Written Answers Nos. 145-166
147. Deputy Aengus Ó Snodaigh asked the Minister for Finance the number of companies in Dublin 6W, 8, 10, 12, 20 and 22 that received the EWSS and TWSS; the number being asked to repay either or both the EWSS and TWSS; the number of employees in those companies; and if he will make a statement on the matter. [53838/22]
View answerI am advised by Revenue that is it not possible to provide a breakdown by Dublin postcode, but to the extent available, Dublin-wide statistics are provided for the Deputy.
The Temporary Wage Subsidy Scheme (TWSS) was provided for in section 28 of the Emergency Measures in the Public Interest (COVID-19) Act 2020, as amended, and the Employment Wage Subsidy Scheme (EWSS) was provided for in section 28B of that Act, as amended. Both of these economy-wide supports played a central role in helping to maintain the link between employers and employees between March 2020 and May 2022. TWSS provided supports to over 689,000 employees linked to over 67,000 employers throughout the scheme. EWSS provided supports to almost 52,000 employers to secure employment for nearly 746,000 employees.
19,900 employers in Dublin received at least one TWSS payment in respect of pay dates between March 2020 and August 2020.
15,100 employers in Dublin received at least one EWSS payment in respect of pay dates between August 2020 and May 2022.
As the Deputy will aware, employers were required to demonstrate, to the satisfaction of Revenue, that its business experienced a decline of turnover or customer order values of 25% and 30% for TWSS and EWSS respectively, and that the decline in trade was as a result of a disruption to business caused by the COVID-19 pandemic. Furthermore, employers were required to be tax compliant.
The majority of companies that participated in the subsidy schemes did so because they had a reasonable expectation that their business would suffer a decline in turnover or customer orders as a result of trade disruption caused by the pandemic. I am satisfied that the schemes operated as a very effective and responsive instrument, both to keep the economy afloat during the pandemic and to aid economic recovery post pandemic.
The schemes operated on a on a self-assessment basis, with employers claiming the subsidies through their payroll submissions to Revenue. Detailed guidance was provided on both schemes.
To expedite TWSS subsidy payments and support employers during the early stages of the pandemic, Revenue paid qualifying employers with eligible employees the maximum wage subsidy of €410 per qualifying payslip per week, or a multiple of this amount for fortnightly and monthly pay frequencies. The employer was instructed by Revenue on how to calculate the correct subsidy for each employee and advised to hold the excess payment as this would need to be repaid to Revenue. In March 2021, Revenue conducted a reconciliation exercise, using data from its systems, which was provided by employers via their payroll submissions. Overpayments primarily occurred in the first five weeks of TWSS, during its transitional phase. Following the reconciliation exercise, approximately 12,200 employers in Dublin were asked to repay that part of the TWSS subsidy which had been overpaid. According to the latest available data, these entities employ approximately 369,900 individuals.
In view of the substantial amounts of public money invested in these schemes, Revenue undertook a programme of compliance checks to ensure that claimant employers were properly eligible and complied fully with scheme requirements. Generally, these checks identified a very high level of compliance by claimant employers but, in both schemes, it was necessary to recover ineligible subsidy payments from a small proportion of employers.
In relation to the TWSS, Revenue has confirmed to me that compliance activity resulted in recoupment of over €38.4 million in overpayments from 1,924 (2.8%) participating employers. 214 of these employers are in Dublin and are associated with €4.7 million in overpayments. The vast majority of their employees are included in the 369,900 individuals referred to previously, as there was a large degree of employer overlap between TWSS compliance and TWSS reconciliation activities. Those employers who qualified for the Debt Warehousing scheme had the option to add the TWSS overpayments to their warehoused debt.
Revenue advises that it undertook a multi-faceted risk-based approach to compliance checks to safeguard the integrity of the EWSS. This included issuing an invitation to some 42,500 employers who had not provided eligibility documentation and who received subsidy payments to perform a final self-review of their EWSS eligibility for all periods of the scheme, utilising an Excel based calculator, which was available on the Revenue website. Any over claims identified by employers by 30 September 2022 were dealt with without the imposition of interest or penalties, and declared liabilities were included in the Debt Warehouse by those employers who are eligible to participate in Revenue’s Debt Warehousing scheme.
In relation to the EWSS, Revenue has confirmed to me that €155.1 million of EWSS has been recouped from 5,700 (10%) participating employers. This includes both repayments as a result of compliance checks, and amounts voluntarily repaid by some eligible employers. Approximately 1,700 employers in Dublin have repaid the EWSS subsidy in part or in full. According to the latest available data, they employ approximately 89,800 individuals.
