Written Answers Nos. 366-384
366. Deputy Joe Carey asked the Minister for Finance if his attention has been drawn to a dramatic increase in the charges that have been incurred by traders who receive payments by debit card (details supplied); if he will raise these severe increases with the Irish Financial Services Regulatory Authority with a view to bringing about a more equitable charging system for traders; and if he will make a statement on the matter. [1949/23]
View answerTraders must consider a number of factors before choosing to accept any type of payment instrument. In the case of accepting card payments, one of the most relevant factors considered by a trader are the fees that it must pay.
The fees paid by merchants for the processing of card payments are collectively known as the Merchant Service Charge. One of the most common fees included in the Merchant Service Charge is the interchange fee i.e. the fee paid between the payer’s bank (the card issuer) and the payee’s bank (the bank used by the trader) to cover handling costs.
The European Commission has acknowledged the negative impact that excessive interchange fees can have on card acceptance. In an effort to address this issue (amongst others) in the market, the EU introduced Regulation (EU) 2015/751 on interchange fees for card-based payment transactions (commonly known as the “Interchange Fee Regulation”), which introduced interchange fee caps for both credit and debit card transactions.
In Ireland, the Central Bank of Ireland is one of the national competent authorities for the purpose of ensuring compliance with the Interchange Fee Regulation and the European Union (Interchange Fees for Card-Based Payment Transactions) Regulations 2015 (the “Irish Interchange Fee Regulations”) which gave effect to the Interchange Fee Regulation in Ireland.
Under the Irish Interchange Fee Regulations, payment service providers are prohibited from offering or requesting an interchange fee of more than the equivalent of 0.10% of the value of the individual debit card transaction.
In Ireland, there is no domestic card payment scheme. Irish card payments are primarily facilitated by international card payment schemes such as VISA and MasterCard. As part of its national competent authority role, the Central Bank seeks independently verified transaction and fee information from international card schemes operating in Ireland to ensure that they are operating in compliance with the Irish Interchange Fee Regulations.
However, while regulated entities must comply with the rules regarding interchange fees, card transaction charges are a commercial decision for each service provider.
367. Deputy Ruairí Ó Murchú asked the Minister for Finance if he will provide an update on the work that is being done in his Department to fix the anomaly whereby many workers who live in Northern Ireland and who work in the Republic are precluded from working from home due to the significant Revenue Commissioners implications for their employers; if he will detail any contacts that his Department has had on the matter with the equivalent British Department in the past six months; and if he will make a statement on the matter. [1994/23]
View answer368. Deputy Ruairí Ó Murchú asked the Minister for Finance if he will provide an update on the survey that is being carried out related to cross-border workers and the issues that they face in relation to working from home, income tax and social protection; and if he will make a statement on the matter. [1995/23]
View answerI propose to take Questions Nos. 367 and 368 together.
Under 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. The availability of remote working is primarily a matter between the employer and the employee. 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 very complex matter and the State cannot move unilaterally. Discussions in relation to global mobility and the tax policy implications for cross border workers have already started at both the EU and the OECD. My Department is fully engaging with all the relevant stakeholders and is contributing to the policy discussions on the issue.
The following three issues are actively 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. The ESRI has been commissioned to undertake a research project in this area. It is understood that this work is in progress by the ESRI.
2. Minimise Administrative Burden – Revenue are 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.
In this regard, to answer the Deputy’s specific question in relation to any contacts between my Department and their counterparts in the UK, over the course of 2022 officials from my Department had two meetings to facilitate an exchange of information on the issue of cross-border working with representatives of HM Treasury.
Finally, issues in relation to cross-border workers and social protection/social insurance are primarily a matter for the Minister for Social Protection and her Department.
369. Deputy Ged Nash asked the Minister for Finance if he will provide a copy of the briefing documents prepared for the incoming Minister and presented to him by his officials on his appointment in December 2022. [1998/23]
View answerI wish to advise the Deputy that a briefing document prepared by the Department of Finance was provided to me on my appointment as Minister for Finance. A copy of this document, having regard to the relevant provisions of the Freedom of Information Act 2014, is available on my Department’s website via the following link:
www.gov.ie/en/organisation-information/1413f6-ministerial-brief/.
As such, the document will not be provided on an individual basis.
