Written Answers Nos. 124-143
125. Deputy Paul Murphy asked the Minister for Finance the companies that had representatives attend the dinner he hosted in Davos last week; the matters that were discussed with these company representatives; and if he will make a statement on the matter. [3090/23]
View answerAs the Deputy will be aware, last week I attended the World Economic Forum where I participated in a range of high-level meetings and participated in panel discussions on the future of work and on global efforts to combat poverty. I also participated in a number of interviews with international and Irish media, with focus on promoting Ireland as a location for investment and job creation.
IDA Ireland also travels to Davos during every World Economic Forum given the extensive attendance of senior executives from international companies, many of whom have investments in Ireland or are considering same. At their request I held a series of meetings with executives and also co-hosted IDA Ireland’s annual dinner event alongside their Acting Chief Executive. The companies involved in these engagements reflected the range of sectors which IDA works with, including technology, pharma and financial services. In line with longstanding practice, the Deputy will understand that discussions with these companies (on consolidating investments, expanding them or making new investments) are necessarily conducted on a confidential basis until such time as any public announcements can be made.
131. Deputy Seán Haughey asked the Minister for Finance the action he is taking to ensure that the public finances do not become too reliant on corporate tax; and if he will make a statement on the matter. [3072/23]
View answerThe potential volatility and concentration risks related to corporation tax receipts are issues which my Department has repeatedly drawn attention to since 2015.
In September of last year, my Department published an analysis entitled De-risking the Public Finances - Assessing Corporation Tax Receipts. The purpose of the document was precisely to highlight, and quantify in so far as possible, the fiscal vulnerabilities stemming from the upward shift in corporation tax receipts, part of which is potentially windfall in nature.
The analysis showed that the share of overall tax revenue accounted for by corporation tax receipts is now at historically high levels. Receipts have been on a steep upward trajectory since 2015, reaching €22.6 billion last year, an increase of 230 per cent relative to 2015 and nearly twice the level recorded in 2021.
A level shift of such magnitude naturally raises questions regarding the sustainability of this revenue stream. The concentration of receipts within a small number of firms is an additional vulnerability, with over half of corporate tax receipts paid by just ten large payers.
My Department concluded that, in 2021, around €4 - 6 billion of these receipts were potentially windfall in nature. Given the large increase once again last year, my Department estimates that around €10½ billion is now windfall in nature.
As such, there is a compelling argument to treat a significant portion of corporation tax receipts as non-recurring. In doing so, we can address a key risk to the public finances, ensuring ‘windfall’ receipts are not used to fund permanent expenditure and thereby help ensure our country’s fiscal sustainability.
The paper also raises the possibility of ring-fencing some of this ‘windfall’ revenue and channelling it into a fund to create a buffer for the economy against future economic shocks and to provide support for long-term structural challenges. In the context of this analysis, the Government decided at Budget time to direct €2 billion into the National Reserve Fund last year. A commitment was also made to transfer an additional €4 billion to the Fund this year.
In addition, in order to highlight this ongoing volatility risk, my Department published an estimate of the fiscal position excluding identified windfall receipts. This new indicator, the underlying general government balance, was published for the first time in Budget 2023 and will continue to be published in the Department’s key publications to enhance transparency on this issue.
132. Deputy Michael Moynihan asked the Minister for Finance if he plans to review the current tax allowances for young farmers investing in farm facilities; and if he will make a statement on the matter. [2823/23]
View answerI understand that the Deputy's question relates to tax allowances for capital works specifically on farms, i.e. farm buildings allowances and accelerated capital allowances for the construction of slurry storage facilities. It should be noted that neither of these measures are restricted to young trained farmers as defined by the TCA.
Farm buildings allowances, provided for under section 658 of the Taxes Consolidation Act 1997 (TCA), are allowances for capital expenditure on the construction of farm buildings and other works. These allowances are made over a seven-year period to a farmer who incurs capital expenditure on the construction of farm buildings, fences, roadways, holding yards, drains, land reclamation and other works such as walls, water and electrical installation and sewerage. The expenditure must be incurred by the farmer for the trade of farming on land occupied by the farmer and so buildings or parts of buildings used as dwellings are excluded. Farm buildings allowances are usually deductible at a rate of 15% per annum over a period of six years with the final 10% deductible in the seventh year.
