Written Answers Nos. 221-241
221. Deputy Eoin Ó Broin asked the Minister for Finance the tax treatment of rental income from local authority and approved housing body social tenancies and rental income from local authority, approved housing body and Land Development Agency rental tenancies. [4840/24]
View answerI understand the Deputy is asking how rental income is treated in the hands of local authorities, approved housing bodies and the Land Development Agency.
I am advised by Revenue that there is no difference in the treatment of income from “social tenancies” and “rental tenancies” – income from both sources is regarded as rental income and taxable under what is known as Case V of Schedule D. The gross rent taxable in a tax year is based on the rent receivable in that year, irrespective of whether that rent has been received. Each rental property must have a separate tax computation in which the allowable rental expenses (as set out in section 97 Taxes Consolidation Act 1997 (TCA)) are deducted from the rental income from the same property to arrive at a profit (where income is greater than expenses) or a loss (where expenses are greater than income) for the property. The total of profits and losses are then aggregated to arrive at the taxpayer’s Case V profits or gains arising in the year.
Local authorities are exempt from income tax, including tax on rental income, by virtue of section 214 TCA.
Revenue is unable to outline the tax position of the other bodies because of its obligation under section 851A TCA to ensure confidentiality of taxpayer information. However, if an approved housing body has the charitable tax exemption, section 207 TCA exempts from tax rental income “vested in trustees for charitable purposes” to the extent that the income is applied solely for charitable purposes.
222. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of reducing the rate of VAT from 13.5% to 9% with respect to services (details supplied) of the kind normally supplied in fairgrounds or amusement parks and hairdressing services, to end-2024 and in full-year terms, respectively, disaggregated by service type listed; and if he will make a statement on the matter. [4842/24]
View answerI am 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 specific products and / or services using taxpayer information alone. Consequently , a number of third-party data sources are used to compile tentative estimate of the cost of reducing the VAT from 13.5% to 9%, however many of these are in aggregated form and it is not possible to disaggregate e.g. hot take away food and tea/ coffee from these data. The details are set out in the table below.
|
|
1 January – 29 February 2024 |
1 March – 30 April 2024 |
1 May – 30 June 2024 |
1 July – 31 August 2024 |
1 September – 31 October 2024 |
1 November – 31 December 2024 |
Total |
|
Food and Catering Services only |
80.0 |
88.7 |
93.6 |
93.6 |
92.0 |
96.4 |
544.5 |
|
All Entertainment |
4.0 |
4.0 |
4.0 |
4.0 |
4.0 |
4.0 |
24.0 |
|
of which Cinemas |
0.9 |
0.9 |
0.9 |
0.9 |
0.9 |
0.9 |
5.4 |
|
of which Theatres |
2.3 |
2.3 |
2.3 |
2.3 |
2.3 |
2.3 |
13.8 |
|
of which Other |
0.8 |
0.8 |
0.8 |
0.8 |
0.8 |
0.8 |
4.8 |
|
Hairdressing Services |
6.0 |
6.0 |
6.0 |
6.0 |
6.0 |
6.0 |
36.0 |
|
Total Cost per VAT period |
90.0 |
98.7 |
103.6 |
103.6 |
102.0 |
106.4 |
604.5 |
|
Total Cumulative Cost |
90.0 |
188.8 |
292.4 |
396.1 |
498.1 |
604.5 |
604.5 |
223. Deputy Róisín Shortall asked the Minister for Finance his plans in respect of the State’s remaining 40.8% stake in a bank (details supplied); if he intends to recover the State’s full €20.8 billion investment in the bank; and if he will make a statement on the matter. [4845/24]
View answerThe total recapitalisation of the domestic banks amounted to €64.1bn, of which €34.7bn was invested in Anglo Irish Bank and INBS or Irish Bank Resolution Corporation (IBRC) and €29.4bn in AIB, Bank of Ireland and PTSB. To date, €23.1bn of the investment in the three remaining banks has been recovered in cash by way of disposals, investment income and liability guarantee fees.
As part of this activity, the State has fully disposed of its investment in Bank of Ireland.
The State has made good progress in reducing its shareholding in AIB from 71.1% at the beginning of 2022 to c. 40.8% today while recovering over €2.8bn during that timeframe as part of the process. The fifth phase of the AIB trading plan became operational on 24th January 2024 and this approach has played an important role in enabling us to gradually reduce our shareholding in AIB. My officials and I will continue to look at other disposal options, should they present themselves.
