Seán Haughey
Question:88. Deputy Seán Haughey asked the Minister for Finance the number of eligible claims currently being made for the rent tax credit in Dublin; and if he will make a statement on the matter. [4251/24]
View answerTax Credits
Questions (88)
Written answers
The Rent Tax Credit, as provided for in section 473B of the Taxes Consolidation Act 1997 (TCA 1997), was introduced by the Finance Act 2022 and may be claimed in respect of qualifying rent paid in 2022 and subsequent years to end-2025.
For the tax years 2022 and 2023, the maximum value of the credit is €1,000 per year in the case of a jointly assessed couple, and €500 in all other cases. Finance Act 2023 increased the value of the credit for the 2024 and 2025 tax years to a maximum of €1,500 for a jointly assessed couple and €750 in all other cases.
I am advised by Revenue that the Rent Tax Credit statistics currently available refer only to claims by PAYE taxpayers. Data on claims by self-assessed taxpayers is not yet available. Statistics covering all taxpayers will be available in Q2 2024.
Claims in respect of the 2022 and 2023 years of assessment can be made by PAYE taxpayers by submitting an Income Tax return for that year. For claims relating to 2023, PAYE taxpayers had the option of claiming the Rent Tax Credit due to them as rent is incurred through Revenue’s Online Service or at the end of the year through their Income Tax return. The same option is available for claims relating to 2024.
Rent Tax Credit claims are made are on a ‘taxpayer unit’ basis. A taxpayer unit is either an individual with any personal status who is singly assessed or a couple in a marriage or civil partnership who have elected for joint assessment.
I am advised that as of 25 January 2024, 453,777 Rent Tax Credit claims have been made nationally by 310,891 taxpayer units for the years 2022, 2023 and to date in 2024.
Data for claims relating to PAYE taxpayers for Dublin are as follows:
• 122,109 claims for 2022,
• 78,051 claims for 2023,
• 14,449 claims for 2024.
This gives a total of 214,609 claims for all years to date for Dublin.
Questions Nos. 89 and 90 answered orally.
Tax Code
Questions (91)
Jackie Cahill
Question:91. Deputy Jackie Cahill asked the Minister for Finance how the income tax treatment of low paid workers in Ireland compares with other EU countries; and if he will make a statement on the matter. [4264/24]
View answerWritten answers
Ireland has one of the most progressive systems of taxes and social transfers of any EU or OECD country.
These systems contribute to the redistribution of income and to the reduction of income inequality in Ireland.
Focusing on the tax system, Ireland’s progressive tax system ensures that the burden of taxation falls most heavily on those with a higher ability to pay. This means that those on lower incomes pay less income tax as a share of their income than those on higher incomes. It is estimated that the top 10 per cent of income earners, those earning in excess of €102,000 will pay 63.2 per cent of the total income tax and USC collected in 2024. In contrast, those earning €69,500 or less, which represents the bottom 80 per cent of income earners, will contribute 21 per cent.
In addition, the latest OECD data show that Ireland recorded the third largest absolute reduction in the Gini coefficient – a measure of income inequality – between market and disposable income in 2020. Almost one-third of the reduction was due to the tax system. The absolute reduction due to tax has remained the largest in the OECD since 2009. This points to the strongly redistributive nature of the tax system in Ireland.
In addition, it is useful to examine the tax wedge – a measure of workers labour income taking account of employee and employer taxes less benefits as a proportion of employer costs. It essentially captures the tax burden facing workers.
The latest OECD data, available for the year 2022, show that Irish lower income workers, in general, have lower effective tax wedges than their EU and OECD counterparts. The tax wedge for below-average income earners was 25½ per cent in 2022, below the OECD average; and when compared to the wedge of above-average income earners, Ireland is the most progressive EU Member State, and is the third most progressive in the OECD.
Budget 2024 included a €1.3 billion personal income tax package, which was designed to reduce the tax burden on income taxpayers, including lower income earners. The budget tax package was built around 3 key pillars: changes to tax credits, the standard rate band and USC, and the Government sought to use each of these levers to spread the benefit of the available package as effectively as possible.
It is my view that a broad-based, progressive income tax system, where the majority of income earners make some contribution but according to their means, is the fairest and sustainable income tax system in the long term.
