Written Answers Nos. 291-304
291. Deputy Mick Barry asked the Minister for Finance if he is considering changing the VAT thresholds in Budget 2024; if he will consider reforms that consider ability to pay or that is graduated; and if he will make a statement on the matter. [34975/23]
View answerAs the Deputy will be aware, it is a longstanding practice that the Minister for Finance does not comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
The VAT registration thresholds are subject to the requirements of EU VAT law, with which Irish VAT law must comply. Our VAT thresholds were increased to their current values, €37,500 for services and €75,000 for goods, on 1 May 2008. Under VAT law, traders/businesses such as B&B’s are required to register and account for VAT where their supply of guest or holiday accommodation exceeds the services threshold.
It is important to note that Ireland’s current registration thresholds are some of the most generous thresholds in the EU. Some Member States do not operate any VAT registration threshold, requiring all businesses to register. As an administrative practice, Revenue allow businesses that are approaching the threshold to take account of the VAT element of their Purchases-for-Resale in calculating turnover. This avoids a ‘cliff-face’ effect when approaching the threshold.
292. Deputy Rose Conway-Walsh asked the Minister for Finance the total rental income declared by non-tax residents as part of their form 11 tax return in each year since 2011 for property located in Mayo; and if he will make a statement on the matter. [35012/23]
View answerI am advised by Revenue that the amount of rental income on residential properties and commercial properties as declared on Form 11 tax returns by non tax-resident persons for the years 2011 to 2020 (the latest year for which fully analysed data are currently available) is set out in the following tables. Information regarding the location of the rental properties is not captured on the returns therefore this data represents all returns for the State.I am further advised that, prior to 2016, the Form 11 tax return captured both residential and commercial properties together, and therefore a similar breakdown for the prior years is not possible. For that reason, the second table below represents the available data for the period 2011 to 2015.
|
- |
Commercial Rental Income €m |
Residential Rental Income €m |
|
2020 |
64.33 |
326.54 |
|
2019 |
65.57 |
328.02 |
|
2018 |
66.87 |
303.94 |
|
2017 |
65.01 |
256.64 |
|
2016 |
75.62 |
214.30 |
|
- |
Rental Income €m |
|
2015 |
246.57 |
|
2014 |
220.88 |
|
2013 |
192.91 |
|
2012 |
199.09 |
|
2011 |
174.16 |
293. Deputy Louise O'Reilly asked the Minister for Finance if he is aware of supports available for people making a complaint about a financial product or service; and if he will make a statement on the matter. [35048/23]
View answerThe Financial Services and Pensions Ombudsman (FSPO) was established in January 2018. It's role to resolve complaints from consumers, including small businesses and other organisations, against financial service providers and pension providers.
The FSPO provides an independent, fair, impartial, confidential and free service to resolve complaints through either informal mediation, leading to a potential settlement agreed between the parties, or formal investigation and adjudication, leading to a legally binding decision.
When any consumer, whether an individual, a small business or an organisation, is unable to resolve a complaint with a financial service provider or a pension provider, they can refer their complaint to the FSPO. When complaints are received to the FSPO, they are dealt with informally at first, by listening to both parties and engaging with them to facilitate a resolution that is acceptable to both parties.
Where these early interventions do not resolve the dispute, the FSPO formally investigates the complaint and issues a decision that is legally binding on both parties, subject only to a statutory appeal to the High Court.
The Ombudsman has wide-ranging powers to deal with complaints against financial service providers about a financial product or service. The Ombudsman can direct a provider to rectify the conduct that is the subject of the complaint. There is no limit to the value of the rectification that can be directed. The Ombudsman can also direct a provider to pay compensation to a complainant of up to €500,000.
In addition, the Ombudsman can publish anonymised decisions and can also publish the names of any financial service provider that has had at least three complaints against it upheld, substantially upheld, or partially upheld in a year.
In terms of dealing with complaints against pension providers the Ombudsman’s powers are more limited. Specifically, while the Ombudsman can direct rectification, the legislation governing the FSPO sets out that such rectification shall not exceed any actual loss of benefit under the pension scheme concerned. Furthermore, the Ombudsman cannot direct a pension provider to pay compensation.