In addition, as introduced by Finance Act 2022, section 658A of the TCA provides for a scheme of accelerated capital allowances for the construction of slurry storage facilities. This scheme provides that 100% of the capital expenditure incurred on the construction of slurry storage facilities and associated equipment may qualify for an accelerated rate such that the allowances may be claimed over two years. Schedule 35A of the TCA sets out a table of the types and descriptions of slurry storage items which may be deemed qualifying expenditure. For reasons related to the updating of the Agricultural Block Exemption Regulation (ABER) by the European Commission, only qualifying expenditure attributable to work actually carried out in the period 1 January 2023 to 30 June 2023 in the provision of or, construction of qualifying capital items will benefit from the accelerated capital allowances. However, now that the new ABER has been implemented, the policy intention is to extend the timeframe for the relief, prior to end-June 2023, to at least 31 December 2025.
Other than the proposed extension of s. 658A TCA, I have no plans at the present time to review or amend either of these capital allowances schemes.
While there are currently no tax allowances for capital works on farms undertaken specifically by young farmers, I would note that supporting young farmers and generational renewal continues to be a priority for both the Government and the EU, and is an important part of the Common Agricultural Programme. For this reason, there are a number of existing tax reliefs which offer additional support to young trained farmers, such as the young trained farmers stock relief under section 667B of the TCA and the young trained farmer stamp duty relief under section 81AA of the Stamp Duties Consolidation Act 1999.
More generally, existing tax expenditure measures are kept under regular review by my Department as part of its on-going programme of work. Any subsequent proposals for changes to those measures would normally be addressed within the context of the annual Budget and Finance Bill process.
133. Deputy Mairéad Farrell asked the Minister for Finance if it is possible to set credit allocation quotas for Irish banks (with a majority State ownership) requiring a certain percentage of their lending to go to green investment activities; and if he will make a statement on the matter. [3136/23]
View answerI wish to highlight, as Minister for Finance, I am precluded from intervening in commercial and operational decisions in any particular bank, even one in which the State has a shareholding. Decisions in this regard, including a bank's policy on green lending, are the sole responsibility of the board and management of the banks, which must be run on an independent and commercial basis. This independence is protected by a Relationship Framework which is a legally binding document that cannot be changed unilaterally. This framework, which is publicly available, was insisted upon by the European Commission to protect competition in the Irish market.
134. Deputy Niamh Smyth asked the Minister for Finance if he will review the unfair treatment when it comes to the rent tax credit not being made available to parents of students where the tenancy is of a type that is exempt from RTB registration, such as a ‘rent-a-room’ or ‘digs’-type arrangement (details supplied); and if he will make a statement on the matter. [2270/23]
View answer243. Deputy Thomas Pringle asked the Minister for Finance if his attention has been drawn to the fact that the rent tax credit will not be available to parents of students in cases in which the tenancy is of a type which is exempt from RTB registration, such as a rent-a-room or digs type arrangement; if he will consider providing a mechanism to include such persons; and if he will make a statement on the matter. [3177/23]
View answer244. Deputy Thomas Pringle asked the Minister for Finance if his attention has been drawn to the fact that parents who pay rent for their children who are studying abroad in approved courses cannot claim the rent tax relief on the rent they pay; and if he will consider providing a mechanism to include such persons; and if he will make a statement on the matter. [3178/23]
View answerI propose to take Questions Nos. 134, 243 and 244 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 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;
- 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; and
- 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.
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 Deputy Pringle's 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.
135. Deputy John McGuinness asked the Minister for Finance if he will provide an update on the retail banking review; the action he will be taking on foot of it; and if he will make a statement on the matter. [3068/23]
View answerThe Retail Banking Review Team submitted the draft Review in November. It was then brought to Government on 29th November to seek its approval to publish the Review and to implement the 34 recommendations. This approval was given and the recommendations are now Government policy.