Tax Yield
Questions (92)
Colm Burke
Question:92. Deputy Colm Burke asked the Minister for Finance the amount received in income tax receipts in 2023; the total number of people paying income tax; and if he will make a statement on the matter. [4548/24]
View answerWritten answers
The total amount of income tax receipts collected for the Exchequer in 2023 was just under €33.0 billion. PAYE and self-assessed income tax, including USC, account for the vast majority of this. A full breakdown of the subcomponents of income tax in 2023 is still being finalised and will be published in Revenue’s Annual Report in April 2024.
I am further advised by Revenue that comprehensive statistics on the number of people paying income tax in 2023 will not be available until 2025. The self-assessed income tax paid in 2023, for the tax year 2023, relates to a preliminary payment only; the exact details of self-assessed taxpayers’ tax position, including the numbers paying, will only be finalised once they file their income tax return for 2023, the deadline for which is in Q4 of 2024. For PAYE taxpayers, their Provisional End of Year Statement (PEOYS) sets out their preliminary tax position. However, this may change as taxpayers file their PAYE Income Tax return, the effects of which may add or remove them from the cohort of taxpayers with a tax liability.
2021 is the latest tax year for which fully analysed data are available, when there was a total of 2.06 million taxpayer units with an income tax and/or USC liability. A taxpayer unit counts a jointly assessed couple as one unit.
The Deputy may also be interested to note that Revenue’s Ready Reckoner Post Budget 2024, which estimates the Exchequer impact of various potential tax changes, projects the number of taxpayer units that will pay income tax or USC in 2024 at an estimated 2.16 million units. The Ready Reckoner can be found on the Revenue website at: www.revenue.ie/en/corporate/information-about-revenue/statistics/ready-reckoner/index.aspx .
Tax Yield
Questions (93)
Peadar Tóibín
Question:93. Deputy Peadar Tóibín asked the Minister for Finance the total amount taken in by the Government on tax on electricity and tax on fuel, including petrol, diesel, home heating oil and so on, in each of the past ten years. [4169/24]
View answerWritten answers
Ireland’s taxation of fuel and electricity is governed by European Union law as set out in Directive 2003/96/EC, commonly known as the Energy Tax Directive (ETD).
ETD provisions on mineral oils are transposed into national law in Finance Act 1999 (as amended). Finance Act 1999 provides for the application of excise duty, in the form of Mineral Oil Tax (MOT) to liquid fuels that are used as motor or heating fuels.
The ETD provisions relating to taxation of electricity are transposed into national legislation in Chapter 1 of Part 2 of the Finance Act 2008 (as amended). This legislation provides for the application of an excise duty, in the form of Electricity Tax, to electricity supplied to consumers in the State.
The relevant excise duty rates on fuel and electricity are published on the Revenue website.
I am advised by Revenue that a breakdown of excise receipts for 2022 and prior years is available on the Revenue website.
In relation to VAT, I am further advised by Revenue that traders are not required to identify the VAT yield generated from the supply of specific goods and services on their VAT returns. Therefore, it is not possible to provide the VAT yield on all fuel and energy related products and services using taxpayer information alone. However, using Revenue and third-party data sources, a tentative estimate of the VAT generated on fuel and energy products can be provided.
The total excise receipts for Mineral Oil Tax (MOT), Solid Fuel Carbon Tax (SFCT), Natural Gas Carbon Tax (NGCT) and Electricity Tax, and an estimate of VAT receipts in respect of fuel and electricity for the past ten years are as follows:
|
|
MOT |
SFCT |
NGCT |
Electricity Tax |
Estimated VAT |
Total |
|
Year |
€ millions |
€ millions |
€ millions |
€ millions |
€ millions |
€ millions |
|
2023* |
2,375.1 |
19.0 |
107.2 |
4.2 |
1,287 |
3,793 |
|
2022 |
2,220.9 |
25.9 |
94.5 |
3.5 |
1,426 |
3,771 |
|
2021 |
2,467.1 |
27.9 |
83.3 |
5.2 |
1,140 |
3,723 |
|
2020 |
2,219.7 |
23.8 |
65 |
2.1 |
925 |
3,235 |
|
2019 |
2,524.1 |
20.1 |
50.4 |
2.3 |
1,005 |
3,602 |
|
2018 |
2,518.9 |
25.3 |
50 |
2.5 |
1,079 |
3,675 |
|
2017 |
2,407.5 |
19.1 |
54.1 |
3.6 |
1,036 |
3,520 |
|
2016 |
2,518.5 |
24.4 |
55.8 |
4.6 |
1,014 |
3,617 |
|
2015 |
2,453.3 |
23.5 |
56.6 |
4.5 |
1,098 |
3,635 |
|
2014 |
2,334.9 |
17.2 |
51.7 |
5.5 |
1,093 |
3,502 |
*Please note that 2023 figures are provisional.