148. Deputy Marc Ó Cathasaigh asked the Minister for Finance the position regarding business energy supports; the number of businesses applying; if it is sufficient; the updated costings from the scheme based on uptake; and if he will make a statement on the matter. [55829/22]
View answer150. Deputy Bríd Smith asked the Minister for Finance if a full list of all companies applying for and receiving the temporary business energy support scheme will be published; when such information will be available; if the amounts claimed for each company will also be publicly available; and if he will make a statement on the matter. [55864/22]
View answer163. Deputy Brendan Smith asked the Minister for Finance the progress to date in introducing a temporary business energy support scheme; the projected number of businesses to avail of this scheme; and if he will make a statement on the matter. [55878/22]
View answerI propose to take Questions Nos. 148, 150 and 163 together.
Details of the new Temporary Business Energy Support Scheme (TBESS) are set out in Finance Bill 2022 which will be discussed at Committee Stage later today. 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.
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 during the week commencing 28 November.
The Revenue Commissioners will be publishing the details of qualifying businesses who have claimed a temporary business energy payment one month after the day on which the specified period ends, They will also publish those details five months after the specified period ends. This is to ensure publication in respect of claims made after the end of the specified period but within the four month time-limit.
In addition, the EU Temporary Crisis Framework imposes certain monitoring and reporting requirements on Member States. These include notifying the Commission when aid granted to an undertaking reaches certain publication thresholds, and monitoring aid granted to ensure that it does not exceed the overall ceilings on aid set out in the Framework. In order ensure that these obligations can be met, it is proposed to amend the legislation to allow for additional information to be gathered from those registering to make a claim under the scheme. Gathering the information on registration will help make the process of complying with the State aid obligations more efficient.
149. Deputy Peadar Tóibín asked the Minister for Finance if his attention has been drawn to a prediction by the Central Bank Governor that interest rates will continue to rise; and if he will make a statement on the matter. [55584/22]
View answerDuring the pandemic, central banks supported economies through expansionary monetary policy, with the ECB maintaining interest rates at record low levels - including a negative deposit rate – while also rapidly increasing its balance sheet through non-standard measures. This policy stance supported market liquidity and facilitated favourable financing conditions over the course of the crisis.
At the beginning of this year, the outlook for the euro area economy was positive. The fading impact of the pandemic represented a tailwind for economic activity, and the expectation was that monetary policy could be gradually normalised in line with the burgeoning economic recovery. However, Putin’s invasion of Ukraine and weaponisation of gas supplies has triggered an exceptionally large energy price shock and undermined global economic prospects. Inflationary pressures have increased rapidly and remained elevated over the last number of months, with the annual rate of inflation in October standing at 9.6 per cent.
The rise in inflationary pressures is not only a feature of the Irish economy but is one that has become evident across most advanced economies, with euro area inflation reaching a record 10.7 per cent in October. It is in this context that the process of monetary policy tightening in the euro area - and around the world - is underway.
The ECB has raised interest rates by a cumulative 2 percentage points this year, which compares to 3¾ percentage points by the US Federal Reserve and 2¾ percentage points by the Bank of England. Most recently at the end of October, the ECB’s Governing Council raised interest rates by 75 basis points and announced its expectation that further interest rate increases will be appropriate. This policy tightening is designed to ensure inflation stabilises at its 2 per cent goal over the medium term.
As Minister for Finance, monetary policy is not part of my remit and it is not appropriate for me to comment or speculate on future Eurozone interest rates, which as the Deputy is aware is the responsibility of the ECB. Of course, interest rates changes do have an impact on the economy and as such my Department will continue to closely monitor developments in this area, particularly the impacts on borrowing costs for households, firms and the public sector.
151. Deputy Ruairí Ó Murchú asked the Minister for Finance the work being done in his Department to fix the anomaly by which many workers who live in the North and work in the South are precluded from working from home because of the significant revenue implications for their employers; and if he will make a statement on the matter. [54998/22]
View answerUnder our domestic tax rules, an individual who holds a private sector employment in the State is chargeable to tax in the State in full on the emoluments of the employment and such income is also within the scope of the PAYE system of payroll deductions at source. This treatment applies to individuals who are resident in the State for tax purposes and also to individuals who are not resident in the State for tax purposes, but who work here full-time.
It is important to clarify that workers who reside in Northern Ireland and work in the State are not precluded from working from home and the availability of remote working is primarily a matter between the employer and the employee.
Similarly, an Irish private sector employer may allow an employee to work remotely in Northern Ireland; however, such arrangements may result in implications for the employer from a UK tax perspective.
