aims to increase the supply of homes for rent or purchase, rather than raise revenue. The estimated yield is low; as I anticipate this tax will influence behaviour and lead to property owners putting their vacant properties to more effective use. As such, the number of properties who will be subject to this tax and the eventual yield may be lower than the estimates provided.
With regard to an annual increasing approach on vacancy taxation, a key consideration in developing and introducing this tax was simplicity. It is important to ensure that the taxation of vacant homes operates well alongside existing property taxation measures, and that it is easy to understand and administer. A tax which increases annually where a habitable residential property remains vacant year-on-year would be more complex to administer.
As this is a new measure, it is important to see how the tax operates after coming into effect, and then make an assessment as to whether it is working. My Department will monitor the tax and if it is not considered to be effective in bringing more properties into use, then I will have no hesitation in reviewing the measure including the rate, the operation of the tax and how it applies to long-term vacant property.
131. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains confident that budgetary measures taken here are adequately focused in order to discourage inflation, self-generated or imported; and if he will make a statement on the matter. [55813/22]
View answerConsumer price (HICP) inflation picked up sharply over the course of the last year and in October stood at 9.6 per cent. Almost every advanced country in the world is in the same position, with euro area inflation reaching a record 10.7 per cent in October.
The key driver of global inflationary pressures at present is the sharp rise in energy, food and other commodity prices as a result of the war in Ukraine. Spillover effects from higher energy prices are also being felt in other sectors, such as food (via fertilisers and fuel costs) and consumer goods and services (via higher energy inputs). As a result, non-energy inflation has picked up sharply in recent months, indicating broad based inflationary pressures.
While the causes of current price pressures are not within our control, the Government is acutely aware of the impact of rising prices on households and businesses, in particular the increase in fuel and other energy prices. That is why Budget 2023 focused on mitigating inflationary pressures. Budget 2023 includes an overall package of €6.9 billion for next year, including adjustments to income tax bands and increases in social welfare and pension rates. Complementing this is a set of one-off measures amounting to €4.1 billion, which take effect from the final quarter of this year. The one-off package includes three €200 electricity credits to each household, an additional social welfare payment, a double payment of child benefit, the extension of the reduction in excise duties and the VAT rate on gas and electricity to end-February as well as the Temporary Business Energy Support Scheme.
This approach balances the need to provide necessary fiscal support to households and firms while at the same time, avoiding a situation in which the Government’s fiscal response becomes part of the inflation problem.
132. Deputy Peadar Tóibín asked the Minister for Finance if he will report on his recent meeting with the Eurogroup. [55583/22]
View answerOn Monday 7th November, I chaired the most recent meeting of the Eurogroup. The agreed summing up letter of the meeting will be published in due course on the Eurogroup website.
In advance of its publication, I can inform the Deputy that the Eurogroup meeting discussed the macro-economic situation in the euro area, and Ministers reiterated our previously expressed view that our economy is weakening. However, we noted the resilience of the euro area, which has been enhanced through the actions taken by Governments over recent years. Despite the unprecedented magnitude of the shocks that are hitting the euro area, the economy expanded strongly in the first half of the year and the outturn in the third quarter has been more robust than expected. Euro area unemployment is at record low levels, which has assisted many households to weather the worst impacts of higher inflation to date. The Eurogroup noted that the Commission will publish its latest economic forecast at the end of this week.
The Eurogroup then discussed fiscal policies and agreed the need for coordination and careful targeting to control inflation. We noted the Commission’s estimate of the impact of national fiscal measures to keep our citizens warm over winter, with euro area Governments having so far collectively spent about 1.25% of EU GDP on energy support for the year (approximately €200 billion). Eurogroup Ministers noted the need to balance the trade-off reducing inflation and also supporting vulnerable households and the euro area's international competitiveness.
The Eurogroup reviewed the outcome of the International Monetary Fund/World Bank Annual Meetings and reflected on the key themes that arose in these meetings. We also heard from Andrea Enria (the Chair of the Supervisory Board of the ECB) and Elke König (the Chair of the Single Resolution Board), who updated us on how the banking system is in a relatively strong position and that its resilience has become an asset for our economies. Nevertheless, they clearly set out that there are some important challenges ahead, with the wider picture of inflation, economic disruption and geopolitical turmoil likely to impact on our banks and the financial sector more broadly.
Finally, we agreed the timeline for the election process for the next President of Eurogroup. I informed the Eurogroup that I have received support to put my name forward for a second term.