Tax Code
Questions (94, 102, 122, 143, 147)
Michael Moynihan
Question:94. Deputy Michael Moynihan asked the Minister for Finance the plans he has to review the VAT treatment of farmers; and if he will make a statement on the matter. [4278/24]
View answer
Brendan Smith
Question:102. Deputy Brendan Smith asked the Minister for Finance if it is proposed to amend the VAT refund regulations as applicable to farmers to ensure the continuation of the system that existed up to recently; and if he will make a statement on the matter. [4624/24]
View answer
Cathal Crowe
Question:122. Deputy Cathal Crowe asked the Minister for Finance if he will urgently consider making a revision to the flat rate of VAT, applicable to farmers, so that rebates can be provided on certain farm infrastructural investments; and if he will make a statement on the matter. [4246/24]
View answer
Pearse Doherty
Question:143. Deputy Pearse Doherty asked the Minister for Finance if he is aware of Revenue no longer accepting certain items of expenditure for the construction, extension, alteration or reconstruction of farm buildings or structures with respect to VAT refunds for unregistered farmers; if he has engaged with Revenue on this issue; and if he will make a statement on the matter. [4621/24]
View answerBrendan Smith
Question:147. Deputy Brendan Smith asked the Minister for Finance if he will ensure that the concerns of farmers in relation to changes to VAT refunds are given urgent and detailed consideration; and if he will make a statement on the matter. [4623/24]
View answerWritten answers
I propose to take Questions Nos. 94, 102, 122, 143 and 147 together.
The VAT treatment of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In accordance with the EU VAT Directive, farmers can elect whether or not to register for VAT in respect of their farming business, and each farmer’s decision on this matter affects how VAT incurred on their inputs (such as the purchase of farm equipment) is treated.
Under VAT law, farmers can avail of the Flat-rate Farmers Scheme and remain unregistered for VAT. The scheme allows unregistered farmers to add and retain a percentage charge (known as the “flat-rate addition”) onto the amount they invoice VAT-registered businesses whom they supply with agricultural goods and services in the course of their farming business. The flat rate addition is currently set at 4.8%, effective since 1 January 2024.
However, in addition to the compensation for flat-rate farmers provided by the Flat-rate Scheme, Irish VAT law also permits flat-rate farmers to reclaim VAT they incur on some particular business expenditure, as set out in the 2012 Refund Order. The Refund Order is permitted under EU law, subject to certain conditions, including that its scope is not extended. This means that the order may not be altered to permit refunds of VAT incurred on farming business costs that are not currently provided for in the order.
However, where the installation of farming equipment requires the alteration or reconstruction of a farm building or structure, the corresponding expenditure on the alteration or reconstruction of the building or structure including equipment or elements of equipment permanently installed in the farm building or structure may be allowed in certain circumstances. The equipment must be permanently installed in the farm building or structure and once installed, cannot be removed without causing significant damage, or destruction to the farm building or structure or to the equipment itself. Revenue have outlined already to the sector that they have demonstrated a significant amount of flexibility in relation to the administration of the refund order, considering the context and nature of the claims that are made, and allow, for example, VAT repayments claims for milk parlours, if part of a new build / construction.
I understand from Revenue that claims by flat-rate farmers for refunds under the Order are made on a self-assessment basis. Claimants should satisfy themselves that any claim complies with the Refund Order. As is normal for self-assessed taxes and schemes, claims received are risk-assessed for review by Revenue. Each reviewed claim is assessed on its own merits. Claims that do not comply with the order cannot qualify for a refund of the VAT.
Revenue have confirmed that they have not changed their interpretation of the law on the Refund Order. In recent times, though, their risk-assessment of claims has identified ineligible claims for the refund of VAT on various types of farm equipment, which are outside the scope of the Refund Order. Revenue’s refusal of such ineligible claims has led to queries from the farming and the farm equipment sectors.