More generally, the issue of cross border workers and the availability of remote working options has potential tax implications not only for this country but also on an international level, given the increase in the extent of remote working, as a result of the Covid-19 pandemic. It is a complex matter and it may not be appropriate for the State to respond unilaterally. Discussions in relation to global mobility and the tax policy implications for cross border workers have already started at an international level (OECD and EU). My Department is fully engaging with all the relevant stakeholders and is contributing to the policy discussions on the issue.
The following three lines of action are currently being pursued:
1. Obtain Better Data – there is a general acceptance that data in relation to the nature and extent of cross-border working could be improved. A research project has been commissioned with the ESRI will be of benefit to all concerned.
2. Minimise Administrative Burden – Revenue is currently looking at ways to minimise and simplify the administrative burden insofar as possible.
3. International Discussions – The Department of Finance will actively engage in any international discussions on the policy implications of cross-border working. The Department will also engage bilaterally with other jurisdictions as appropriate to the circumstances.
152. Deputy Mattie McGrath asked the Minister for Finance if he and his Government will instruct the Revenue Commissioners, and by extension Revenue sheriffs, to place a suspension on the reported avalanche of revenue debt enforcement referrals, pertaining to the collection of tax debt on SMEs until at least the end of 2023, given that small businesses are struggling with the fallout from forced pandemic lockdowns and are now dealing within an energy costs crisis; and if he will accept that pursuing this debt enforcement would cause many otherwise viable businesses to fail, with wide-scale job losses for tens of thousands of small Irish businesses and their employees. [51439/22]
View answerOne of the primary functions of Revenue is the collection of tax and ensuring that all taxpayers pay the correct amounts due in a timely manner. Revenue’s clear preference is always to engage with taxpayers and businesses and, where possible, to agree mutually acceptable payment arrangements in preference to deploying debt collection/enforcement sanctions. However, where there is no meaningful engagement, then Revenue has no alternative but to use its enforcement powers to protect the Exchequer and maintain a “level playing field” for the vast majority of taxpayers who meet their tax obligations on time.
During the COVID-19 pandemic, Revenue strongly supported businesses through that very difficult period by suspending normal debt management activities and implementing the Debt Warehousing Scheme, which provided a vital liquidity support to businesses. Under the scheme, businesses can temporarily ‘park’ certain tax debts on an interest free basis until the end of this year (or until 30 April 2023 for businesses who qualified for the warehoused extension). However, to remain eligible for the Debt Warehousing Scheme, in addition to filing all returns for the warehouse periods, current liabilities must also be filed and paid on time.
The Government understands the very significant challenges that businesses are currently experiencing in meeting their tax obligations, arising from the impacts of the current energy costs crisis and the financial pressures this have placed on businesses as they continue their recovery from the pandemic. I welcome the important changes Revenue has recently announced to the Debt Warehousing Scheme, which will ease the burden on many taxpayers in light of the current challenging economic situation. Under the scheme, businesses with warehoused debt were due to enter into an arrangement to deal with that debt by the end of the year (or by 1 May 2023 for those subject to the extended deadline). Given the current economic uncertainty, Revenue has extended the timeline to 1 May 2024. This means that businesses will not now be faced with the challenge of either clearing the debt in the warehouse or entering into a phased payment arrangement to clear that debt until 1 May 2024. Importantly also, businesses will still be able to avail of the reduced 3% interest rate from 1 January 2023, as opposed to the general interest rate of 10%, when they come to pay the debt. I expect this will be of great benefit to a large number of businesses and will significantly ease their cashflow burden.
Earlier this year, Revenue commenced a phased return to standard debt collection for non-warehoused debt, which had been partially suspended since the start of the pandemic in March 2020. As part of Revenue’s standard debt collection procedure, where current taxes become overdue, a request for payment will issue with details of the tax(es) due, requesting payment within a set time frame. The request for payment outlines the consequences of continued non-payment and affords the taxpayer up to 10 days to engage. In the absence of customer engagement, a final demand issues allowing another 7 days for the customer to engage. Where there is continued lack of engagement from the customer in response to these notices, the case is escalated for further action.
The majority of taxpayers take action to resolve their payment difficulty without recourse to enforcement action. Revenue encourages taxpayers to engage early when payment difficulties arise, particularly during the current energy costs crisis. Revenue has a strong track record of successfully working with individuals and businesses to resolve their payment difficulties. In most cases, a mutually satisfactory solution is found without resorting to enforcement action. For example, taxpayers can enter into a Phased Payment Arrangement to pay off their debt in instalments over a period of time. Furthermore, Revenue has introduced a number of flexibilities into its payment arrangements to assist businesses, including reduced down payments, longer repayment periods and the option to take a payment break.