With regards to PTSB, in June 2023, I successfully disposed of part of the shareholding in this bank. The disposal was executed by way of a placing of shares in an accelerated book building process to investors, carried out in tandem with NatWest. The State sold a 5% stake in PTSB and following this transaction, the State retains a 57.4% shareholding in the bank.
The remaining investments in AIB and PTSB are currently valued at c. €4.9bn (as at 30/1/2024) leaving a shortfall of c. €1.36bn.
The investment in IBRC is largely a sunk cost with a net €1.1bn recovered to date.
The long-standing policy of this Government is to return the remaining banks to private ownership, while achieving value for our citizens. It continues to be this Government’s belief that banking in the main is an activity that should be provided by the private sector and that taxpayer funds that were used to rescue the banks should be recovered and used for more productive purposes.
224. Deputy Cathal Crowe asked the Minister for Finance how many homebuyers in each county have availed of the help-to-buy scheme since July 2020, by county, in tabular form; and if he will make a statement on the matter. [4850/24]
View answerI am advised by Revenue that the numbers of Help to Buy (HTB) claims that reached the claim stage on or after 1 July 2020, broken down by county, are set out in the table below.
|
Property County |
Number of Claims* |
|
Carlow |
288 |
|
Cavan |
268 |
|
Clare |
464 |
|
Cork |
3,643 |
|
Donegal |
560 |
|
Dublin |
3,655 |
|
Galway |
1,318 |
|
Kerry |
362 |
|
Kildare |
3,624 |
|
Kilkenny |
487 |
|
Laois |
707 |
|
Leitrim |
80 |
|
Limerick |
786 |
|
Longford |
83 |
|
Louth |
1,098 |
|
Mayo |
564 |
|
Meath |
2,719 |
|
Monaghan |
297 |
|
Offaly |
476 |
|
Roscommon |
230 |
|
Sligo |
232 |
|
Tipperary |
419 |
|
Waterford |
678 |
|
Westmeath |
409 |
|
Wexford |
992 |
|
Wicklow |
1,156 |
|
Totals |
25,595 |
*Data refers to the period from 1 July 2020 to 6 January 2024.
225. Deputy Cathal Crowe asked the Minister for Finance how many taxpayers are currently claiming the rent tax credit, by county, in tabular form. [4851/24]
View answerThe 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.
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 by 310,891 taxpayer units consisting of:
• 136,660 taxpayer units that made claims for 2022 only,
• 102,473 taxpayer units that made claims for both 2022 and 2023,
• 5,413 taxpayer units that made claims for both 2022 and 2024,
• 41,415 taxpayer units that made claims for 2023 only,
• 5,678 taxpayer units that made claims for both 2023 and 2024,
• 4,591 taxpayer units that made claims for 2024 only,
• 14,661 taxpayer units that made claims for 2022, 2023, and 2024.
Data for claims relating to PAYE taxpayers is set out by county in the table below.
|
County |
Number of taxpayer units claiming RTC |
||
|
2022 Year of Assessment |
2023 Year of Assessment |
2024 Year of Assessment |
|
|
CARLOW |
2,346 |
1,479 |
247 |
|
CAVAN |
2,139 |
1,355 |
210 |
|
CLARE |
3,243 |
2,086 |
391 |
|
CORK |
29,357 |
17,905 |
3,231 |
|
DONEGAL |
3,263 |
2,046 |
363 |
|
DUBLIN |
122,109 |
78,051 |
14,449 |
|
GALWAY |
18,560 |
10,936 |
2,103 |
|
KERRY |
3,952 |
2,380 |
381 |
|
KILDARE |
9,181 |
5,894 |
1,076 |
|
KILKENNY |
2,740 |
1,830 |
329 |
|
LAOIS |
2,027 |
1,301 |
263 |
|
LEITRIM |
848 |
485 |
91 |
|
LIMERICK |
12,697 |
7,299 |
1,315 |
|
LONGFORD |
1,502 |
939 |
167 |
|
LOUTH |
3,519 |
2,355 |
443 |
|
MAYO |
3,712 |
2,361 |
460 |
|
MEATH |
4,819 |
3,228 |
577 |
|
MONAGHAN |
1,794 |
1,175 |
208 |
|
OFFALY |
2,108 |
1,330 |
246 |
|
ROSCOMMON |
1,680 |
1,060 |
209 |
|
SLIGO |
3,036 |
1,759 |
314 |
|
TIPPERARY |
4,495 |
2,860 |
493 |
|
WATERFORD |
5,011 |
3,171 |
591 |
|
WESTMEATH |
3,752 |
2,405 |
428 |
|
WEXFORD |
4,054 |
2,539 |
449 |
|
WICKLOW |
3,155 |
2,056 |
393 |
|
Not Currently Available |
4,108 |
3,942 |
916 |
|
Total |
259,207 |
164,227 |
30,343 |
226. Deputy Neasa Hourigan asked the Minister for Finance if he will provide an update on the work underway to implement the recommendation of the Report of the Commission on Taxation and Welfare that the remittance basis of taxation should be subject to a lifetime limit of three years; and if he will make a statement on the matter. [4852/24]
View answerAs the Deputy may be aware, the Remittance Basis of Taxation (RBT) concerns how non-domiciled Irish residents are taxed on their worldwide income.