My Department and Revenue are engaging with the farming sector to explain the situation in relation to the law and the claims process. Revenue is happy to further engage with the sector in clarifying the matter and has invited the ICSMA and IFA to make submissions in this regard. Revenue will then publish updated guidance shortly once it has received and considered those submissions.
Climate Change Policy
Questions (95)
Alan Farrell
Question:95. Deputy Alan Farrell asked the Minister for Finance to provide an update on his Department’s efforts to support climate action projects; and if he will make a statement on the matter. [4005/24]
View answerWritten answers
The Programme for Government lays out a commitment to achieve emissions reduction of 51% by 2030 relative to 2018, with the enactment of the updated Climate Action and Low Carbon Development (Amendment) Act on 23 July 2021 giving statutory force to this reduction, as well as placing on a statutory basis a net zero target for 2050, and establishing a process for adopting a series of five-year carbon budgets and related sectoral emissions ceilings.
Through annual Climate Action Plans, Government has set out a pathway that seeks to deliver on this and to implement the adopted carbon budgets and sectoral emissions ceilings.
My Department is fully committed to supporting the Government’s climate agenda and will continue to contribute positively to the achievement of the Government’s emission reduction targets, including through supporting delivery of Climate Action Plan 2024 as approved in December, subject to public consultation and Strategic Environmental Assessment.
My approach is in line with the Programme for Government which agreed that all Departments should make climate action a core pillar of their new strategies, with the Department of Finance’s Statement of Strategy now including ‘promoting environmentally sustainable economic progress’ as one of the Department’s five strategic goals. Under this priority, the Department’s goal is to develop and promote economic, fiscal and financial policy advice to support the Government’s climate agenda.
As Deputies will know, the taxation system has an important role in supporting our efforts to transition to a low carbon economy and over the past number of years, a number of environmental taxation reform including increases in the carbon tax, and reforms to the vehicle registration tax (VRT) and motor tax regimes have been introduced.
In particular, I see the implementation, through the Finance Act 2020, of the statutory trajectory for increasing the carbon tax to €100 per tonne by 2030 as a central building block of our national decarbonisation strategy. The rate increased to €56.00 per tonne on 11 October 2023 for auto-fuels and will apply to solid and other fuels used in home heating from 1 May 2024.
As Deputies will be aware, since 2020 revenue raised from increases in the carbon tax is also hypothecated – that is it is directly allocated for expenditure on climate action and the Just Transition. The additional revenue raised by increasing carbon tax in steps up to €100 per tonne by 2030 is ring-fenced and used to enable progressivity, transitional changes and the greening of agriculture, and to provide targeted social welfare and other measures to prevent energy poverty.
In support of our retrofitting targets, we have legislated for a new tax deduction of up to €10,000 per property for small-scale landlords who undertake retrofit works while the tenant remains in situ. In support of our renewables targets, I introduced a measure in Finance Act 2023 to reduce the VAT rate on the supply and installation of solar panels for private dwellings to zero from 1 May 2023, and in Budget 2024 I extended this measure to schools with effect from 1 January 2024. Furthermore, Budget 2024 announced a doubling of the tax disregard in respect of personal income received by households who sell residual electricity from micro-generation back to the national grid. In addition, the home energy upgrade loan scheme was developed by my Department in conjunction with the Department of the Environment, Climate and Communications, the Strategic Banking Corporation of Ireland, the Sustainable Energy Authority and the European Investment Fund.
On Budget Day, I also announced the establishment of two significant new funds which will have an important role in financing climate projects: (i) the Future Ireland Fund; and (ii) the Infrastructure, Climate and Nature Fund.
The Future Ireland Fund will be maintained over the longer term with the return on the Fund used to support government expenditure for future generations. This will help to deal with future recognised expenditure pressures including ageing, climate, digitalisation and other fiscal and economic challenges. The Infrastructure, Climate and Nature Fund will help to ensure that the State has resources available in a future downturn to support expenditure through the business cycle. It will have a climate and nature remit worth up to €3.15 billion. The aim of this is primarily to help the achievement of the national carbon budgets and sectoral emissions targets, through the delivery of projects. The Fund is designed to be used where it is clear our climate targets are not being reached.