The important message for taxpayers is to engage with Revenue at the earliest opportunity so that a mutually acceptable solution can be found to enable them work through their difficulties. I am assured that Revenue appreciates the challenge for businesses in paying their outstanding liabilities in a difficult economic and financial climate and Revenue is committed to finding solutions which are flexible, and which take account of the financial circumstances of the business concerned.
153. Deputy Aindrias Moynihan asked the Minister for Finance the consideration and engagement he has had with the Minister for Public Expenditure and Reform on the current carbon tax and excise duty levies on biofuels for home heating, given the environmental benefits from the use of biofuels; and if he will make a statement on the matter. [55799/22]
View answerThe Finance Act 1999 provides for the application of an excise duty, Mineral Oil Tax (MOT) to specified mineral oils, such as petrol, diesel, and kerosene, that are used as motor or heating fuels. MOT comprises two excise components, a carbon component which is commonly referred to as carbon tax and a non-carbon component which is often referred to as “excise”, “fuel excise” or “fuel duty”.
The rate of the MOT carbon component, or carbon tax, is based on charging an amount per tonne of carbon dioxide emitted on combustion of the fuel concerned. Fuels with higher carbon dioxide emissions attract higher rates of carbon tax than fuels with relatively lower emissions. Currently carbon tax rates for propellant fuels, such as petrol and auto-diesel, are based on charging €48.50 per tonne of carbon dioxide emitted. The carbon dioxide emissions basis for non-propellant fuels, including those used for heating purposes, is currently €41.00 per tonne. MOT rates for various fuel types and uses, broken down into carbon and non-carbon components, are published on the Revenue website at www.revenue.ie/en/tax-professionals/tdm/excise/excise-duty-rates/energy-excise-duty-rates.pdf.
Under MOT law a liquid, other than a specified mineral oil, that is used for motor or heating purposes is regarded as a substitute fuel. Where a substitute fuel is used in place of a propellant fuel, it is subject to MOT at the MOT rate that applies to the fuel it is used in place of. For example, a substitute fuel used in place of auto-diesel in a motor vehicle would be taxed at the MOT rate for auto-diesel, currently €425.45 per 1,000 litres.
A substitute fuel used for non-propellant purposes such as heating is chargeable, under section 96(2A)(c) of Finance Act 1999, at the MOT rate that applies to Marked Gas Oil (MGO). The MOT rate on MGO is currently €111.14 per 1,000 litres, comprised entirely of MOT carbon component. There is no differentiation between MOT rates for fuels used for domestic or commercial heating purposes.
For the purposes of MOT, biofuels are treated as substitute fuels. Biofuels are defined in MOT law as substitute fuels made from biomass, with biomass being defined as the biodegradable fraction of products, waste and residues from agriculture (including vegetal and animal substances), forestry and related industries, as well as the biodegradable fraction of industrial and municipal waste. These fuels fall within the definition of substitute fuel products that are made of biomass of animal or vegetal origin. Section 100(5)(a) of Finance Act 1999 provides for a carbon tax relief for biofuels. This means that a biofuel produced entirely from biomass is liable for the non-carbon component of MOT only. Where a biofuel is used for non-propellant purposes such as heating, the MOT rate of €111.14 per 1,000 litres, is therefore fully relieved. With regard to blended fuels produced partially from biomass, the relief applies to the portion of fuel that meets the biofuel criteria set out in MOT legislation.
The MOT carbon tax relief for biofuels is intended to promote a higher level of biofuel usage for motor and heating purposes and supports the Government commitment to incentivising more environmentally friendly alternatives to fossil fuels. As the carbon component of MOT is fully relieved for biofuels, these types of fuels are not impacted by the ten-year trajectory of carbon tax increases which was introduced in Finance Act 2020. This means that, as annual increases in the carbon component of MOT are implemented, the differential in tax costs between biofuels and fossil fuels will continue to widen, further incentivising the uptake of biofuels.
154. Deputy Marc Ó Cathasaigh asked the Minister for Finance if he will provide a timeline for the roll-out and implementation of the cargo bike scheme; the oversight that will be in place; and if he will make a statement on the matter. [55828/22]
View answerSection 118(5G) of the Taxes Consolidation Act (TCA) 1997 provides for the ‘Cycle to Work’ scheme. This scheme provides an exemption from benefit-in-kind where an employer purchases a new bicycle and associated safety equipment for an employee or director up to certain limits, and subject to certain conditions being satisfied.
