Written Answers Nos. 202-213
204. Deputy Thomas Pringle asked the Minister for Finance the measures that are available to the haulage industry for reductions in fuel costs because of the current crisis; and if he will make a statement on the matter. [55961/22]
View answerThe price of fuel is determined by a number of factors such as global market dynamics, costs of labour, exchange rates, taxation as well as wholesale and retail pricing policy practices which may include additional pricing to cover transport and distribution costs. The Government has acted to limit the impact of increased prices on households and businesses via reductions in VAT, excise and income tax, targeted welfare supports, reduced public transport fares and the provision of energy credits to households.
On 10 March 2022, to alleviate the impact of rising auto fuel prices on households and businesses, the Government introduced VAT inclusive Mineral Oil Tax reductions of 15 cent per litre on diesel. A further reduction of 1 cent per litre (VAT inclusive) applied from 1 April 2022 to offset the impact of anticipated increased prices as a result of the increase in the Biofuel Obligation Scheme administered by my colleague, the Minister for Transport and Environment, Climate and Communications. These reductions were due to expire on 12 October 2022 but in recognition of the continued impact of high fuel costs, I have extended the reductions until 28 February 2023. While the Government remains committed to the carbon tax trajectory, in recognition of current fuel prices Budget 2023 also provided a reduction in the NORA levy to a nominal amount which will offset the impact of carbon tax increases on auto fuels. This measure will also last until 28 February 2023.
According to the European Commission weekly oil bulletin, the average national price for a litre of diesel in Ireland as of 7 November 2022 was €2.03. In recent weeks there has been an increase in the retail price of diesel affecting the national average price across Europe. The increase in price arises from supply side issues affecting the pretax price of diesel.
While garages are not committing an offence by charging a higher price than competitors, all garages must operate within the bounds of consumer protection and competition law in relation to their pricing policies and practices.
The Competition and Consumer Protection Commission (CCPC) is the statutory independent body responsible for the promotion of consumer rights and the enforcement of consumer law. The CCPC provides information on consumer rights and enforces consumer protection laws, including rules on pricing and deceptive trading practices.
If an individual believes that a breach of their consumer rights has occurred, they may make a complaint directly to the business concerned, but also to the CCPC. The CPCC provides advice and guidelines on the process of making a complaint. Full information is available at: www.ccpc.ie
With regard to specific supports for the haulage sector, the Government has put in place several measures to ease cost pressures including:
- On 15 March 2022, the Government introduced the Licensed Haulage Emergency Support Scheme. The Scheme was administered by the Department of Transport and provided a temporary financial support of €100 per week, for eight weeks, for each eligible heavy goods vehicle authorised on the licence of a road haulage operator as of 11 March 2022. There was good uptake of the scheme, with over €15.6 million paid out to c. 3,080 operators (approx. 80% of licensed operators.)
- The Diesel Rebate Scheme (DRS) has been in operation since 2013 and remains available to qualifying road haulage and passenger transport operators. The DRS operates on a sliding scale basis, whereby the rebate kicks in when the retail price of diesel exceeds €1.00 VAT exclusive and the repayment amount increases gradually as the retail price increases up to a maximum repayment amount of 7.5 cents per litre. Budget 2020 provided for a significant enhancement to the scheme whereby the marginal rate of compensation was doubled at prices over €1.07 VAT exclusive. This enhancement has been maintained to date in light of the current challenges facing sectors of the economy.
- VAT registered businesses are also entitled to recover the cost of VAT on the purchase of diesel, used in the course of their business, as is the case with most business costs.
- The extended excise reduction on diesel also benefits hauliers.
The Government does not have infinite resources but through the measures outlined it has responded as best it can to help to ease the impact of high fuel prices.
205. Deputy Denis Naughten asked the Minister for Finance if he will consider a reduction in VAT on heat pumps and solar panels to encourage the investment by homeowners in same; and if he will make a statement on the matter. [55972/22]
View answerThe 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 (currently 23% in Ireland), unless they fall within the categories of goods and services specified in Annex III of the VAT Directive, in respect of which Member States may apply a lower rate of VAT.
Following amendments to Annex III of the VAT Directive, agreed in April 2022, it now includes a category for "the supply and installation of solar panels on and adjacent to private dwellings, housing and public and other buildings used for activities in the public interest."
Outside of the above category in Annex III, the supply of solar equipment, is liable to VAT at the standard rate, currently 23%.
I have decided not to make any change to this rate because of the fact that when solar panels are supplied as part of a “supply and install” contract, they may be subject to VAT at the reduced rate of 13.5%. A “supply and install” contract is where installation services are provided in conjunction with goods such as solar panels. As a result, if solar panels are supplied as part of a “supply and install” contract, then the contract may be subject to VAT at the reduced rate of 13.5%, provided that the value of the goods supplied does not exceed two thirds of the total value of the contract. I believe the reduced rate applied in these circumstances is sufficient.