The Bill to provide for the establishment of these funds is listed as a priority for publication on this term’s Government legislative programme. The Oireachtas Committee for Finance, Public Expenditure and Reform and Taoiseach published its Pre-Legislative Scrutiny Report on the legislation on 25 January 2024. My officials are reviewing the Report and the drafting of the Bill is progressing.
I will also mention the important role of the National Treasury Management Agency, which is a body under the aegis of the Department of Finance, in contributing to the funding of climate projects in tandem to supporting the broader green financing needs of the State. In particular, through its funding and debt management function, the NTMA, on behalf of the State has issued Irish Sovereign Green Bonds (ISGBs) to the value of over €10 billion, with the proceeds allocated against eligible green projects.
The financial services sector also has a pivotal role in facilitating such activities and accelerating the implementation of Ireland’s Climate Action Plans and transition to net zero. For a number of years, Ireland has prioritised developing our sustainable finance sector, as part of our international financial services strategy, Ireland for Finance, and in our engagement at EU level.
At EU level, my Department works to ensure the regulatory framework for sustainable finance is ambitious and transparent while remaining usable for companies, including in relation to the EU taxonomy for sustainable activities, and the sustainable finance disclosures regulation.
Economic Policy
Questions (96)
Jackie Cahill
Question:96. Deputy Jackie Cahill asked the Minister for Finance the action he proposes to take to protect the role of cash in our society and economy in the future; and if he will make a statement on the matter. [4265/24]
View answerWritten answers
Cash has an important role in both society and the economy, and involves both access to, and acceptance of, cash. I am working to protect that role in two ways.
The General Scheme of the Access to Cash Bill 2024 was published on 23 January, and will preserve cash infrastructure initially at approximately December 2022 levels, accounting for the exit of KBC and Ulster Bank.
The Bill will make designated entities, whose share of current accounts and household deposits meet or exceed percentages I will prescribe, responsible for maintaining access to cash levels. This will, initially, be the three main retail banks.
The legislation will allow me to prescribe regional requirements for the minimum numbers of ATMs per 100,000 people, the proportion of the population that must be no more than 10 km from an ATM, and the proportion of the population that must be no more than 10 km from a “cash service point”, which are locations where cash can be deposited and withdrawn, with in-person assistance available, during normal business hours. Both bank branches and post offices satisfy this definition of a cash service point,
“Local deficiencies,” will also be addressed by the Central Bank under the legislation. These are cases where, although the population and capacity criteria are being met in a region, localised difficulties occur within the region with access to cash infrastructure. The Bill also provides for registration and supervision by the Central Bank of independent ATM deployers and Cash-in-Transit firms (CITs).
With regard to the acceptance of cash, a new National Payment Strategy is being developed by my Department. The Strategy will, among other things, look at the acceptance of cash in the future payments system and I expect it to be published later this year.
As part of the development of the Strategy, a public consultation is currently being undertaken and I would encourage contributions to that process. The consultation will close on 14 February 2024.
Tax Code
Questions (97, 106)
Violet-Anne Wynne
Question:97. Deputy Violet-Anne Wynne asked the Minister for Finance if he will comment on the decision to remove the 9% VAT rate for tourism and hospitality; and if he will make a statement on the matter. [53599/23]
View answer
Alan Dillon
Question:106. Deputy Alan Dillon asked the Minister for Finance if he will consider reducing the 13.5% VAT rate for restaurants and hospitality; and if he will make a statement on the matter. [4493/24]
View answerWritten answers
I propose to take Questions Nos. 97 and 106 together.
At the outset, the Deputy should note that the 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 (23% in Ireland), unless they fall within 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. Tourism and hospitality fall within Annex III thus explaining why they have been subject to these lower rates for a considerable period of time. The lower VAT rates that apply in this country are 13.5% and 9%.
As the Deputy will be aware the 9% VAT rate applied on a temporary basis to the hospitality and tourism sectors until 31 August 2023 when it reverted to the 13.5% rate. The 9% rate was introduced on 1 November 2020 in recognition of the fact that the tourism and hospitality sectors were among those most impacted by the public health restrictions put in place throughout the pandemic.
The economic rationale for a VAT rate reduction at that time as it was in 2011 when it was also reduced to 9% was to lower consumer prices, encouraging higher demand, more output and an increase in employment.