Currently, those limits are €1,250 for a bicycle and €1,500 for electric bicycles. The scheme does not apply to motorbikes, scooters or mopeds and safety equipment does not include child seats or trailers.
Under section 118B TCA 1997 an employer and employee may also enter into a salary sacrifice arrangement under which the employee agrees to sacrifice part of his or her salary, in exchange for a bicycle and related safety equipment.
I am advised by Revenue that where a bicycle or safety equipment is purchased under the ‘Cycle to Work’ scheme or through a salary sacrifice arrangement, certain conditions must be met.
These conditions include the following:
1. The bicycle must meet the definition of a ‘pedal cycle’ which means:
- A bicycle or tricycle which is intended or adapted for propulsion solely by the physical exertions of a person or persons seated thereon, or
- A pedelec, being a bicycle or tricycle which is equipped with an auxiliary electric motor having a maximum continuous rated power of 0.25 kilo-watts, of which output is progressively reduced and finally cut off as the bicycle reaches a speed of 25 kilometres per hour, or sooner if the cyclist stops pedalling.
2. The bicycle and related safety equipment must be new and must be purchased by the employer.
3. The bicycle and related safety equipment must be used by the employee or director mainly for the whole or part of their journey to or from work.
4. An employee or director can only avail of the ‘Cycle to Work’ scheme once in any 4-year period, commencing with the date the employee or director is first provided with a bicycle or bicycle safety equipment.
I am amending the ‘Cycle to Work’ scheme in the Finance Bill this year to increase the allowable expenditure incurred by the employer for the provision of a cargo bicycle or e-cargo bicycle and related safety equipment.
The limits that will apply after this change will be as follows:
The first €1,250 in respect of bicycles and related safety equipment.
The first €1,500 in respect of electric bicycles and related safety equipment.
The first €3,000 in respect of cargo bicycles and electric cargo bicycles and related safety equipment.
The Finance Bill 2022 changes, once passed by the Oireachtas, will take effect from 1 January 2023.
The Cycle to Work scheme operates on a self-administered basis, and relief is automatically available provided the employer is satisfied that the conditions of their particular scheme meet the requirements of the legislation. However, where Revenue is conducting a compliance intervention on an employer’s operation of PAYE or its benefit-in-kind arrangements, and the employer in question is participating in the ‘Cycle to Work’ scheme; Revenue staff will frequently examine the employer’s adherence to the conditions of the scheme.
Comprehensive guidance material on the ‘Cycle to Work’ scheme can be found on Revenue’s website, in Tax and Duty Manual 05-01-01g, available on Revenue's website.
157. Deputy Pearse Doherty asked the Minister for Finance the effective tax rate applied to three banks (details supplied) in each of the years 2020 and 2021; his views on restricting their ability to reduce their corporate tax liability through historic losses in the context of heightened interest income and profitability; and if he will make a statement on the matter. [55909/22]
View answerIn relation to the Deputy’s query on the effective tax rate for the three banks, section 851A of the Taxes Consolidation Act 1997 precludes the Revenue Commissioners from directly or indirectly disclosing taxpayer information to third parties unless this is specifically provided for in legislation. Therefore, neither Revenue nor I can comment on the tax affairs of any individual or company.
As the Deputy is aware, loss relief for corporation tax is a longstanding feature of the Irish corporate tax system and a standard feature of corporation tax systems in most OECD countries. It recognises the fact that a business cycle runs over several years and that it would be unfair to tax income earned in one year and not allow relief for losses incurred in another. Loss relief works by allowing a deduction for losses incurred in one accounting period against profits earned in another period.
The value of these tax losses to the State is realised through share sales. The banks' share prices recognise a certain value for the tax losses and as such the State will continue to receive value for the balance of tax losses as future sell-downs complete. There would be a negative impact on the valuation of the State’s investments in the banks from a change in tax treatment of losses carried forward.
Despite the scale of losses accumulated, the banks contribute to the Exchequer through the financial institutions levy. It should also be noted that loss relief does not shelter profits made by the banks in all their corporate entities.
In 2018 Department of Finance officials produced a detailed technical note for the Committee on Finance, Public Expenditure and Reform, and Taoiseach on the subject of both bank losses and corporation tax losses more generally (see www.gov.ie/en/publication/436ff7-technical-note-on-the-potential-consequences-of-changes-to-the-treat/). The technical note considered in some detail the potential implications of restricting the use of losses carried forward, or the introduction of a specific time limit or “sunset clause” on loss relief, for Irish banks, for the wider banking sector, or for the corporate sector as a whole. Among other considerations, it examined the possible effect of such a restriction on consumers, with the probability that an increased cost base for the banks would be passed on to the consumer in the form of higher fees, higher interest rates on loans, or lower deposit rates.