We will return to budgetary matters next month when we discuss euro area budgetary plans for 2023. This discussion will be an opportunity to further enhance the coordination of our policies to achieve the objectives of fiscal sustainability, the proper targeting of our supports, and incentivising the energy transition.
134. Deputy Richard Boyd Barrett asked the Minister for Finance if he intends to address the concerns, recently raised by an organisation (details supplied), that those in receipt of section 481 tax relief are not compliant with the EU's copyright directive in relation to the intellectual property rights of actors and performers and the remuneration that they should receive for their work in films funded by the relief; and further the issues raised by film crew that the DAC structure in Irish film productions funded by section 481 makes vindication of film workers' rights under the Protection of Employees (Fixed-Term Work) Act 2003 impossible; and if he will make a statement on the matter. [55854/22]
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 Irish culture.
I refer to the Deputy’s query concerning copyright and intellectual property rights of actors. I would note that copyright law falls within the remit of the Department of the Enterprise, Trade and Employment (DETE). I am informed by DETE that the main source of Copyright legislation in Ireland is the Copyright and Related Rights Act 2000 (as amended) (CRRA). The legislation grants rights to the creators (“authors”) of works to use, distribute, and reproduce their work. In addition, protection is afforded to performers (including actors), producers and broadcasters of works by what are known as ‘related rights’. The CRRA also ensures that copyright holders have an effective means of enforcing their rights should they consider that they have been infringed.
I am further informed by DETE that the CRRA is complimented by a number of Statutory Instruments. The EU (Copyright and Related Rights in the Digital Single Market) Regulations 2021 transposed the EU Directive on Copyright in the Digital Single Market (EU) 2019/790. The Regulations strengthen the rights and protections of copyright holders in order to reflect the impact of technological advances and increased digitalisation. They also provide for wider access and use of copyright protected works to the potential benefit of the creative sectors, press publishers, researchers, educators, cultural heritage institutions, and citizens.
I am aware that the issue of copyright is an important one for the Irish culture, arts and media sectors. I am also aware that there have been issues raised in relation to intellectual property rights and remuneration of actors and performers. My officials are currently seeking to engage with the stakeholders concerned, including both Government stakeholders and representative bodies for actors and performers, to gain an understanding of the topic and the various perspectives of those concerned.
I now refer to the use of Designated Activity Companies (DACs) and film workers' rights. I am advised by DETE that the Protection of Employees (Fixed-Term Work) Act, 2003 offers significant protection to fixed term workers and the purpose of this legislation is:
1. to ensure that fixed term workers are afforded no less favourable treatment than their comparable permanent counterparts, and
2. to prevent employers from abusing employees by employing them on a series of successive short fixed term contracts, rather than offering them permanent one.
If an employee who commenced employment on a fixed-term basis on or after 14th July 2003 has had two or more fixed term contracts, the combined duration of the contracts shall not exceed four years. After this, if the employer wishes the employee to continue, it must be with a contract of indefinite duration unless the employer has objective grounds for renewing the contract of employment again on a fixed-term basis. However, the Act does not apply in circumstances where an employee is not re-employed by an employer following completion of a fixed-term contract.
An employer must also inform a fixed-term worker of any vacancies, which become available in order to ensure that he/she has the same opportunity to secure a permanent position as other employees
The Deputy will be aware that I have taken steps in recent years to reinforce the importance of adhering to employment rights legislation. Finance Act 2018 amended the section 481 certification process to provide that the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, after considering an application and applying a set of tests, may issue a Cultural certificate to a producer company stating that a film is qualifying film for the purpose of the credit.
As part of the certification process, an applicant company is required to submit an undertaking of compliance with all relevant employment legislation and commits applicants to compliance with all relevant employment legislation in relation to the film being certified. These conditions are to be met not just by the producer company but also by the qualifying company (designated activity company). I would like to conclude by advising that the monitoring of compliance with employment rights legislation is primarily a matter for the DETE through the Workplace Relations Commission.
135. Deputy David Stanton asked the Minister for Finance his plans, if any, to levy a tax on derelict properties; his further plans to incentivise the upgrade of such properties to encourage them to be brought back into use; and if he will make a statement on the matter. [55882/22]
View answerAddressing vacancy and dereliction, and maximising the use of existing housing stock, is a priority objective of the Government. In Housing for All, the Government has set out a suite of incentives available to encourage re-use of properties and increase the supply of housing. However, in addition, the Government is committed to exploring options around sanctions for non-use of residential property so that there is some penalty for leaving a property vacant for a prolonged period without a genuine reason at a time where there are pressures in terms of housing supply. This is why I am introducing the Vacant Homes Tax, announced in Budget 2023, which aims to increase the supply of homes for rent or purchase to meet demand. Further detail on this measure is set out in the Finance Bill, which was published on 20 October.