The Commission on Taxation and Welfare (COTW) considered the remittance basis of taxation in its report entitled ‘Foundations for the Future’ which was published on 14 September 2022. As a matter of taxpayer equity, the Commission recommended that the remittance basis should only be available to resident, but non-domiciled taxpayers, for a maximum period of three years.
In due course my Department will examine all recommendations from the Commission on Taxation and Welfare’s report including the recommendation as highlighted by the Deputy regarding the remittance basis of taxation.
227. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the insurance industry here remains competitive when compared with insurance costs throughout the European Union notwithstanding any national difference that may apply; and if he will make a statement on the matter. [4866/24]
View answerImproving the competitiveness of the domestic insurance market is a key priority for Government and was included in the Programme for Government. Accordingly, the Office to Promote Competition in the Insurance Market (OPCIM) was established in December 2020, and is currently chaired by Minister of State Carroll MacNeill.
The OPCIM has had success in engaging with new entrants to the Irish market, some of which have launched in the last year and others will do so in the coming months. Furthermore, in a recent round of meetings with Minister of State Carroll MacNeill, many incumbent providers indicated that they were expanding into new areas in response to recent Government reforms aimed at improving the insurance environment. Indeed, major international insurers have indicated that they are impressed with the pace and scale of our reforms to date and point to Ireland as a positive example of Government action in this complex policy area.
The OPCIM also has an important role in connecting various stakeholders – insurers, brokers, representative groups, among others – and facilitating engagement on issues relating to the availability of insurance across the market. This has, in many cases, helped resolve some pinch-points within the Solvency II insurance framework within which we must operate. In addition, we have seen multiple insurers offer quotes for some of these former pinch-points at renewal, indicating a positive improvement in the competitive environment over time.
In relation to other European Union member states, it is my understanding that it is difficult to obtain reliable comparative data on the cost of insurance. I am informed that international organisations, such as the OECD and Eurostat, do not publish such information. Eurostat publishes Harmonised Index of Consumer Prices (HICP) data with regard to insurance, but this only provides a comparison of the rate of inflation for different types of insurance such as motor, home and travel. Accordingly, it is not possible to compare the underlying cost of each insurance type. In addition, this does not include a comparative index for the price of business insurance. In any event, while a single market for insurance does exist across the EU, any international comparison based on price alone would not take into account relevant market-specific factors such as the various regulatory environments and liability systems in place in different jurisdictions, which have a major impact.
However, increased availability of data in relation to insurance, and understanding of the factors that influence insurance costs, is important. In this regard, the National Claims Information Database (NCID) is unique in Europe in terms of the transparency it provides into the Irish insurance sector. To date, the Central Bank has published NCID reports on private motor insurance and employers’ liability, public liability and commercial property insurance. These contain a wealth of information regarding the key insurance markets for consumers and businesses, including data on claims costs and average earned premiums.
The NCID is continually enhancing the transparency and insight that can be provided through these reports, and the data collection has been amended to include more information over time. As such, I believe that it will continue to serve a vital role in helping us to understand the impact of market developments on insurance costs into the future. In addition, the NCID should also enable stakeholders to assess the impact of the wide range of Government reforms already undertaken to improve the affordability of insurance, and will enable us to better tailor any future measures to increase the competitiveness of this key sector.
228. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which credit remains available to small and medium sized enterprises; and if he will make a statement on the matter. [4867/24]
View answerSmall and medium-sized enterprises (SMEs) are hugely important to the Irish economy and accounted for 99.8% of the total enterprise population for 2021. They also accounted for 60.1% of total persons employed. Their key role in Ireland's economy is why my Department conducts the SME Credit Demand Survey and has been doing so biannually since 2011.