However, it is important to remember that VAT reductions, even temporary VAT reductions, do have a cost to the Exchequer. The estimated cost of the 9% VAT rate for tourism and hospitality, from 1 November 2020 to 31 August 2023, was €1.2 billion. This represented a very substantial support by the Government to the hospitality and tourism related sectors.
It is possible to have separate VAT treatment for tourism and hospitality under the EU VAT Directive. However, Revenue have indicated that there are practical operational concerns in having different VAT rates applying to hotel accommodation and meals given how the sector operates, with various packages ranging from bed and breakfast accommodation through to all-inclusive board and lodging packages.
The Government obviously wants to maintain a healthy and profitable environment for the sector going forward. However, in making any decision in relation to VAT rates or other taxation measures, the Government must balance the costs of the measures in question against their impact and the overall budgetary framework.
I have no plans to reduce the VAT rate for the tourism and hospitality sector to 9%.
Tax Code
Questions (98)
Richard Boyd Barrett
Question:98. Deputy Richard Boyd Barrett asked the Minister for Finance if he will consider introducing a digital tax on digital and social media companies, as an alternative method of funding public service broadband to replace the regressive and widely discredited TV licence model; and if he will make a statement on the matter. [4569/24]
View answerWritten answers
As has been stated on numerous occasions, this Government is committed to the reform of the TV licence. A long-term funding is model is needed, to deliver effective reform and ensure that a secure, sustainable funding model is put in place for our public service media.
The Future of Media Commission was established to, amongst other things, consider sustainable public funding model and noted three main funding models, a TV Licence, a universal charge, or direct Exchequer funding. While the Commission recommended a direct Exchequer funding model, Government established a Technical Working Group in order to examine other potential options for the reform and enhancement of the existing system.
I understand that the Working Group submitted their report to my colleague, the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media last year, and while initial discussions on the matter had commenced, the events over the summer regarding RTÉ meant that a final decision had to be paused. As Minister Martin has stated, while discussions on the matter are continuing, a final decision on this matter will not be taken until the independent reviews into RTÉ, carried out by the Expert Advisory Committees that Government appointed, are complete and have received consideration. I am advised that these reports are expected at the end of February.
It would not be appropriate for me to pre-empt consideration of the matter by Government.
Regarding a tax on digital and social media companies, the Deputy will be aware that the European Commission previously made a legislative proposal for a digital services tax based on a €750 million global revenue threshold and an EU-wide €50 million revenue from in-scope services threshold. This proposal, together with other digital taxes proposed or implemented around the globe, were received negatively. Subsequently, negotiations by the OECD and the G20 on reforms to the international system of taxation led to the OECD Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy in October 2021.
It must be noted that Pillar One of the OECD Agreement provides for the standstill and removal of unilateral measures such as digital services taxes. I firmly believe that Pillar One of the agreement will be successfully implemented, as was the case with Pillar Two, in a manner faithful to the agreement.
It is important that any proposal for additional taxation avoids raising trade tensions and does not undermine the ongoing development and implementation of the OECD agreement. Implementation of the agreement will bring much needed stability to the international tax framework after the turbulence and uncertainty of the last couple of years. Throughout this process, I have remained convinced that a global approach under Pillar One of the OECD agreement is preferable to unilateral measures like a Digital Services Tax.
Fiscal Policy
Questions (99)
Darren O'Rourke
Question:99. Deputy Darren O'Rourke asked the Minister for Finance about the actions outlined in Ireland’s Sustainable Finance Roadmap; the progress to date to implement same; what engagement has been carried out at EU and international levels by him and his Department as outlined in the 2023 climate action plan; and if he will make a statement on the matter. [4482/24]
View answerWritten answers
Sustainable finance has been part of our Ireland for Finance Strategy and its Action Plans since 2019, and Ireland is well placed to become a leading sustainable finance hub. For the past number of years, we have prioritised developing the sustainable finance sector, as part of our international financial services strategy, Ireland for Finance, and in our engagement at EU level.
In this context, Ireland strongly supports the EU taxonomy for sustainable activities which is at the heart of the sustainable finance policy and the Department of Finance actively engages in its development. This EU level legislation sets out common, science-based definitions of environmentally sustainable economic activities, for voluntary private sector use to guide and scale up sustainable investments to support net zero goals. Requirements under climate adaptation and mitigation objectives are now in place, as are reporting and disclosure requirements for firms using the Taxonomy.