Further information, including animated videos on how to make a complaint to a provider or to the FSPO is available on the FSPO website at www.fspo.ie. Where a prospective complainant, or their nominated third party representative, have accessibility requirements or practical needs in making a complaint, the FSPO has an appointed Access Officer who is available to provide support by email at access@fspo.ie or by phoning 01 5677000.
294. Deputy Pearse Doherty asked the Minister for Finance if the estimated revenue generated by the temporary solidarity contribution bases on taxable profits in the fossil fuel production and refining sectors, and a cap on the market revenues of certain generators in the electricity sector, are included in the tax base for 2024 as outlined in the Summer Economic Statement; and the amount of revenue with respect to each. [35178/23]
View answer299. Deputy Pearse Doherty asked the Minister for Finance if the revenue raised by the banking levy is in the tax base for 2024, 2025, 2026, 2027, 2028 and 2029, respectively, and if so, the quantum of revenue in the base with respect to each year. [35243/23]
View answer328. Deputy Pearse Doherty asked the Minister for Finance if the special assignee relief programme is in the tax base for 2025 as per the Summer Economic Statement; and, if so, the value associated with its cost for 2025. [35431/23]
View answerI propose to take Questions Nos. 294, 299 and 328 together.
The temporary solidarity contribution in respect of windfall gains in the energy sector is estimated to raise approximately €100 million in 2024. This is reflected in the revenue projections published as part of the Stability Programme Update (SPU) 2023.The cap on market revenues will be collected by the Commission on Regulation of Utilities (CRU). The proceeds from the cap on market revenues will be retained and used in the electricity sector to lower prices for consumers. As such, this measure will not increase Exchequer revenue. In relation to the Bank Levy, on a no policy change basis, the fiscal projections published as part of SPU 2023 contained a reduction in revenue from 2024 to take into account the end of this measure, which is legislated to expire at end-2023. Any decision on whether to extend the Bank Levy will be made in the context of Budget 2024. Should the measure be continued, it would result in additional revenue and projections will be updated accordingly.In respect of the SARP, I am advised that Revenue Commissioners do not maintain a projected future cost for this measure. The estimated total cost of the measure for 2020, the most recent year for which Revenue statistics are available, is €36.6 million. SARP is included in the tax base for 2025, and is currently due to sunset at end-2025. If the measure is extended beyond that date, cost estimates will be subject to revision based on the latest available data at the time.
295. Deputy Aindrias Moynihan asked the Minister for Finance for consideration to expand the help-to-buy scheme for first-time buyers to include second-hand homes; and if he will make a statement on the matter. [33084/23]
View answerHelp to Buy (HTB) is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive offers a refund on Income Tax and Deposit Interest Retention Tax (DIRT) paid in the State over the previous four years, subject to limits outlined in Section 477C of the Taxes Consolidation Act 1997.
An increase in the supply of new housing remains a central and priority aim of Government policy. For this reason, HTB is specifically designed to encourage an increase in demand for new build homes in order to support the construction of an additional supply of such properties. For a property to qualify for HTB, it must be new or converted for use as a dwelling, having not previously been used as a dwelling.
A move to include properties which were previously used as residential homes/second-hand properties within the scope of the scheme itself would not improve the effectiveness of the relief; on the contrary, it could serve to dilute the incentive effect of the measure in terms of encouraging additional supply. Extending the HTB scheme in this way would provide no incentive effect to encourage the building of new homes and would be likely to have a significant dead-weight element and a high Exchequer cost. For these reasons, there are no plans at present to extend the HTB scheme to include such properties.
296. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue raised, in first and full-year terms, by introducing the rate of commercial stamp duty from 7.5 to 12.5 percent, excluding agricultural land. [35238/23]
View answerThe Department of Finance has opened its pre-budget costings service, which is available with effect from 3 July 2023. The procedures for availing of this service are set out in a letter dated 3 July 2023 from the Secretary General of the Department to all recognised parties and technical groups in Dáil Éireann. To ensure efficiency and fairness all costing requests should be made in this manner, via the standard request format template, instead of the Parliamentary Question system at this time.
297. Deputy Pearse Doherty asked the Minister for Finance the revenue raised by increasing the rate of commercial stamp duty from 7.5 to 10 and 12.5 percent, respectively, while increasing the farm consolidation relief accordingly, in first and full-year terms. [35239/23]
View answerThe Department of Finance has opened its pre-budget costings service, which is available with effect from 3 July 2023. The procedures for availing of this service are set out in a letter dated 3 July 2023 from the Secretary General of the Department to all recognised parties and technical groups in Dáil Éireann. To ensure efficiency and fairness all costing requests should be made in this manner, via the standard request format template, instead of the Parliamentary Question system at this time.
298. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue generated in first and full-year terms of reducing the Standard Fund Threshold to €1.5 million; and if he will make a statement on the matter. [35241/23]
View answerThe Department of Finance has opened its pre-budget costings service, this is available with effect from 3 July 2023. The procedures for availing of this service are set out in a letter dated 3 July 2023 from the Secretary General of the Department to all recognised parties and technical groups in Dáil Éireann. To ensure efficiency and fairness all costing requests should be made in this manner, via the standard request format template, instead of the Parliamentary Question system at this time.
300. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue raised by introducing a 25% and 50% cap, respectively, on corporation tax loss relief utilised in a single year by NAMA participating banks, and separately, by all banks, in first and full-year terms. [35250/23]
View answerAs 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.
With respect to the banks in which the State has, or previously had, a shareholding, 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 receives value for the balance of tax losses as sell-downs complete.
I am advised by Revenue that the estimated revenue which could be raised by introducing a 25 percent and 50 percent cap, respectively, on corporation tax loss relief utilised in a single year by NAMA-participating banks and by all banks would be dependent on future profitability, and therefore cannot be estimated. Information can be provided in respect of the years 2019 to 2021 (the most recent year for which data are available), and is set out below. However I would note that, having regard to its confidentiality obligations under s851A of the Taxes Consolidation Act, 1997 (as there are only two remaining NAMA-participating banks), Revenue is not able to provide a breakdown between NAMA-participating banks and all banks.
The estimated amount that could have been raised in the last three years through the imposition of loss restrictions covering all banks is presented in the table below:
|
All Banks |
||
|
Year |
25% |
50% |
|
2019 |
€53m |
€106m |
|
2020 |
€20.5m |
€41m |
|
2021 |
€85m |
€170m |
I would note that State aid implications would need to be considered if a targeted restriction were proposed on the banking sector, or indeed any other specific sector.
The Deputy will be aware that, 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.
301. Deputy Pearse Doherty asked the Minister for Finance the estimated value of deferred tax assets yet to be utilised by NAMA-participating banks; the Government’s policy towards corporation tax loss relief with respect to NAMA-participating banks where the State reduces or entirely divests its shareholdings in respective banks; and if he will make a statement on the matter. [35260/23]
View answerSection 851A of the Taxes Consolidation Act 1997 precludes the Revenue Commissioners from directly or indirectly disclosing taxpayer-specific information to third parties unless this is specifically provided for in legislation. Therefore, I can only refer to publicly available information.
The latest data available for the estimated value of the relevant banks’ deferred tax assets is from their 2022 annual reports. According to their year-ended 31 December 2022 financial statements, the deferred tax assets (DTAs) being held in relation to losses forward are as follows:
|
Bank |
DTA value |
Source (y/e 31/12/22 financial statements) |
|
AIB |
€2.742 billion |
Page 295 |
|
Bank of Ireland |
€989 million |
Page 277 |
For a number of years following the economic crash, there was a restriction on the use of losses carried forward by NAMA-participating institutions (AIB, Bank of Ireland (BOI), Anglo Irish Bank, Irish Nationwide Building Society and the Educational Building Society (EBS)), such that losses could be used to shelter only 50% of taxable profits in any given year, with any restricted amounts carried forward for use in future years.
At the time of the introduction of this restriction, contained in Section 396C of the Taxes Consolidation Act 1997, the Government had limited direct participation in the banking system. However, by 2013, the State had acquired substantial holdings in the banking sector following the re-capitalisation of the banks – 99.8 per cent ownership of AIB and 15 per cent ownership of BOI. Due to the State’s substantial holdings in the banks, the restriction in section 396C was considered to have outlasted its initial purpose to the point where it was deemed to be acting against the State’s interests.
The repeal of Section 396C in Budget 2014 shortened the time-frame over which the bank losses were likely to be used. It therefore put the institutions in a stronger position when being assessed by regulators and investors and reduced the risk of a further requirement for State support. It also protected the value of the State’s equity and debt investments in the pillar banks, as investors give some value to the accounting and cash benefit provided by DTAs.