The SME Credit Demand survey is an independent and statistically significant report that provides insights into the availability of and demand for credit, and related issues, amongst SMEs. Starting in 2024, in light of Retail Banking Review recommendations, the survey will be conducted and published on a calendar year basis.
As the Deputy is aware, the latest SME Credit Demand Survey was published on 27 January 2023 and the full report is available online. Key results include that demand for bank credit has fallen steadily since the series commenced, with requests in the period falling from 39% of those surveyed in September 2012 to 17% in the most recent result (6 months to September 2022).
However, the recent growth in non-bank finance activity as a source of credit for SMEs is a contributing factor. The 5% of SMEs who stated they applied for non-bank finance in the 6 months to September 2022 is notable and reflects a growing market share for this source of finance, with further expected future demand.
The Deputy will be aware that in my role as Minister for Finance I have no direct function in the relationship between the banks and their customers and the decisions made by individual lending institutions at any particular time, which are taken by the board and management of the relevant institution. This includes decisions in relation to products and lending. However, there are a number of Government-backed initiatives that have been introduced to assist SMEs with access to credit.
In relation to those businesses refused credit, the Credit Review was established to assist SMEs and farm borrowers that have had credit applications of up to €3 million refused or an existing credit facility withdrawn or amended by the participating bank. SMEs can apply to Credit Review after exhausting the banks' internal appeals process.
As the Deputy will also be aware, two loan guarantee schemes for SMEs were announced in Budget 2023; the Ukraine Credit Guarantee Scheme and the Growth and Sustainability Loan Scheme. These aim to facilitate access to credit at competitive prices in these areas important to SMEs and Government, namely challenges arising from invasion of Ukraine by Russia, growing businesses and investing in sustainability. These credit guarantee schemes are being delivered through the Strategic Banking Corporation of Ireland.
The Ukraine Credit Guarantee Scheme opened for applications on 20 March 2023. This €1.2 billion scheme provides low cost funding to qualifying SMEs, including farmers and fishers and small Mid-Caps affected by the rising costs of carrying out business, resulting from the invasion of Ukraine by Russia. By the end of 2023, 2,318 loans were approved to the value of €218.3 million; with €183 million of this amount drawn down to date.
The Growth and Sustainability Loan Scheme launched on 19 September 2023. This scheme for SMEs, including primary producers and small Mid-Caps, makes €500 million in loan funding available to enable investment in growth and sustainability. 30% of the lending volume under the scheme is reserved for investment in sustainability and energy efficiency. These green loans also attract a special discount interest rate. 571 applications were approved by the end of 2023 to the value of €9.73 million, with €7 million of this amount drawn down to date.
229. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which measures introduced in this jurisdiction to combat such issues as inflation, here and-or throughout the eurozone, are being successful; and if he will make a statement on the matter. [4868/24]
View answerIreland alongside all other Eurozone countries has experienced multi-decade high rates of inflation. Whilst inflation in Ireland peaked over the summer of 2022 at 9.6 per cent, inflation in the Euro Area peaked later and at a higher rate (10.6 per cent in October 2022). Whilst the initial driver of the inflationary pressure was a surge in global energy prices it subsequently became increasingly broad based as price pressures spread throughout the economies.
To combat these high rates of inflation, the ECB raised interest rates at a record pace, with the main refinancing rate reaching 4.5 per cent in January, from zero for much of the past decade. Whilst this has been a necessary step to prevent inflationary expectations from becoming de-anchored, the increase in interest rates will have knock on implications for the financing burden faced by both businesses and households. Indeed, higher mortgage rates to households and cost of capital firms are expected to act as headwinds to growth in the year ahead.
Throughout this period of high inflation the Government has provided timely support to households and businesses. Many of the fiscal supports enacted have been temporary and targeted in order to help those most in need without exacerbating price pressures or impeding the ECB’s efforts of returning inflation to target.
I am happy to report that we appear to have turned a corner on inflation, though the path to price stability may not be smooth. The latest data suggests that inflation in Ireland was at 3.2 per cent in December of last year, an uptick on November, while it was at 2.9 per cent for the euro area. Despite some potential volatility, my Department expects the downward trajectory in inflation to continue throughout 2024. At the time of Budget 2023, the Department forecast average headline annual inflation of 2.9 per cent for this year.
230. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which house price inflation here is likely to affect economic performance in the future; and if he will make a statement on the matter. [4869/24]
View answerMy Department continues to monitor all aspects of the property market – including the rate of house price inflation - on an ongoing basis, although policy issues in this area rest with the Minister for Housing, Local Government and Heritage. According to the most recent figures released by the Central Statistics Office, annual property price inflation was at 2.9 per cent in November, this is a fall from 8.5 per cent in November of last year, but an increase from mid-year lows.