371. Deputy Emer Higgins asked the Minister for Finance further to Parliamentary Question No. 193 of 17 February 2022, if the tax exemption limit for persons aged 65 years and over will be reviewed, given the Exchequer surplus in 2022 which may make it possible to increase the tax exemption limit while remaining within the fiscal parameters; and if he will make a statement on the matter. [2082/23]
View answerAs the Deputy will be aware, Budget 2023 included a significant income tax package amounting to a cost of €1.13 billion in 2023 and consisted of both personal income tax and Universal Social Charge (USC) changes. In relation to the income tax changes, the Standard Rate Cut-Off Point for single persons was increased by €3,200 or 8.7 per cent from €36,800 to €40,000, with commensurate increases for persons who are married/in civil partnerships. In addition, the main tax credits – the personal tax credit, employee tax credit and earned income credit - were all increased by just over 4.4 per cent or €75 each from €1,700 to €1,775. The home carer tax credit was also increased by €100 from €1,600 to €1,700 which equates to a 6.3 per cent increase. These tax changes will provide a real benefit to all individuals who pay income tax by reducing their overall income tax liability.
Turning to the USC, the ceiling of the band for the 2 per cent rate was also increased by €1,625 from €21,295 to €22,920. This will ensure that a full-time worker on the minimum wage, who benefited from the increase in the hourly minimum wage rate from €10.50 to €11.30, will remain outside the top rates of USC. It is also worth pointing out that the USC concession for medical card holders who earn less than €60,000 per annum was extended for a further year, which means such individuals will continue to pay a reduced rate of USC in 2023. Further details can be located at the following link:
www.gov.ie/en/publication/ccc22-budget-2023-taxation-measures/.
The age exemption applies for any year of assessment where an individual is aged 65 years or over and his or her total income does not exceed €18,000. Where an individual is a married person or civil partner and is jointly assessed to tax, the age exemption will apply where either individual is aged 65 or over and where the couple’s total income does not exceed €36,000. The relevant income thresholds may be increased further if the individual has a qualifying child. The thresholds are increased by €575 in respect of both the first and second child, and €830 in respect of each subsequent child.
Marginal relief may be available where the individual’s or couple’s income exceeds the relevant exemption limit but is less than twice that amount. Where marginal relief applies the individual or couple is taxed at 40% on all income above the exemption limit to a ceiling of twice the exemption limit. Once the income exceeds twice the exemption limit marginal relief is no longer available and the individual pays tax under the normal tax system.
It should be noted, however, that where the individual’s income is greater than the exemption limit but below twice that limit, the taxpayer is always given the benefit of the more favourable treatment as between the use of marginal relief or the normal tax system of credits and bands.
Budget 2023 did not provide for an increase in the above thresholds and there are no current plans to increase these thresholds further. However, it is important to take into account that the current tax arrangements for persons aged 65 or older compare favourably with the tax treatment of the generality of taxpayers. For example, persons aged 65 or over may also avail of the age tax credit, which currently amounts to €245 per year for single persons or €490 per year for married couples or civil partners. Reduced rates of USC also apply for persons aged 70 or older where their total income is €60,000 or less. Furthermore, the State Contributory Pension and the State Non-Contributory Pension are not chargeable to USC or Pay Related Social Insurance.
It should be noted that the recent Commission on Taxation and Welfare (CoTW) recommended that age should be removed as a factor for determining the charge to Income Tax and Universal Social Charge. The report stated that the determination of an individual’s tax treatment based on age narrows the base and breaches the concept of horizontal equity, whereby those with similar income should pay the same proportion of that income in taxes. It also breaches the concept of intergenerational equity. Further details are set out in the Report of the Commission, located at the following link: www.gov.ie/en/publication/7fbeb-report-of-the-commission/.
Finally, as signalled in the Budget, my Department has begun initial work on developing a medium-term roadmap for personal tax reform, taking account of the recent report of the CoTW, and considering a range of measures across income tax, USC and PRSI together with other related personal taxation issues.
I expect that, when completed, this work will help inform deliberations relating to a number of aspects of the income tax system in the context of future budgets.