It therefore follows that there would be a material negative impact on the valuation of the State’s remaining investment if any change in the tax treatment of accumulated losses (DTAs) were to be introduced.
The Deputy will also be aware that, in recognition of the part that the banks played in the financial crisis, the financial institutions levy was introduced in 2013, delivering an annual revenue of approximately €150 million to the Exchequer from 2014. The levy was originally intended to apply for this three-year period only. However it has since been extended and amended on several occasions and is currently scheduled to expire at the end of 2023, therefore a review of the levy being undertaken by my Department this year.
Proposals to re-introduce a limitation on loss relief for the remaining NAMA-participating banks have been discussed in detail in the Oireachtas on a number of occasions in recent years. I would first note that only AIB and BOI remain of the original five NAMA-participating institutions previously subject to Section 396C. It also has to be noted that the State no longer has any shareholding in BOI, and has been repaid its full investment.
The reintroduction of a tax loss restriction of this nature could have a number of negative impacts, and these considerations are discussed in some detail in a technical paper published on my Department’s website (see www.gov.ie/en/publication/436ff7-technical-note-on-the-potential-consequences-of-changes-to-the-treat/). Firstly, it would mean the period of utilisation of losses for these banks would be extended over a considerably longer timeframe than currently anticipated. This would increase the likelihood that bank auditors would seek a write-down in the current value of the DTAs, which could put pressure on the banks’ balance sheets.
From a consumer perspective, increased costs and reduced competitiveness in the banks as a result of a restriction on loss relief could potentially lead to pricing increases or reduced services. This could have a negative impact on consumers – for example, through increased fees, increased mortgage interest rates, or reduced lending to Irish businesses – or on employment in the Irish banks if cost-cutting measures are required.
It is also important to understand that the State has received value to date for these tax losses, and is continuing to receive value today, through its share sales. The banks’ share prices recognise a certain value for the DTAs and, as such, the State receives value for the balance of tax losses as sell-downs complete. There would be a negative impact on the valuation of the State’s investment in the relevant banks from a change in tax treatment of losses carried forward. A change in policy with regard to loss relief would also have the potential to damage the State’s credibility in the international markets, and this could have negative consequences for values achieved in future share sales.
State aid implications would also need to be considered, as a restriction focused exclusively on the remaining NAMA-participating institutions, or on the wider banking sector, would be a targeted measure.
For these reasons, a change to the tax treatment of bank trading losses is not currently under consideration.
302. Deputy Pearse Doherty asked the Minister for Finance the estimated annual revenue generated by the defective concrete products levy; the quantum of revenue generated by the defective concrete products levy in the tax base for the years 2024, 2025 and 2026, as per the Summer Economic Statement; and if he will make a statement on the matter. [35269/23]
View answerWhen the design of the Defective Concrete Products Levy was agreed last year, it was estimated to raise €32 million per full year i.e. from 2024 inclusive. As this is a permanent measure it is considered to be part of the tax base.
303. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue generated, in first and full-year terms, by increasing the rate of stamp duty to 17% with respect to the block-purchase of all residential property (including apartments), by institutional investors; and if he will make a statement on the matter. [35285/23]
View answerThe Department of Finance has opened its pre-budget costings service, which is available with effect from 3 July 2023. The procedures for availing of this service are set out in a letter dated 3 July 2023 from the Secretary General of the Department to all recognised parties and technical groups in Dáil Éireann. To ensure efficiency and fairness all costing requests should be made in this manner, via the standard request format template, instead of the Parliamentary Question system at this time.
304. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue generated, in first and full-year terms, by increasing the rate of dividend withholding tax to 33 per cent with respect to REITs and IREFs. [35286/23]
View answer305. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue generated, in first and full-year terms, by applying the 33 per cent rate of capital gains tax to the disposal of property assets by REITs and IREFs. [35287/23]
View answerI propose to take Questions Nos. 304 and 305 together.
The Department of Finance has opened its pre-budget costings service, this is available with effect from 3 July 2023. The procedures for availing of this service are set out in a letter dated 3 July 2023 from the Secretary General of the Department to all recognised parties and technical groups in Dáil Éireann. To ensure efficiency and fairness, all costing requests should be made in this manner via the standard request format template, instead of the Parliamentary Question system at this time.