Regarding derelict properties, I am informed by the Minister for Housing, Local Government and Heritage that the Derelict Sites Act 1990 imposes a general duty on every owner and occupier of land to take all reasonable steps to ensure that the land does not become, or continue to be, a derelict site. The Act also imposes a duty on local authorities to take all reasonable steps, including the exercise of appropriate statutory powers, to ensure that any land within their functional area does not become, or continue to be, a derelict site. These powers include the power to prosecute owners who do not comply with notices served; making compulsory land purchases and carrying out necessary work at charge to the owners for the cost.
I am advised that the Department of Housing, Local Government and Heritage continues to liaise with local authorities on the implementation of the Act with a view to improving its effectiveness. In this regard, a review of the Act was initiated in November 2021 and initial submissions have been sought from local authorities on potential improvements to the legislative provisions and the way they are applied. I am further advised that the Department of Housing, Local Government and Heritage has established a focused working group to progress this matter further.
It would be premature to speculate on possible legislative changes or policy changes in advance of the completion of this review.
In the case of refurbishing vacant or derelict property, my colleague the Minister for Housing, Local Government and Heritage has introduced a number of schemes for direct funding such as the local authority administered Vacant Property Refurbishment Grant under the Croí Cónaithe Fund. I am advised that the Department of Housing, Local Government and Heritage are working with the Vacant Homes Officers (VHO) in each local authority who will be available to provide advice and information on the schemes and the application process.
136. Deputy Éamon Ó Cuív asked the Minister for Finance if he intends introducing a mortgage interest tax credit for first-time buyers of new or second-hand properties to assist them to deal with the challenge of ever-increasing interest rates; and if he will make a statement on the matter. [55043/22]
View answerWhile I am aware that there have been increases in certain mortgage rates by some lenders, it is important to point out that mortgage interest rates, in particular fixed interest rates, have fallen over the past number of years. In addition, it is also important to point out that a significant portion of new mortgages, are now fixed rate mortgages and this will protect borrowers in the event of a rise in official and market interest rates at least for the period that the interest rate is fixed.
It is also worth noting that there is additional scope for many borrowers, in particular variable rate mortgage borrowers who have now built up equity in their home to look at alternative mortgage options and to reduce their mortgage costs.
In relation to Mortgage Interest Relief (MIR) the position is that the relief was phased out on a gradual basis over the period 2009 to 2020. Furthermore, the decision to abolish MIR was taken in the wake of the financial crisis with the cost of the relief being one of the influencing factors. MIR cost over €700 million in 2008. It should also be noted that, prior to its curtailment and eventual abolition, and as pointed out by the 2009 Commission on Taxation, in 2005, the top two income deciles accounted for close to half of the tax forgone through the measure. The relief cost about €280 million in 2005.
As the Deputy will be aware, the Summer Economic Statement set out the fiscal parameters for this year’s Budget. A tax package of over €1.1 billion was announced in Budget 2023, which included a substantial income tax package. Budget 2023 also included a substantial cost of living package and a large range of one-off measures to assist households with cost of living pressures. Therefore, I have no plans to reintroduce MIR at this time. It should also be noted that the recent report of the Commission on Taxation and Welfare put forward no case or recommendation for the reintroduction of MIR.
Finally, in relation to first time buyers the Help-to-Buy scheme has been in place since 2016. This scheme, which is expected to cost about €175 million in 2022, can help with a deposit to purchase or self-build a new house or apartment. The scheme, with an enhanced level of support of up to €30,000, has been extended again for a further two years until the end of 2024.
137. Deputy James O'Connor asked the Minister for Finance the position regarding the forecasted income from corporation tax in 2023; and the potential ramifications of a global recession on corporation tax income in Ireland. [55741/22]
View answerThe forecast for corporation tax was published as part of the full suite of economic and fiscal projections in Budget 2023. For next year, these receipts are projected at €22.7 billion. To put this in context, that would be over five times the corporate tax yield a decade ago.
The increase in corporation tax we have seen in recent years is in many respects a positive development. It reflects well on Ireland as a top destination for highly profitable multinational firms. It also means that, during the pandemic, we had to borrow less.