The revised Annex III of the VAT Directive also includes provision for a reduced rate to apply to the supply and installation of highly efficient low emissions heating systems meeting the emission (PM) benchmarks laid down in Annex V to Commission Regulation (EU) 2015/1189 and in Annex V to Commission Regulation (EU) 2015/1185 and having been attributed an EU energy label to show that the criterion referred to in Article 7(2) of Regulation (EU) 2017/1369 of the European Parliament and of the Council is met.
However, similarly to solar panels, if such heating systems are supplied as part of a “supply and install” contract, then the contract may be subject to VAT at the reduced rate of 13.5%, provided that the value of the goods supplied does not exceed two thirds of the total value of the contract. I also believe the reduced rate applied in these circumstances is sufficient.
206. Deputy Brendan Smith asked the Minister for Finance if he has had any recent discussions with the Central Bank in relation to the need to extend the deadline with banks (details supplied) to exit the State; and if he will make a statement on the matter. [55997/22]
View answerWhile it is regrettable that Ulster Bank and KBC have decided to exit the market, as Minister for Finance, I do not have a role in the operations of any bank operating within the State. Decisions in this regard are commercial matters and are the sole responsibility of the board and management of the banks, which must be run on an independent and commercial basis.
My priority now is that the withdrawals take place in an orderly manner and the importance of this is emphasised in all engagements with Ulster Bank and KBC. Both banks are meeting with my officials and providing relevant information regarding account closures to the Department of Finance on a monthly basis. This will help to identify any emerging trends and potential issues for consumers.
The Central Bank continues to actively engage with the banking sector as part of its supervisory programme on retail bank consolidation. Officials in my Department are also engaging regularly with the Central Bank, the Competition and Consumer Protection Commission, and the Banking Payments Federation of Ireland to ensure a cohesive approach regarding consumer protection and information provision, along with discussing emerging trends and issues affecting consumers.
Both banks are providing their customers with six months’ notice to close their account(s) and have committed not to close any branches this year.
As part of the Central Bank's supervisory engagement, it has met with the CEO's of the five main retail banks a number of times over the summer in relation to the large scale migration of customer accounts and outlined the need for better planning, customer focused arrangements, proactive communications and system wide engagement.
In September, the Central Bank began publishing monthly statistics on account migration. Migration activity has been in line with the expectations of the Central Bank to date. On 12 October, the Central Bank statistics showed that in the first nine months of the year:
- 31 per cent of KBC and Ulster Bank accounts had closed, and
- 718,112 (current and deposit) accounts were opened in the three main remaining banks.
While the numbers are encouraging, the focus must continue to be on ensuring adequate resources and training are in place to ensure a positive customer experience. The next statistical release is expected tomorrow.
My officials and I will continue to monitor the migration of current accounts from the exiting banks and engage with relevant stakeholders, both public and private, to ensure that impacted customers face the least amount of disruption in migrating their accounts over the coming months.
207. Deputy Bernard J. Durkan asked the Minister for Finance the correct level of taxation applicable in the case of a person (details supplied); and if he will make a statement on the matter. [56029/22]
View answerI am advised by Revenue that, according to the information available to them, the person concerned is currently in receipt of the appropriate tax credits and standard rate band allocations.
However, given the circumstances outlined in the details supplied, the person may be eligible to claim the Single Person Child Carer Tax Credit (SPCCC) and an additional standard rate band of €4,000. These are available to a single person where they are the primary carer of a child who is either, under 18 years of age or over 18 years of age and in full time education, or permanently incapacitated. The SPCCC can be claimed online using Revenue’s MyAccount or by completing and submitting the Form SPCC1. Further information on claiming the credit is available on Revenue’s website at:
www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/children/single-person-child-carer-credit/index.aspx
Upon receipt of a completed application form, Revenue will determine the person’s eligibility for the SPCCC and if approved, will apply the credit to the person’s record as appropriate.
208. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which deflationary measures remain adequate to achieve results; and if he will make a statement on the matter. [56034/22]
View answer210. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that deflationary measures are sufficient to meet the challenges arising from inflation; and if he will make a statement on the matter. [56036/22]
View answerI propose to take Questions Nos. 208 and 210 together.
The Consumer 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.
Looking ahead, inflation is expected to continue to rise over the coming months driven primarily by energy prices, with a very gradual easing of the inflation rate anticipated over the course of next year. Overall, my Department is forecasting average annual inflation of 8½ per cent for 2022 as a whole, with inflation of just over 7 per cent projected for 2023. Despite the easing of the inflation rate anticipated for next year, it is important to bear in mind that the price level consumers face will remain elevated.
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.
A distributional analysis of Budget 2023 shows that the impact of the budgetary measures is strongly progressive, with the lowest income deciles seeing the highest proportional gains in their disposable income. Additionally, 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.
209. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which good governance and fiscal policy continue to remain central to combatting inflation and maintaining a stable economy; and if he will make a statement on the matter. [56035/22]
View answerPutin’s illegal and immoral invasion of Ukraine and the weaponisation of gas supplies has triggered an exceptionally large energy price shock which has reverberated throughout the globe. Consumer price (HICP) inflation has picked up sharply as a result and stood at 9.6 per cent in October. 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.