House price momentum over recent months reflects – in part – the pass through of significant but moderating inflation in the cost of construction materials. It follows that new home property price inflation at 10¼ per cent in Q3 2023 was the key driver of house price inflation; offsetting a fall in property prices for existing homes of 1 per cent on the same basis.
Over the medium term, imbalances between housing market demand and supply can create upward pressure on prices with the potential to impact competitiveness and labour supply, and thereby economic performance. The Government’s Housing for All strategy and its programme of housing delivery to meet the needs of a growing population and economy has been in place since 2021, and has underlined increasing supply and delivery against targets in every year since.
For 2022 and 2023 combined, new home completions exceeded targets by 8,800 units. For 2023, 32,700 new homes were built, a 10 per cent improvement on the previous year and some 4,000 units ahead of target. This represents a significant success in terms of response to the imbalance in supply characteristic of post-pandemic in many advanced economies.
Indicators of future supply are increasingly positive and trending in the right direction. Last year, construction commenced on 32,800 new homes, 22 per cent higher than the number of commencements in 2022, and the highest number of annual commencements since records began in 2014. New commencement activity in the final quarter of the year was particularly strong, with 8,900 commenced units in Q4 2023, nearly 50 per cent higher than the same quarter in 2022.
Elsewhere, data on planning permissions show permissions granted for the construction of over 37,500 new homes in the 12 months to September 2023. In addition to this, mortgage drawdowns for first-time buyers reached the highest level since 2007.
Despite the significant progress, challenges still remain and the Government is addressing these through reforms such as the Planning and Development Bill 2023, and the forthcoming revision of the National Planning Framework.
231. Deputy Bernard J. Durkan asked the Minister for Finance the ongoing effect of Brexit on the economic performance in this jurisdiction as well as other EU Member States; and if he will make a statement on the matter. [4870/24]
View answerWhile it has now been close to eight years since the UK voted to leave the European Union, the implications of Brexit continue to play out. Following the end of the Brexit transition period on 31 December 2020, the EU applied import controls on goods moving from the UK to the EU, including Ireland. The UK authorities did not apply their controls at the same time.
After a number of years of postponements, the UK is now introducing new import controls under the UK government’s Border Target Operating Model, which will apply to qualifying goods from the EU, including Ireland on 31 January. This is the first in a number of phases of the implementation of these controls, with further milestones arising in April 2024. The new processes will have important implications for Irish exporters to Great Britain, particularly agri-food exporters, which will have to be pre-notified and be accompanied, in some cases, by export health and phytosanitary certificates.
The economic impact of Brexit has been playing out more slowly than expected, due to the phased nature of changes in trading arrangements under the EU-UK Trade and Cooperation Agreement (TCA). This does not, however, mean that the ultimate impact will not be felt by Irish exporters, and the wider Irish economy. Research by my Department and the ESRI from 2019 suggests that, over the medium-term and long-term, the level of Irish GDP under the TCA is expected to be around 2-3 per cent lower, compared to a ‘no-Brexit’ scenario.
That being said, anticipated introductions of import controls on Irish goods entering the UK have not materialised in the intervening period, having been postponed on multiple occasions. This will have given many Irish exporters time to diversify their export portfolios, lessening the ultimate impact of non-tariff barriers. Indeed, between 2015 and 2022, the share of total food and beverage exports going to the UK has decreased from 43 to 35 per cent. In addition, departments and agencies have had extensive stakeholder engagement with affected Irish stakeholders, coupled with communications and advertising campaigns, to raise awareness of these changes. This has been informed by extensive engagement with the UK authorities, to better understand and prepare for the changes.
We cannot ignore, however, that the administrative burden associated with the new import controls on many SMEs will be significant. Government departments will continue to engage with those impacted by these checks and any other relevant stakeholders to minimise associated costs, while my department will continue to monitor the economic fallout.
232. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he and his Department continue to monitor the activities of investment funds here with particular reference to the need to ensure that their activities are strictly in accordance with their operational licence; and if he will make a statement on the matter. [4871/24]
View answerWhile the Minister for Finance has overall responsibility for policy matters in relation to the investment funds sector, the Central Bank of Ireland is the responsible statutory body for the authorisation and supervision of investment funds established in Ireland.