The technical note also noted potential negative consequences for the valuation of the State’s banking investments, and for capital levels in the banks with possible resulting regulatory impacts. It also considered potential effects on competition within the banking sector in Ireland, a factor of increasing relevance as banks have since left the Irish market. Taking all these factors into account, it is my view that it would be detrimental to Irish consumers and Irish taxpayers if a restriction were to be placed on the use of losses carried forward by the banks.
160. Deputy Richard Boyd Barrett asked the Minister for Finance if he will provide a detailed report on the effectiveness of the vacant site levy; if he needs to reconsider the timeline and the rate of the new zoned land tax; and if he will make a statement on the matter. [55852/22]
View answerThe Department of Housing, Local Government and Heritage (DHLGH) have informed me that, under the vacant site levy provisions in the Urban Regeneration and Housing Act 2015 (the Act), planning authorities were empowered to apply a vacant site levy of 3% of the market valuation of relevant properties, which were listed on the local authority vacant site registers in 2018, which relevant owners were liable to pay in January 2019. The rate of the levy increased to 7% for sites listed on local authority vacant sites registers from 2019 onwards which site owners became liable to pay in January of the following year.
DHLGH issued Circular Letter PL 03/2022 on 25 March 2022 requesting the submission of a progress report on the collection of the levy by each local authority. A response was received from each of the 31 local authorities and this information is provided in the attached Table.
Under section 19 of the Act, unpaid levies due remain a charge on the land in question until they are paid. Accordingly, under vacant site levy provisions, there will be a cumulative effect associated with not activating a site for development purposes for each year that a site remains vacant or idle and in respect of which levy liability is unpaid.
Regarding the residential zoned land tax, a two-year lead in time was considered appropriate for a number of reasons. The purpose of the measure is to encourage those who own land, on which homes could be built, to build those homes. The process of carrying out a nationwide mapping exercise and allowing sufficient consultation with affected landowners is one that unavoidably takes time. In particular, it was necessary to allow sufficient time for landowners to view and prepare submissions on the draft maps.
Designing homes, applying for planning permission and accessing finance takes time and I it is appropriate that landowners also have sufficient lead in time so as to have the opportunity to activate their land and start building homes.
The experience gained through the operation of the vacant site levy has been brought to bear in developing the residential zoned land tax measure and the opportunity has been taken to mitigate numerous challenges, which arose in respect of the vacant site levy. Therefore, when considering the 3% rate of the residential zoned land tax and the current 7% vacant site levy we are not comparing like with like. On this basis, it is felt that a rate of 3% is proportional at the outset.
161. Deputy Matt Shanahan asked the Minister for Finance the additional energy rebates or energy tax considerations that the Government is considering to apply to the SME sector in order to retain jobs and businesses over the coming six months given the significant energy cost difficulties facing many SMEs; and if he will make a statement on the matter. [53736/22]
View answer202. Deputy Neale Richmond asked the Minister for Finance if he will outline the details of the temporary business energy support scheme; and if he will make a statement on the matter. [52965/22]
View answerI propose to take Questions Nos. 161 and 202 together.
The Temporary Business Energy Support scheme (TBESS) will assist businesses with their energy costs over the winter months.
The TBESS will be open to businesses that carry on a Case I trade or Case II profession, are tax compliant and have experienced a significant increase in their natural gas and electricity costs. The scheme is being designed to be compliant with the EU state aid Temporary Crisis Framework and as such it will not be open to credit institutions or financial institutions.
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. The scheme will not be open for claims until State aid approval has been received.
The scheme will operate by comparing the average unit price for the relevant claim period with the average unit price in the corresponding reference period in the previous year. 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 - subject to meeting the other conditions.
The Government and I are very conscious of the scale of the energy crisis and how worried businesses are as they witness the rising cost of energy and of doing business. With this in mind, in Budget 2023, the Government introduced a significant package to help businesses with escalating energy costs and to plan for the future.
In addition to TBESS, there is a new Growth and Sustainability Loan Scheme, which will make up to €500 million in low-cost investment loans of up to 10 years available to SMEs, with no collateral required for loans up to €500,000. A minimum of 30% of the lending volume will be targeted towards Environmental Sustainability purposes.
The €200 million Ukraine Enterprise Crisis Scheme, which is being operated by Enterprise Ireland, will assist viable but vulnerable businesses in the manufacturing and internationally traded services sectors which are suffering the broader effects of the war in Ukraine as well as increasing energy costs.