375. Deputy Pearse Doherty asked the Minister for Finance the estimated cost to the Central Bank of the National Claims Information Database; the expected date of the introduction of the levy as a required reimbursement mechanism under the Central Bank (National Information Claims Database) Act 2018; and the expected annual revenue that it will raise. [2171/23]
View answerA transparent and evidence-based approach to policymaking remains a key focus for the Government’s ongoing insurance reform agenda. Accordingly, the introduction of the National Claims Information Database (NCID) within the Central Bank of Ireland (CBI) is a key-step change in this regard.
The NCID reports provide wide range of official data on private motor, employers’ liability, public liability and commercial property insurance. Indeed, Ireland is unique in the EU in having this level of quantitative insight, allowing us to analyse and understand industry-level developments.
I would also note that the NCID has been well received by all stakeholders, as well as all sides of the House. It represents a valuable resource and therefore it is important that it be sufficiently funded to ensure it continues to perform this important function. In this regard, the fourth NCID Private Motor Report, published in November 2022, contained some initial insights as to the impact of the Personal Injuries Guidelines introduced in 2021. The NCID continues to be enhanced, and from this year will begin to publish some key data on a more regular basis.
The NCID is underpinned by the Central Bank (National Claims Information Database) Act 2018. While the CBI is responsible for the NCID, the European Central Bank’s Opinion (CON/2018/43) on this legislation, noted that this is not deemed as a “central bank task” under European law. Therefore, the CBI is not permitted to pay for the cost of establishing and running the NCID from its own resources. This provision is designed to ensure Member State governments do not outsource “non-bank” activities to their respective central banks and in turn leave them with the associated costs.
Consequently, Section 11 of the 2018 Act requires the CBI to make Regulations to recoup the cost of the NCID by prescribing levies to be paid by insurance undertakings. These levies should not be directly charged to consumers. This provision has been in place since 2018 when passed by the Oireachtas, with industry having been aware of it.
The CBI is currently working on a regulation to establish a levy which will retrospectively recoup the Bank's costs in operating the NCID. I understand that the CBI expects that the regulation will be enacted in H1 2023, and that it will provide details of the total costs of the levy per year and information on how the levy is calculated. The money raised will cover, the set-up and design cost of both NCID databases. Furthermore, I understand that it is proposed that the ongoing running cost of the NCID publications will henceforth be met on an annual basis.
At this point, I understand preparations are proceeding through the Central Bank’s internal approval processes. Accordingly, I am unable to comment any further until briefed on the outcome from the work done by the Central Bank.
378. Deputy Fergus O'Dowd asked the Minister for Finance his views on matters raised in correspondence (details supplied) in respect of the recently introduced rent relief; and if he will make a statement on the matter. [2176/23]
View answer388. Deputy Brendan Howlin asked the Minister for Finance in relation to the new rent relief scheme for parents who are paying their children’s rent while studying at third level, if he will extend the scheme to cover parents of students who are paying for ‘digs’-type accommodation or ‘rent a room’ accommodation; if he will ensure that the parents of students studying in the EU and UK whose course fees are eligible for tax relief will also be entitled to tax relief for accommodation paid for these students; and if he will make a statement on the matter. [2407/23]
View answerI propose to take Questions Nos. 378 and 388 together.
Finance Act 2022 introduced the Rent Tax Credit, which is provided for in section 473B of the Taxes Consolidation Act 1997. This is an income tax credit of up to €500 per year (or up to €1,000 for jointly assessed couples) which may be claimed in respect of qualifying rent paid in 2022 and subsequent years to end-2025.
Where a claimant is paying rent for a property used by his or her child, there are certain conditions which must be met in order for the claimant to be eligible to claim the Rent Tax Credit. These are:
- The claimant must have made a qualifying rental payment in respect of the property during the tax year;
- The property must be used by the claimant’s child for the specific purpose of facilitating the child's attendance at or participation in an approved course, as defined in section 473A of the Taxes Consolidation Act 1997;
- The property must be the child’s principal private residence during term time. Where the child returns to the family home outside of term time (including weekends) this will not preclude the claimant from receiving the Rent Tax Credit;
- Neither the claimant nor tenant can be related, in any way, to the landlord;
- The tenancy must be of a type which is required to be registered with the Residential Tenancies Board (RTB) and where the landlord has complied with any such registration requirement, which means that the credit will not be available where the tenancy is of a type which is exempt from RTB registration, such as a ‘Rent a Room’ or ‘digs’ type arrangement;
- The claimant's child must have been under 23 at the start of the tax year in which he or she first commenced an approved course in order for the Rent Tax Credit to apply; and
- The claimant must not be a ‘supported tenant’ and the landlord must not be a 'specified landlord' within the meaning of section 473B of the Taxes Consolidation Act 1997.