However, the corporation tax base is highly concentrated. The top ten firms now pay well over half of all corporate tax receipts received by the State: this leaves the tax base for this revenue stream vulnerable to the business decisions of a small number of multinational firms.
I have warned many times about the vulnerabilities that this poses to the public finances. We know from history that windfall revenues are not an appropriate basis for permanent expenditure commitments. A shock to the multinational sector could have a significant negative impact on corporation tax revenues.
In addition to the negative implications of a potential global economic downturn on receipts, Government is also planning for a reduction in the corporate tax yield as a result of changes to the international tax regime under the BEPS agreement. My Department’s current estimate is that €2 billion could be lost, relative to baseline, as a result of these changes, but the actual impact could, of course, be far greater.
In Budget 2023, my Department published an estimate of the fiscal position excluding windfall corporation tax. This new metric – the underlying general government balance or GGB* - presents a more accurate picture of the public finances. This year, we are expecting a headline surplus on the order of €1 billion. However, if excess corporate tax were excluded we would instead be facing a significant deficit in the region of €8 billion.
To mitigate this risk, Government is setting aside €6 billion, across two years, of this windfall to rebuild our fiscal buffers through the National Reserve Fund. This will give us the fiscal firepower to address future challenges without risking these receipts becoming part of the permanent expenditure base.
138. Deputy Alan Dillon asked the Minister for Finance the role FDI multinationals and technology companies play in supporting Ireland’s economy; and the latest Exchequer returns from corporation tax. [55889/22]
View answerThe multinational sector in Ireland makes a highly significant contribution to the domestic economy, with the foreign-owned sector accounting for 55 per cent of gross value added in the economy in the second quarter of this year. During the Covid-19 pandemic, the resilience of the multinational sector helped support the economy through the worst of the crisis and has bolstered the recovery over the course of this year.
The Industrial Development Agency estimates that more than 275,000 people were directly employed by the multinational sector in Ireland in 2021, with the large presence of multinational enterprises supporting even more jobs through indirect effects. The level of employment in the ICT sector alone currently accounts for 6.5 per cent of total employment, following a rapid expansion from 5.4 per cent just prior to the pandemic.
The multinational sector has driven growth in the traded sector in recent years, with export growth of 20 per cent in the first half of this year no exception. Computer services exports, which account for almost 30 per cent of total Irish exports, grew by 19 per cent in the first half of the year. Exports from the pharmaceutical sector, accounting for a further fifth of total exports, have grown by 35 per cent so far this year. While export figures to date show continued strength, a slackening of growth in the multinational sector is expected, in line with the darkening international outlook.
Multinational enterprises also contribute significantly to the economy by way of tax receipts. For 2022, corporation tax receipts are estimated to exceed €21 billion, overtaking VAT to become the State’s second-largest source of tax revenue, after income tax. However, much of this growth may be windfall in nature and is subject to exceptional volatility. As I have stated on multiple occasions, such receipts are not an appropriate basis for funding public expenditure.
That is why Government has committed to transferring €6 billion in windfall corporate tax to the National Reserve Fund across this year and 2023 to rebuild our fiscal buffers and ensure that these potentially transient revenues do not become part of the permanent expenditure base.
Because of these factors, Ireland is highly vulnerable to adverse developments within the multinational sector. Moreover, as a small open economy with a large presence of multinational enterprises, Ireland is particularly exposed to risks in the global economy, including further energy and commodity price shocks, tightening financial conditions, and heightened geopolitical tensions. My Department will continue to closely monitor these risks, and the evolution of conditions in the multinational sector in particular.
140. Deputy Brendan Griffin asked the Minister for Finance his views on the contribution taxation policy is making to the cost of building and renting; and if he will make a statement on the matter. [55857/22]
View answerAs outlined by my Department in its Tax Strategy Group Paper, Property-Related Tax Issues, which was published on 10 August last on the Department’s website, the root cause of pressures in the Irish housing market is one of insufficient supply.
The high levels of property price inflation that have been experienced are likely due to a combination of factors including under-supply, the release of post-COVID pent-up demand (including ’excess savings’), the strength of the labour market recovery and the war in Ukraine.
The key to resolving issues of access to housing in the property market, including affordability, is through the provision of increased supply. The Government announced Housing for All late last year: a multi-annual, multi-billion euro strategy to improve Ireland’s housing system and deliver more homes of all types whilst addressing pressures within the housing market.