My Department expects inflation to peak in the fourth quarter of this year and average 8½ per cent for the year as a whole. For next year, inflation is only expected to ease slightly to just over 7 per cent. Practically speaking, inflation will be higher for longer and this will have a real impact on households and businesses.
Inflation is eroding real incomes of Irish households while tighter financing conditions and heightened economic uncertainty is constraining businesses investment. As a result, the pace of growth in the domestic economy is expected to slow throughout the rest of this year and into next year.
The Government is acutely aware of the cost pressures households and businesses face and that is why we have focused on doing as much as possible to provide relief to households and firms without making the inflationary situation worse through inappropriate or poorly targeted fiscal policy. That is exactly what we have achieved in Budget 2023.
Budget 2023 includes a total package of €11 billion, of which €4.1 billion has been set aside for once-off cost of living supports. Importantly, the range of measures set out in Budget 2023 have been designed in a manner which balances the need to provide much needed support to households and businesses on the one hand, whilst at the same time avoiding a situation in which the Government’s fiscal response becomes part of the inflationary problem. This prudent approach to our public finances ensures that spending is both sufficient and sustainable, meeting the needs of today without compromising the future needs of our people in the years to come.
211. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which Ireland's economy compares with other European economies in the context of combatting inflation and maintaining growth; and if he will make a statement on the matter. [56037/22]
View answer214. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which Ireland can continue to be seen internationally as a stable and reliable economy; and if he will make a statement on the matter. [56040/22]
View answerI propose to take Questions Nos. 211 and 214 together.
Ireland is currently facing many of the same economic headwinds as the wider European economy. The invasion of Ukraine and Russia’s weaponisation of gas supplies has triggered an exceptionally large energy price shock and undermined global economic prospects. Europe has been particularly exposed to the economic consequences of the war, owing to its significant dependence on Russian energy imports, in addition to other direct trade links.
Consumer price (HICP) inflation picked up sharply over the last year and was recorded at 9.6 per cent in October. 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 of 10.7 per cent recorded in October.
Despite the darkening economic outlook, Ireland is in a strong position to weather the storm. Domestic economic activity expanded significantly in the first half of the year, with modified domestic demand (MDD) – a proxy for the domestic economy – up by 11.7 per cent. The number of people in employment is now at a record level of well over 2½ million, and the unemployment rate stood at just 4.4 per cent in October - close to the lowest on record.
Ireland continues to be seen as a stable and reliable economy on the world stage. Foreign direct investment (FDI) in the Irish economy remains robust, with the stock of FDI in Ireland reaching over €1,280 billion in the second quarter of 2022. Last year, the IDA reported the highest increase in FDI employment in a single year, reflecting strong international confidence in the Irish economy.
Taking account of all factors, the outlook for the international economy is one of extreme uncertainty and there are significant risks to the economic outlook for Ireland, as well as for the European economy. Nevertheless, Ireland remains on a relatively strong economic footing and, along with our partners in Europe, we will withstand the economic headwinds together.
212. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which Ireland remains an attractive option for foreign direct investment; and if he will make a statement on the matter. [56038/22]
View answer213. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which Ireland's economy can remain competitive notwithstanding the many challenges; and if he will make a statement on the matter. [56039/22]
View answerI propose to take Questions Nos. 212 and 213 together.
Ireland’s industrial policy has been highly successful in attracting foreign direct investment (FDI), contributing to sustained economic activity over the past number of decades. The strong regulatory and legal environment as well as stable and pro-enterprise policy, combined with a talented workforce, is reflected in the level of FDI that Ireland has attracted and retained. The IDA recently estimated that the multinational sector directly supports approximately 275,000 jobs in Ireland, with further positive spillovers for jobs in the domestic sector.
Ireland remained a competitive economy throughout the pandemic with export growth in the ICT and pharmaceutical sectors contributing to economic growth despite pandemic-related restrictions; an outcome that was particularly unusual in an international context. However, while the domestic economy rebounded quickly following the lifting of pandemic restrictions, the strength of the recovery has been tempered by Russia’s invasion of Ukraine and its weaponisation of gas supplies. This supply-side shock has contributed to record levels of inflation in the euro area of 10.7 per cent in October, with Irish inflation also elevated at 9.6 per cent. Lower demand and rapid interest rate hikes from central banks have negative implications for the economic prospects of economies the world over.
Thus, no economy is immune from the global crisis, not least a small open economy like Ireland. Despite the darkening global situation, however, Ireland’s modified (and headline) current account is projected to remain in surplus over the next few years. Similarly, despite external headwinds my Department projects that Irish exports will continue to grow, albeit at a lower annual rate than was seen in the last couple of years, demonstrating continued competitiveness in the Irish economy.
Notwithstanding our positive position, we must not become complacent. There is a risk that a wage-price spiral emerges as a result of persistently high inflation, which would damage our cost competitiveness and hamper the economy’s ability to compete in the global market place. My Department will continue to monitor risks to competitiveness closely, and respond as needed to protect Ireland’s attractiveness as a location for FDI. Indeed, the economic fall-out of a large sector-specific shock was flagged as a potential risk to the forecasts published by my Department alongside Budget 2023 and recent events in the ICT sector reflect the importance of examining such scenarios.