Each recommendation identifies the body or bodies responsible for delivery of that recommendation and in some cases contain timelines for delivery of the recommendation, where appropriate. It is for those bodies to consider and implement the recommendations addressed to them.
The implementation of the recommendations that are directed at the Department of Finance and relevant authorities will be carried out for the most part as part of normal policy and legislative work.
However, a key issue identified by the Review was access to banking services, particularly the ability to withdraw and deposit cash, and a number of recommendations address this issue. There is a dedicated team in place that has commenced its work and is currently in its research phase to develop legislation and prepare heads of bill.
These heads of bill will include requiring banks to provide reasonable access to cash, which will be defined in consultation with the Central Bank and other stakeholders.
138. Deputy Ged Nash asked the Minister for Finance if he will consider revisiting the decision to end the zero VAT rating on antigen testing kits; and if he will make a statement on the matter. [3086/23]
View answer151. Deputy Barry Cowen asked the Minister for Finance if he will remove VAT on antigen tests; and if he will make a statement on the matter. [3070/23]
View answerI propose to take Questions Nos. 138 and 151 together.
As the Deputy will be aware, VAT on supplies of Covid 19 testing kits have been subject to a temporary zero rate up until 31 December 2022 as a result of an EU Commission derogation.
While recognising the success of the Government’s vaccination programme, I have decided that Covid-19 test kits should be subject to a zero rate of VAT on an ongoing basis. This is because there are still significant level of this virus in general circulation. My decision is reinforced by the public health guidelines which continue to advise caution, in particular recommending self-isolation if one has symptoms of COVID-19 and recommending Covid testing for certain vulnerable groups.
I propose that the zero rating of Covid 19 testing kits will be put on a legislative basis at the first available legislative opportunity, however in the meantime, the Revenue Commissioners have agreed to operate it with effect from 1 January 2023 on an administrative basis.
139. Deputy Frankie Feighan asked the Minister for Finance if he will provide clarification on the residential zoned land tax and whether there are exemptions for farmers and agricultural land zoned for a mixture of uses; and if he will make a statement on the matter. [3145/23]
View answerA key objective of the government’s Housing for All plan is a pathway to increase housing supply, including a focus on providing an adequate supply of available serviced zoned land within required densities. In this regard, provision was made in the Finance Act 2021 for a new tax on land zoned for residential development, which also has the necessary services in place. The Residential Zoned Land Tax (RZLT) is designed to prompt residential development by landowners of land that is zoned for residential or mixed-use (including residential) purposes and that is serviced.
RZLT is an annual tax, calculated at a rate of 3% of the market value of the land within its scope. The tax will be due and payable from 2024 onwards in respect of land which fell within the scope of the tax on or before 1 January 2022. Where land is zoned or serviced after 1 January 2022, the tax will be first due in the third year after the year in which it comes within scope.
It is important to note that, to come within the scope of RZLT, farmland must be both zoned for residential use and serviced. Farmland that is zoned for residential use, but which is not currently serviced is not within the scope of the tax will only come within the scope of the tax should the land become serviced in the future.
Section 653B(b) of the Taxes Consolidation Act 1997 provides that land will be considered to be serviced for the purposes of the tax where it is reasonable to consider that the land has access to, or may be connected to, public infrastructure and facilities, including roads and footpaths, public lighting, foul sewer drainage, surface water drainage and water supply, necessary for dwellings to be developed on the land and with sufficient service capacity available for such development.
Where land meets the criteria to fall within the scope of the tax as set out above, a number of exclusions may apply.
As the Deputy’s question relates to land zoned as mixed use one of the exclusions may be of particular relevance.