As the Deputy will be aware, under the strategy, over 300,000 new homes will be built by 2030, including a projected 54,000 affordable homes for purchase or rent, over 90,000 social homes and 18,000 cost rental homes. The plan is backed up with a commitment of over €15.5 billion in funding. Some €12 billion in direct Exchequer funding will be made available up to 2025, with an additional €3.5 billion in funding generated through the Land Development Agency (LDA) and a further €5 billion funding generated through the Housing Finance Agency.
The Government’s Action Plan Update and Q3 Progress Report on Housing for All, which was published by the Department of the Taoiseach last week (2 November 2022), indicates that, while there are challenges, the plan is working.
Housing supply is increasing. Housing for All has a target of 24,600 homes to be delivered in 2022. The Government fully expects to meet this target. Indeed, more homes are expected to be built this year than in any year since 2009. The 2023 target is 29,000 homes.
While tax is included in the cost of construction, any policy to amend taxes on building houses should be treated with caution given Ireland’s past experience with tax incentives.
The Government has introduced a number of measures over the past year to support the cost of building in these challenging times. In the interest of safeguarding public projects that are already under construction and to mitigate the risks of significant losses being sustained by contractors, the Government introduced an “Inflation Co-operation Framework" earlier this year. The Framework addresses the impacts of exceptional inflation and supply chain disruption to public projects and the delivery of badly needed social housing.
It is also important to recognise that tax policy is already being used in many ways to support the supply of new homes and for people within the market.
Budget 2023 included various tax-related housing initiatives:
- The Help to Buy scheme was extended for two years.
- For tenants, a new rent tax credit was introduced valued at €500 per year to improve affordability. This will be aimed at those who do not get any other housing supports. This will apply from 2023 but will also be claimable in respect of rent paid in 2022.
- For landlords, in Budget 2023 the expenditure limit for deductible pre-letting expenses for landlords was doubled from €5,000 to €10,000 and the period for which a property must be vacant was halved from twelve months to six months. This is an important measure for landlords and its aim is to support landlords in continuing their important work in providing accommodation for renters.
- A Residential Zoned Land Tax has also been legislated for and will come into effect in 2024.
During the 2000s there were various property-based tax incentives that were discontinued after multiple reviews which highlighted the following issues;
- Deadweight loss arising from activity that would have occurred anyway.
- Cost to the exchequer.
- Equity concerns as the reliefs accrued to a small number of individuals.
- Narrowing of the tax base, and
- Reliefs act as a disincentive to seek productivity gains.
Using tax incentives to encourage construction risks making the mistakes of the past.
The Government will continue to monitor the situation while ensuring the focus remains on increasing the capacity of the sector and reducing costs of supply.
142. Deputy Ged Nash asked the Minister for Finance the number of mortgage owners currently in short- and long-term arrears, in tabular form; if his Department or the Central Bank will conduct an analysis on the potential impact of rising ECB rates on mortgage arrears; if he is satisfied the 2013 code of conduct on mortgage arrears is adequate to protect customers in the current environment of rising rates; and if he will make a statement on the matter. [55834/22]
View answerAs the Deputy is aware, the Central Bank of Ireland publishes statistics on residential mortgage arrears and repossessions on a quarterly basis in respect of mortgages secured on both principal dwellings and buy to let properties by Central Bank regulated entities. The Central Bank advises that the most recently published data, which is for the quarter ending June 2022, indicates the following:
|
Total number of residential mortgage accounts (both primary dwelling and buy to let mortgage accounts) |
802,590 |
|
of which:- |
|
|
in short term arrears (which for the purposes of this table are regarded as accounts in arrears of up to 90 days) |
16,247 |
|
in long-term arrears (which for the purposes of this table are regarded as accounts in arrears of over 365 days) |
33,331 |
Note: In addition to the above, there are a further 7,880 accounts in arrears which for the purpose of this table are not regarded as being in short term or long term arrears.
The Central Bank further advises that, while at this point it has not published a formal analysis of the potential impact of higher interest rates on either repayment amounts or mortgage arrears, work in this area is being conducted as part of the upcoming Financial Stability Review and which it is expected will be published in the coming period.
There is a comprehensive consumer protection framework in place, and which includes the Central Bank Code of Conduct on Mortgage Arrears (CCMA), which seeks to ensure that Central Bank regulated entities are transparent and fair in all their dealings with borrowers and that borrowers are protected from the beginning to the end of the mortgage life cycle. Including through protections at the initial marketing/advertising stage, in assessing the affordability and suitability of the mortgage and at a time when borrowers may find themselves in financial difficulties.