The reduced rate of VAT on gas and electricity from 13.5% to 9% has been extended until the 28th February 2023. The Government are also raising awareness around energy efficiency, helping businesses to reduce the amount of energy they use and improving take-up of the approximately 20 existing schemes that are already in place for business to help them reduce their energy costs. These include the Green4Micro programme and the Climate Toolkit for Business.
Additionally, small and medium businesses can currently receive an energy audit voucher from SEAI to get professional advice on how to increase efficiency and reduce their costs. Other financial assistance includes the SEAI Community Grant and grants for microgeneration.
Further information on the available business energy schemes can be found on the Department of Enterprise Trade and Employment’s website.
162. Deputy Brendan Griffin asked the Minister for Finance if he has considered the tax costs associated with bringing derelict buildings back into use as homes; if he will move to reduce or eliminate these costs particularly for first-time buyers; and if he will make a statement on the matter. [55856/22]
View answerWhile the issue of derelict housing is the remit of the Minister for Housing, Local Government and Heritage, any matters in relation to taxation or tax incentives are considered by the Department of Finance.
As the Deputy will be aware, there is a Vacant Property Refurbishment Grant available for those who meet the relevant criteria. This is a payment you can avail of if you are turning a vacant house or building into your permanent home. A grant of up to €30,000 is available.
Taxes on capital including Capital Gains Tax and stamp duty ensure that taxation is not focused solely on income and that those who benefit from gains in the value of their assets, or who have the means to acquire assets, are included within the tax net on an equitable basis.
I should also note that the VAT Directive allows for a reduced rate to apply to the renovation and repair of private dwellings, excluding materials which account for a significant part of the value of the service supplied. This is already applied in a number of Member States including Ireland where the reduced rate of 13.5% applies. Under the VAT Directive it is not possible to apply a different VAT rate for first-time buyers.
However, it is important to be aware, that taxation is only one of the policy levers available to the Government through which to boost overall housing supply and the presumption should be that non-tax alternatives should be considered before the use of tax-based measures. I would wish to avoid introducing or widening the scope of any tax expenditures that could, or already do, distort the market. Tax exemptions which could be costly to the Exchequer may not in fact assist purchasers of derelict or renovated property as any gains to owners may not be passed on to purchasers. Previous experience with tax incentives in the housing market has demonstrated a considerable potential for unexpected consequences to such changes which can end up being unhelpful to the broader market. They are also prone to being deadweight to an extent, in that what they seek to achieve would often still have happened in their absence.
In conclusion I currently have no plans to provide for relief from taxation for the development of derelict properties. However all taxes are subject to ongoing review which includes the consideration and assessment of rates along with any associated reliefs and exemptions, within the wider tax policy context.
164. Deputy Ged Nash asked the Minister for Finance the average response time for an online Revenue query; if he is satisfied the Revenue Commissioner is adequately resourced to respond to such queries in a timely fashion; and if he will make a statement on the matter. [55837/22]
View answerMy Enquiries is a secure online service that allows customers to send, receive and track correspondence to and from Revenue. Revenue’s published customer service standards set out the standard of service customers can expect. Revenue reports on its performance including against the customer service standards in its annual report which is available on Revenue's website.
The customer service standard advises that Revenue’s objective is to address queries received through MyEnquiries with within 20-working days at normal times and 25-working days during peak periods.
Revenue received almost 2.5 million enquiries via MyEnquiries in 2021. Of these queries, 88% were dealt with within 20 days and 91% within 25 days. I am advised that, while the time taken to respond fully to a query will vary with the complexity of the issue, Revenue works to exceed these standards where possible. In 2021 Revenue provided completed responses to 68% of all enquiries received via MyEnquiries within a 5-day period. Overall, the average time to complete an enquiry via MyEnquiries in 2021 was 6.5 working days with a median time of 2 working days.
Therefore, I am satisfied that Revenue has adequate resources to respond to online queries.
165. Deputy Éamon Ó Cuív asked the Minister for Finance the amount of PAYE, USC and PRSI payable in 2022 by a one-income family with an income of €100,000 with only basic tax credits, including the homemaker's tax credit, as compared with a two-income family with each earning €50,000; the reason for the disparity in the amount paid; and if he will make a statement on the matter. [55042/22]
View answerThe below computations set out the PAYE income tax, PRSI and Universal Social Charge (USC) for the taxpayer unit cases request by the Deputy. It should be noted that for the purposes of answering the Deputy’s question it was necessary to make a number of assumptions, for example, that the taxpayers are private sector employees and full rate PRSI contributors.