Land which is zoned for a mixture of residential and other uses (and not purely for residential development), is only considered to be within the scope of RZLT where it is considered to be ‘vacant and idle’. Land which is vacant and idle is defined in the Taxes Consolidation Act 1997 as follows: -
‘Vacant or idle land’ means land which, having regard only to development (within the meaning of the Act of 2000) which is not unauthorised development (within the meaning of the Act of 2000), is not required for, or integral to, the operation of a trade or profession being carried out on, or adjacent to, the land.'
Farming is considered a trade, it is exempted development, and where the land is being actively used for such a purpose, or is integral to the use of adjoining lands for farming, then the lands would not meet the definition of being vacant and idle As such, farmland which is zoned for mixed use, including residential use, and which is integral to the operation of a farming trade carried out on or beside it, is excluded from the tax, even where such land is serviced and should not be reflected on the RZLT maps prepared and published by local authorities identifying land within the scope of the tax.
A draft RZLT map was published by all 31 local authorities on 1 November 2022. The purpose of the draft map is to allow landowners, including farmers, to see if their land is within the scope of the tax. If a landowner sees that their land is included on the draft map and believes that it should not be, they should have made a submission to their local authority by 1 January 2023 seeking to have the map updated and their land removed from the map. Local authorities are currently considering the submissions received and will provide landowners with a written determination on whether the land should stay on the map or be removed from it on or before 1 April 2023. If the landowner disagrees with the determination, they can appeal to An Bord Pleanála on or before 1 May 2023.
141. Deputy Ciarán Cannon asked the Minister for Finance if he will provide an update on ‘pinch point’ areas in insurance. [3104/23]
View answerAt the outset, I wish to reassure the Deputy that I recognise the concerns felt by many individuals and businesses across the country around the cost and availability of insurance cover. Accordingly, Government has prioritised insurance reform through the Action Plan for Insurance Reform. As the Deputy may be aware, the Third Action Plan Implementation Report demonstrates that 90 percent of the 66 actions contained therein are either delivered or initiated.
There are clear signs that the market is responding to the Government’s reform agenda, with insurers moving into areas that had previously proved problematic such as: inflatables hire; equestrian activities; childcare; and non-standard buildings. However, Government recognises that some ‘pinch-points’ remain, largely in high-footfall, public-facing areas involving public liability insurance. Data from the Central Bank indicates that the public liability market has been loss-making for a number of years, and consequently insurers appear reluctant to commit to this specific area. At the same time, this more specialised market segment is also very closely linked to global insurance trends, and is therefore slower to reflect the changes being delivered through the Government reform agenda than what is usually considered as more commoditised insurance products, such as motor cover.
Key to addressing this issue is rebalancing the Duty of Care legislation. This is now a Government priority and is being led by the Department of Justice. Overhauling this area of law should help to address the issue of ‘slips, trips and falls’, which are particularly prevalent in heavy-footfall areas and could potentially unlock further liability insurance capacity, including in niche segments.
Finally, I would like to take this opportunity to assure the Deputy that it is Government's intention to ensure that implementation of the Action Plan will have a positive impact on the affordability and availability of insurance across all sectors in the economy.
142. Deputy Richard O'Donoghue asked the Minister for Finance why the temporary business energy support scheme does not cover the use of liquid gas, such as LPG and BioLPG (details supplied). [62210/22]
View answerDetails of the Temporary Business Energy Support Scheme (TBESS) are set out in Finance Act 2022. The TBESS is 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 and to certain sporting bodies and charities. The scheme operates on a self-assessment basis.
In accordance with the scheme rules, the TBESS only applies to the metered supply of natural gas and electricity. The scheme is designed around determining increases in unit prices and actual consumption for each month falling within the period of the scheme as compared to the same month in the previous year based on information made available through electricity and gas meters.
For energy sources such as oil and LPG, it would be difficult to accurately determine the actual usage for each claim period (month), the relevant unit price for each claim period, or the actual increase in that unit price and usage over the same period in the reference period. For instance, an oil tank could be filled during the summer, with the oil being used in the winter months, or in February 2023 with the oil being used in the months that follow.
The TBESS is currently due to expire at the end of February and, in that context, in the coming weeks I will examine the operation of the scheme.