In designing tax reliefs, there is always a balance to be struck between providing support to as many people as possible consistent with the overall policy intention behind the measure and ensuring that there is an appropriate degree of control in the management of limited Exchequer resources. The current rules for the rent tax credit seek to achieve such a balance having regard to the more informal nature of rent-a-room or digs type arrangements as compared with those that must be registered with the Residential Tenancies Board.
In relation to the question of parents paying for their children who are studying abroad and in a tenancy outside the State, the purpose behind the rent tax credit, introduced as a temporary measure, is to assist as part of the overall response to the accommodation shortage in the private rented residential sector in Ireland. More specifically, the aim is to provide some financial assistance to renters in that particular sector who may face high rental costs and who do not receive any other housing supports from the State. As such, the eligibility criteria for the credit specify that the rental property concerned must be a residential property located in the State.
The operation of the rent tax credit will be closely monitored by my Department in conjunction with Revenue in the coming months and the question of whether any further adjustments are needed will be considered in the context of the Budget and Finance Bill process later this year.
379. Deputy Neale Richmond asked the Minister for Finance his views on whether the budget 2023 decision regarding benefit-in-kind for company cars should be addressed for staff for whom the company car is a necessary part of the job and not a perk; and if he will make a statement on the matter. [2192/23]
View answerRegarding differentiation in BIK rules by use, an employee is chargeable to benefit-in-kind (BIK) where, by reason of his or her employment, a car is made available (without a transfer of ownership) to him or her and the car is, in the tax year, available for that individual’s private use, or to his or her family or household. By virtue of section 121(1)(b)(i)(I) of the Taxes Consolidation Act 1997, a car made available to an employee is deemed to be available for private use and a BIK charge arises even if the car is not used for private purposes. The BIK charge applies unless the terms on which the car is made available prohibit private use, and no such use is actually made of the car in the tax year.
In summary, therefore under current legislation, it is not possible to make the distinction that the Deputy refers to in his question.
380. Deputy Holly Cairns asked the Minister for Finance if he will outline his engagement with the credit union movement to fulfil the commitment in the programme for Government for credit unions to become a key provider of community banking. [2289/23]
View answerWe have a Minister of State with responsibility for credit unions, Minister Jennifer Carroll MacNeil, who will lead the Government's engagement with the credit union sector. Arising from the recent Government changes Minister Carroll MacNeil was appointed to her position on 21 December 2022 and has already had an engagement with Core Credit Union on 5 January 2023. Core Credit Union has 7 branches and represents a significant geographic area in Dublin including Sallynoggin, Shankill and Dun Laoghaire.
The Minister intends to continue the considerable level of engagement with the credit union sector that was undertaken by her predecessor Minister Sean Fleming. Officials at the Department are currently working on organising meetings with the Registry of Credit unions and the four main representative bodies. It is expected that these meetings will take place in the coming weeks. In addition, the Minister will speak at CUDA’s AGM on 28 January.
As noted above, the former Minister of State with responsibility for credit unions, Minister Fleming conducted a substantial level of engagement with the sector. In 2022 alone Minister Fleming attended 27 meetings and events with various credit union stakeholders including the representative bodies, the Credit Union Advisory Committee and individual credit unions.
Separately, Department officials from the Credit Union Policy team have very regular engagement with sector stakeholders, including chairing a quarterly stakeholder roundtable. They also act as secretariat to the Credit Union Advisory Committee, which meets on a monthly basis.
383. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue to be raised in 2023 from legislated increases in the carbon tax in May 2023 and October 2023 respectively. [2345/23]
View answerI am advised by Revenue that the estimated revenue to be raised in 2023 from legislated increases in the carbon tax in May 2023 and October 2023 respectively is estimated at €138.4m for 2023, comprised of €125m in carbon tax and €13.4m in VAT. This estimate is based on the most recent full year data and does not account for any future behavioural changes.