Further details on the legislation, authorisation process, supervision process, regulatory requirements, guidance and other relevant matters pertaining to regulated investment funds can be found on the following page of the Central Bank website: www.centralbank.ie/regulation/industry-market-sectors/funds
As Ireland's independent financial services regulator the Central Bank of Ireland operates an assertive risk-based approach to supervision which is supported by a credible threat of enforcement, with the overall objective of ensuring financial stability, consumer protection and market integrity.
234. Deputy Bernard J. Durkan asked the Minister for Finance how he sees this country’s economy progressing and comparable to other EU economies; and if he will make a statement on the matter. [4873/24]
View answerThe Irish economy has proven to be remarkably resilient, despite the large and unprecedented shocks faced in recent years. This resilience is most evident in the strength of the labour market, with the level of employment reaching an all-time high in the third quarter of last year. Modified domestic demand (MDD) – my preferred measure of the domestic economy - recorded modest growth of 0.8 per cent in the first three quarters of 2023 compared to the same period in 2022, supported by solid growth in consumption bolstered by full employment and government supports.
GDP in the EU and euro area was somewhat subdued in 2023, both growing by ½ a per cent compared to 2022. Of note, the single market’s largest economy, Germany, registered a contraction of -0.3 per cent in 2023.
The outlook for the domestic and European economies remains uncertain, and the Government is conscious of the challenges on the horizon. In the most recent OECD forecasts in November, projected MDD growth was revised down to 1.7 per cent in 2024, while the forecast for euro area GDP was revised down to 0.9 per cent.
Although headline inflation was generally on a downward trajectory throughout last year, persistent core inflation continues to be a risk. The related tightening of monetary will act as a headwind going forward, and the full impact of the tighter monetary policy stance is still uncertain. However, the Irish economy is facing into this year from a relatively strong economic position, and my Department will continue to monitor the risks to the Irish economic outlook.
My Department will publish updated macroeconomic forecasts in the spring.
235. Deputy Bernard J. Durkan asked the Minister for Finance whether he remains satisfied that the taxation system in this country is sufficiently broadly based to avoid dependency on any one sector to such an extent that it might become a threat to the economy; and if he will make a statement on the matter. [4874/24]
View answerMy Department publishes the Annual Taxation Report to provide a detailed analysis of the Irish tax system, with the objective of monitoring developing trends in tax revenue to minimise fiscal vulnerabilities.
The latest Report, published last year, highlights the high concentration in the corporation tax base, with ten firms paying nearly 60 per cent of corporation tax receipts in 2022. Irish Fiscal Advisory Council analysis suggests that as few as three payers account for one-third of receipts.
The corporation tax base is not only reliant on a small number of tax payers but is also concentrated at sectoral level with a small number of highly profitable sectors i.e. pharmaceutical, manufacturing and ICT driving a large proportion of the growth seen in recent years.
The concentration of corporation tax receipts among a handful of large payers, as well as a small number of sectors, presents a clear vulnerability to our public finances. My Department estimates that around half of the corporation tax yield last year was ‘windfall’ in nature, in other words it is not linked to the domestic economy and could be transient.
This is a risk about which I have cautioned on numerous occasions. I have stated many times that given the degree of concentration in our corporate tax base, and the associated volatility of these receipts, we must not rely on temporary windfall tax revenues to fund permanent increases in expenditure. To do so would be to repeat the mistakes of the past.
That is why this Government has taken action to mitigate the exposure of our tax base to volatile windfall revenues, announcing the establishment of two new long-term funds, the Future Ireland Fund and the Infrastructure, Climate and Nature Fund, that will invest windfall receipts to help fund the response to future structural fiscal challenges that we know are on the horizon.
Ultimately, the best way to ensure the sustainability of the tax base over the medium term is by continuing to pursue a balanced and sensible budgetary policy.
236. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he and his Department can influence and co-ordinate fiscal matters in such a way as to support and encourage growth and development throughout the island of Ireland; and if he will make a statement on the matter. [4875/24]
View answer237. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he continues to maintain contact with the relevant authorities in Northern Ireland with a view to achieving maximum co-operation and benefit throughout the island of Ireland; and if he will make a statement on the matter. [4876/24]
View answerI propose to take Questions Nos. 236 and 237 together.
As the Deputy will be aware, the North-South Ministerial Council, as one of the formal structures provided for in the Good Friday Agreement, has not met in recent years. That has been very unfortunate as that forum has served as an important means of engagement through which to support co-operation on a whole range of areas. That said, at the time of writing there are positive signals on the restoration of the Assembly and the Executive. The government greatly welcomes these developments and I look forward to early engagement with the Executive’s Minister for Finance once appointed.