As the Deputy will be aware, in 2018 the Central Bank carried out a review of the CCMA to ensure it remains as effective as possible. Based on a point in time analysis and informed by various strands of work including inspections, data collection, and stakeholder engagement, the Central Bank found that for borrowers who engage with the process, the CCMA was working effectively and as intended.
143. Deputy Thomas Gould asked the Minister for Finance if he will provide an update on the work of the Revenue Commissioners to implement the zoned land tax. [55826/22]
View answerThe Residential Zoned Land Tax (RZLT) is a new Tax which was established in Finance Act 2021, and which is designed to activate suitably zoned and serviced land for housing and is a commitment under Housing for All.
The implementation of RZLT involves my Department, the Department of Housing, Local Government and Heritage, Revenue and the 31 local authorities in the country. The implementation of RZLT consists of two phases as set out below.
Phase 1 – the preparation and publication of maps by the 31 local authorities in the State identifying land within the scope of the measure. This phase is already underway, with draft maps having been published by local authorities on 1 November last. This is being followed by a period of consultation during which landowners can make submissions to the relevant local authority. A full description of the submission process is available on www.gov.ie/rzlt. The initial mapping process will conclude with the preparation and publication of a final map on 1 December 2023. From 2025 onwards, local authorities will update this final map on an annual basis.
Phase 2 – the administration of the tax by the Revenue Commissioners will commence in 2024, with the initial liability date for the tax arising on 1 February 2024 and the first pay and file date following on 23 May 2024. In preparation, Revenue has designed a work programme to operationalise RZLT and established a governance structure to deliver the necessary elements of this work programme. A cross-divisional group has been established, comprising officials from operational, collection, IT and policy and legislation areas within Revenue, each of whom is charged with delivering elements of the work programme required to make RZLT operational in advance of the initial liability date of 1 February 2024.
As part of this work programme, Revenue has begun a change management and communications process for external stakeholders, in particular RZLT taxpayers, as well as for Revenue staff. Detailed guidance on the operation of RZLT was published in July 2022 and is available on the Revenue website at: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-22a/22a-01-01.pdf
Revenue also published a webpage on RZLT on its website earlier this month, to coincide with the publication of draft maps by local authorities.
144. Deputy Richard Boyd Barrett asked the Minister for Finance if he will introduce an amendment to section 481 that clearly establishes that the producer company who receives tax relief under this section must be the legally responsible employer for all those who are employed on section 481-funded film productions rather than the DAC, which only has a transitory existence; and if he will make a statement on the matter. [55851/22]
View answerSection 481 TCA 1997 provides a 32% payable credit for eligible expenditure on film production in Ireland. 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 Irish culture.
The Deputy will be aware that I have taken action in recent years to ensure that the provision of quality employment and training, and adherence with all relevant employment rights legislation, are key components of the relief. As part of this process, my officials have engaged with a broad range of worker representative bodies in the sector, to better understand employment patterns in the sector.
In Finance Act 2018, I amended the Section 481 certification process to improve the focus on quality employment and skills development. Production companies are now required to apply to apply to the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media (DTCAGSM) before commencement of Irish production to have the film certified as a qualifying film. As part of the application process, applicants must provide a skills development plan and, if the amount of eligible expenditure is over €2m, that plan must be agreed with Screen Ireland.
In addition as part of the certification process undertaken by DTCAGSM, an applicant company is required to sign an undertaking of compliance with all relevant employment legislation. The undertaking requires both the producer company and the qualifying company to comply with all obligations in the field of environmental, social and employment law. The producer company and the qualifying company must be responsible for compliance with all statutory requirements of an employer and have in place written policies and procedures on grievances, discipline and dignity at work (including harassment, bullying and equal opportunity).
While the importance of adhering to employment legislation has been reinforced by introducing the undertaking in respect of quality employment, it should be noted that adjudication of adherence to employment legislation is not within the remit of the Minister for Finance. The monitoring of compliance with employment rights legislation is primarily a matter for the Department of Enterprise, Trade and Employment through the Workplace Relations Committee (WRC).
This year Finance Bill 2022 provides for the extension of Section 481 from its current end date of 31 December 2024 to 31 December 2028. This extension demonstrates that the development of a thriving Irish audio-visual sector remains an objective of the Government. There are no plans to make further legislative changes at this point.