Within the EU, at both a Ministerial and at an official level, Ireland works to ensure the regulatory framework for sustainable finance is ambitious and transparent while remaining usable for companies. We engage continuously with our European partners on the legislative proposals and other related actions. The Department engaged constructively with the European Commission and fellow Member States across several files, in particular on the Taxonomy and Green Bonds. My officials attend the Member State Expert Group, which works on developing the taxonomy delegated acts.
The Roadmap you mention is a part of this development and is an industry-led initiative of which we have and continue to be supportive. The roadmap called for the establishment of an International Sustainable Finance Centre of Excellence to serve as an essential platform in meeting the ambitions of Ireland’s Sustainable Finance Roadmap.
The Centre was established in October 2022 with the support of Skillnet Ireland, and supported the delivery of other Roadmap actions including the publication of research reports and the annual Climate Finance Action week in December 2023, during which I launched the first joint Irish-French sustainable finance seminar.
Indeed, throughout 2023 several measures were delivered including the launch of a number of new public courses in the field, such as a postgraduate diploma in Sustainable Finance Reporting and in Disclosures and Sustainable Financial Technology & Innovation. The support by Skillnet for the development of an educational and training offering with the aim of building a strong compliance culture is a particular focus of state involvement. The Irish Government has invested public money in training, developing new courses, and upskilling more than 4,000 professionals in sustainable finance to date.
My Department continues to engage closely with stakeholders to advance the sustainable finance agenda. This includes a specific focus on sustainable finance within the ‘Update to Ireland for Finance: Action Plan 2024’ which will be brought to Government shortly. In addition to fostering a regulatory framework that enables a high quality and transparent sustainable finance sector, these measures seek to improve industry readiness and build skills in order for firms to be able to expand their sustainable investments while complying with EU requirements.
Insurance Industry
Questions (100)
David Stanton
Question:100. Deputy David Stanton asked the Minister for Finance to outline the efforts being made by his Department to engage with insurance providers on the cost of motor insurance premiums; the insights provided by the National Claims Information Database Report on Private Motor Insurance published in December 2023; and if he will make a statement on the matter. [4591/24]
View answerWritten answers
At the outset, it is important to note that neither I, as Minister for Finance, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products. This position is reinforced by the EU framework for insurance (the Solvency II Directive).
Notwithstanding this, the Government has implemented a comprehensive strategy to reform our insurance sector. With respect to motor insurance, key achievements include the Personal Injuries Guidelines; the Central Bank’s ban on price walking; and strengthening the Injuries Resolution Board (formerly the Personal Injuries Assessment Board; PIAB).
The National Claims Information Database (NCID) is a key evidence-base to assist policymakers to monitor the impact of the reforms. The latest Private Motor Report, published last December, found that the average premium declined by 19 per cent from its peak in 2018, to €568 in 2022, including a further 7 per cent year-on-year reduction from 2021. These findings are welcome, particularly in light of the current inflationary environment, and indicate that consumers have benefitted from lower premiums overall in recent years.
Indeed, during the latest series of bilateral meetings held by Minister of State Carroll MacNeill in late 2023, insurers indicated that it is due to Government reforms that Ireland has not seen dramatic price rises like those being experienced in other jurisdictions. For example, while the latest CSO CPI data shows a 2.7 per cent increase in motor insurance prices here in the year to December 2023, prices in the UK, a market where many of our motor insurers also operate, rose by over 43 per cent during the same period.
I am aware that motor insurance prices may now be rising for some customers here, given current inflationary pressures, which have particularly impacted the cost of damage claims, for example, with increased costs for spare parts and labour. Indeed, the latest NCID Motor Report found that damage claims accounted for 46 per cent of total claims cost in 2022, compared to 30 per cent in 2021.
However, the NCID also highlights the potential for Government reforms to lower the overall cost of claims, which drives premiums. For example, the average cost of claims settled under the Personal Injuries Guidelines in 2022 (either directly or through the Injuries Resolution Board) was between 32 to 47 per cent lower, compared to 2020. In addition, the data shows that the recently enhanced Injuries Resolution Board continues to offer a faster route for settling claims than litigation, as well as substantially lower legal fees.
Therefore, it is my belief that the Government’s reform package has targeted the key underlying factors that influence premiums, and that through complete and consistent implementation of these reforms, we can continue to achieve further improvements in the cost of insurance for motorists, as well as other groups.