Notwithstanding the institutional challenges of recent years, there has continued to be engagement of varying natures by both myself and officials in my Department. For example, I addressed the British Irish Parliamentary Assembly in Kildare last October, an important gathering which includes elected members of the Northern Ireland Assembly and which was also addressed by a minister from the UK Government’s Northern Ireland Office. At official level, my Department is also involved at senior levels in various interactions with the Northern Ireland Civil Service.
As the Deputy is aware, more broadly the government’s Shared Island initiative aims to harness the full potential of the Good Friday Agreement to enhance cooperation, connection and mutual understanding on the island and engage with all communities and traditions to build consensus around a shared future. The initiative aims at further developing the all-island economy, deepening North/South cooperation, and investing in the North West and border regions. I and my Department are of course closely associated with this important work.
238. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he remains satisfied that Ireland, along with its European colleagues, continues on a positive trajectory in terms of fiscal policy; and if he will make a statement on the matter. [4877/24]
View answerWe begin this year in a strong position, with the end-2023 Exchequer returns showing a headline surplus of €1.2 billion, reflecting the underlying strength of our economy, particularly in respect of the labour market.
Tax receipts for 2023 reached a new record level of €88.1 billion, with growth driven by income tax, VAT and corporation tax. On the expenditure side, gross voted expenditure in 2023 was €94.7, which was €5.9 billion ahead of 2022.
This equates to an estimated surplus on a General Government basis last year in the region of €7.8 billion or around 2¾ per cent of modified national income (GNI*).
For this year, a General Government surplus of €8.4 billion was projected at the time of Budget 2024. This would be 2.7 per cent of GNI*. Our public debt is expected to remain high, albeit on a downward trajectory, at €222.2 billion (72.3 per cent of GNI*).
To put this in context, on aggregate the EU’s debt and deficit positions remain elevated. In 2024, twelve countries are projected to have debt levels above the 60 per cent of GDP threshold, with six of these above 100 per cent of GDP. Similarly, twelve countries are projected to have a deficit above the threshold of 3 per cent of GDP. In contrast, Ireland is one of only four Member States with a projected surplus.
That said, the EU is expected to see continued improvements in its aggregate fiscal position in 2024. The Commission forecasts the EU aggregate deficit to decline from 3.2 per cent of GDP in 2023 to 2.8 per cent of GDP in 2024 and the debt-to-GDP ratio to fall from 83.1 per cent in 2023 to 82.7 per cent in 2024.
However, beneath the undoubtedly positive headline numbers there remain risks to the Irish public finances: the surplus is flattered by an estimated €11 billion in windfall corporation tax receipts that are not linked to our domestic economy. When these volatile receipts are excluded an estimated underlying deficit is in prospect for this year.
Government has taken steps to mitigate this risk, announcing the establishment of two new long-term investment funds that will allow us to invest these receipts to part-fund the response to future structural challenges.
Of course, the best way to ensure that we remain on a positive fiscal trajectory over the medium-term is by continuing to a pursue a balanced budgetary strategy that allows for continued investment in our public services and the productive capacity of our economy while keeping public expenditure growth at sustainable levels.
239. Deputy Alan Dillon asked the Minister for Finance if he will consider increasing the tax exemption limits for people aged 65 years and over; and if he will make a statement on the matter. [4946/24]
View answerAs the Deputy will be aware, 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 per annum. 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 per annum. 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.
In addition, 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 per cent on all income above the exemption limit to a ceiling of twice the exemption limit. The system of marginal relief ensures that in cases where an individual's or couple’s income rises above the exemption threshold that their net income will not decline, as the 40 per cent income tax rate only applies to the proportion of income above the threshold. 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 entitled to the benefit of the more favourable treatment as between the use of marginal relief or the normal tax system of credits and bands.
I have no plans to increase the age exemption thresholds. However, it should be noted that in circumstances where the individual or couple no longer benefits from the age exemption or marginal relief, they will benefit from the increases to the main personal tax credits in recent Budgets.
For example, the increases to the main personal tax credits in Budget 2024 (€100 increase to the single, employee and earned income credits and a €200 increase to the credit for married couples / civil partners) means that the effective entry point to income tax has increased for all taxpayers, including those aged over 65. As of 2024, the effective entry point to income tax for an individual in receipt of the single person credit, employee / earned income credit and the age credit is now €19,975 per annum.