Example 1 – Couple (Married/Civil Partnership), one income, with children earning €100,000 per annum.
|
- |
2022 |
|
Gross Income |
€100,000 |
|
Income tax liability |
€24,140 |
|
PRSI liability |
€4,000 |
|
USC liability |
€4,836 |
|
Total tax liability |
€32,976 |
|
Net Income |
€67,024 |
Example 2 – Couple (Married/Civil Partnership), two incomes, earning €50,000 each per annum.
|
- |
2022 |
|
Gross Income |
€100,000 |
|
Income tax liability |
€18,480 |
|
PRSI liability |
€4,000 |
|
USC liability |
€3,075 |
|
Total tax liability |
€25,555 |
|
Net Income |
€74,445 |
As the Deputy will be aware, prior to 2000, the income tax system in place allowed for full joint assessment of married couples. This meant that the earner in a single income couple could use the combined tax allowances and standard rate band available to both individuals – i.e. double the personal tax allowance and rate band available to a single earner. As a result, where the primary earner of a couple had sufficient income to use the available allowances and bands in full, the second earner faced the marginal rate of tax from the first pound of income earned, which acted as a disincentive to workforce participation for second earners.
A process of moving towards an individualised system of income taxation began in the tax year 2000/2001 with the stated economic objectives of increasing labour force participation and reducing the numbers of workers paying the higher rates of income tax. Many European countries have made similar moves towards a partial or fully individualised income taxation system on the grounds that it improves equality and economic independence for women.
The process of individualisation was never completed with the result that we now have a hybrid system. Up to €9,000 of the standard-rate band may be transferred between spouses/civil partners and the personal tax credit that applies in the case of persons who are married or in civil partnerships may be allocated in full to one spouse/civil partner. Because the income tax system allows married/civil partnership couples to choose whether to be jointly or individually assessed, there can be a difference between the tax liabilities incurred by such couples on the same household income, depending on the method of assessment chosen.
However, in lieu of fully transferable rate bands, a Home Carer Tax Credit may be claimed where one spouse/civil partner works primarily in the home to care for a dependent person, such as a child. This credit was originally introduced in the context of the move towards individualisation. It recognises the choices made by families where one spouse/civil partner stays at home to care for children or the elderly.
It is worth pointing out that recent Report of the Commission on Taxation and Welfare recommended a phased move towards individualisation of the Standard Rate Cut off Point as a step towards addressing disparities in the income tax system, facilitating increased employment, and decreasing the gap in the employment rate between men and women.
As the Deputy will be aware from my Budget Day announcement, the Government is committed to developing a medium-term roadmap for personal tax reform, taking account of the recent Report of the Commission on Taxation and Welfare, together with other related personal taxation issues.
Finally, it is also worth pointing out that PRSI and USC charges are already on an individualised basis.
166. Deputy Michael Fitzmaurice asked the Minister for Finance the different tax exemptions available for young farmers and for all farmers; if he has secured European Union approval to continue the exemptions, following his budget 2023 speech in which he outlined that he was seeking same; and if he will make a statement on the matter. [55844/22]
View answerAs I announced in my Budget 2023 speech in September, there are five agri-tax reliefs that are due to expire at the end of this year.
They are:
(1) the Young Trained Farmer Stamp Duty Relief;
(2) the Farm Consolidation Stamp Duty Relief;
(3) the Farm Restructuring CGT Relief;
(4) the Young Trained Farmer Stock Relief; and,
(5) the Registered Farm Partnership Stock Relief
As each of these reliefs is categorised as a state aid, extending them requires European Commission approval under the Agricultural Block Exemption Regulation or ABER, and that ABER needs to be in effect for the full duration of any such extension.
The existing ABER is due to expire at the end of 2022, with a new ABER expected to be in place from 1 January 2023 to run for at least five years, but this has not yet been formally confirmed.
I had hoped that it would have been confirmed by the European Commission at this point, and had therefore deferred providing for these extensions in Finance Bill 2022 until Committee Stage in the hope that this would be the case.
Unfortunately, for reasons beyond my, or the Government's, power to change, the necessary certainty has not been provided by the Commission as yet, so the only option open to me legislatively in Finance Bill 2022 at this time is to provide for 6 month extensions of each of the five reliefs to end-June 2023.
I fully expect, and have been advised by the Department of Agriculture, Food and the Marine that the new ABER will be in operation from 1 January, 2023, and if that is the case I will look, at the earliest opportunity in 2023, to extend the five reliefs in line with my original intentions for them. That is to extend the first three named by three years to the end of 2025, and the two stock reliefs by two years to the end of 2024.