In addition, 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 per annum or less. Furthermore, the State Contributory Pension and the State Non-Contributory Pension are excluded from the calculation when determining whether an individual’s total income has exceeded the €60,000 per annum threshold. It is also worth pointing out that the State Contributory and Non-Contributory Pensions are not chargeable to USC or Pay Related Social Insurance.
Finally, it should be noted that the Commission on Taxation and Welfare recently reviewed the tax system in the round. The Commission recommended that age should be removed as a factor for determining the charge to income tax and USC. 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/.
As part of the Personal Tax Review published on Budget Day, my Department set out further analysis of the recommendations of the Commission on Taxation and Welfare, including in respect of the age exemption limits. The Report is available at the following link -
assets.gov.ie/273335/96f70eb1-64e1-4f02-9096-e36f306a048b.pdf#page=null.
240. Deputy David Stanton asked the Minister for Public Expenditure, National Development Plan Delivery and Reform to outline the proposed pension increases for former employees of semi-State companies that are currently awaiting Government approval; if he will provide further details in this regard; and if he will make a statement on the matter. [4695/24]
View answer242. Deputy Fergus O'Dowd asked the Minister for Public Expenditure, National Development Plan Delivery and Reform when he expects to make a final decision on the ESB pensions increase request received in January; and if he will make a statement on the matter. [4831/24]
View answerI propose to take Questions Nos. 240 and 242 together.
The pension scheme rules of commercial semi state bodies typically requires that the parent Minister of the semi state body and the Minister for Public Expenditure, NDP Delivery and Reform both consent to pension increases under the relevant scheme. The Code of Practice for the Governance of State Bodies 2016, as amended by Department of Public Expenditure, NDP Delivery and Reform Circular 16/2021, also requires that pension increases in commercial semi state bodies must receive the consent of both Ministers.
Under rule 42.4 of the ESB Defined Benefit Pension Scheme, set out in Electricity Supply Board (Superannuation) Order 2014 (S.I. No. 18/2014), the consent of the Minister for the Environment, Climate and Communications and the Minister for Public Expenditure, NDP Delivery and Reform is required for pension increases under the Scheme.
On 22 November 2023, the Secretary of the Superannuation Committee of the ESB Defined Benefit Pension Scheme wrote to the Department of the Environment, Climate and Communications requesting consent for a 4.0% increase to pensions under the Scheme effective from 1 January 2024. A report on the proposed increase was completed by NewERA on 20 December which has informed the consent process.
On 17 January, the Department of the Environment, Climate and Communications wrote to my Department confirming the consent of the Minister for the Environment, Climate and Communications and requesting my consent. On 30 January officials in my Department communicated my consent to the Department of the Environment, Climate and Communications.
There are no commercial semi state body pension increase consent requests that have been submitted to my Department and that are still awaiting my approval. My Department does not hold information on proposed commercial semi state body pension increases which have not yet been submitted to my Department for my approval.
241. Deputy Michael Creed asked the Minister for Public Expenditure, National Development Plan Delivery and Reform the level of oversight by the Office of Government Procurement regarding contracts awarded; the oversight of a particular contract in the Dublin area (details supplied); the level of complaints received with regard to service delivery under this contract; if this contractor has other contracts; if details of same can be provided; and if he will make a statement on the matter. [4763/24]
View answerThe Office of Government Procurement (OGP) has responsibility for establishing central procurement arrangements for commonly available goods and services. A central arrangement (Framework Agreement) was established in June 2023 for the Supply of Cleaning, Paper, Personal Hygiene & Period Equality Products.
The OGP is responsible for managing the overall performance of the Framework Agreement, ensuring that the terms and conditions of the Framework Agreements, the products supplied, the contracted prices and the performance levels are adhered to by the Framework Members. OGP conducts regular review meetings with the Framework Members and with Public Service Bodies. OGP is not aware of any performance issues or breaches of the Framework Agreements terms, conditions and requirements.
Individual contracts relating to this Framework Agreement are entered into via a Notification to Activate Goods form signed by both the PSB and the Framework Member. Each PSB is responsible for the operational management and performance of their contract, and directly manages the relationship with their supplier. No operational issues have been escalated to OGP by either PSBs or Framework Members. OGP is satisfied that the central procurement arrangement established is performing as expected.
The Framework Agreement for the Supply of Cleaning, Paper, Personal Hygiene & Period Equality Products is a multi-supplier and multi lot arrangement. A specific Lot for the Leinster Region was established. Framework Members appointed to this Lot have been appointed to other geographic lots. The relevant Contract Award Notice was published on the eTenders portal on 14th June 2023.
