Paul Nicholas Gogarty
Ceist:106 Mr. Gogarty asked the Minister for Finance if he will report on the 8 November 2005 ECOFIN meeting; and if he will make a statement on the matter. [32942/05]
Other Questions.
Official Engagements.
I attended the ECOFIN Council meeting in Brussels on 8 November 2005. This meeting was attended by Ministers of Finance of all 25 EU member states and of Bulgaria and Romania.
The Council held a debate on Council conclusions on means of establishing an improved control framework for the EU budget on the basis of work carried out by a group of member state experts convened by the Commission and co-chaired by the Presidency. Council adopted Presidency conclusions on the Commission's proposal for a roadmap to an integrated internal control framework for the EU budget, setting out proposals for the harmonisation of principles of controls and for the simplification of legislation.
The Council adopted conclusions on the introduction of a common EU methodology to measure administrative burdens, which burdens are the costs imposed by legal obligations to provide information. The introduction of this initiative will assist the EU Commission in measuring the costs imposed by EU legislation and will complement other initiatives taken in the area of better regulation, such as the screening of regulatory proposals, the simplification of existing legislation and impact assessments.
With regard to EU statistical governance, the Council adopted conclusions, including measures to be taken in order to improve the quality of statistical data to be used in the assessment of member states' budgetary situations. These conclusions support the creation of a new high-level advisory body to enhance EUROSTAT independence and governance. Ireland's National Statistics Board has worked well in a similar role vis-à-vis the Central Statistics Office. I welcome the ongoing review of EU statistical priorities. In a rapidly changing world, it is vital to make sure that the information produced by statisticians matches the information needed by policy makers.
The Council adopted the decision under Article 104(8) of the treaty, which points to Hungary's failure to correct its excessive deficit below the reference value of 3% of GDP by 2008. The Council will closely monitor Hungary's progress in dealing with this issue on the basis of reports from the Commission.
The UK Presidency presented a report to Council on progress on proposals aimed at simplifying cross-border business obligations relating to value-added tax, and on future handling of the dossier by the UK and Austrian presidencies. The proposals are intended to ease VAT compliance for businesses. The proposals consist of a draft directive amending a previous directive with a view to simplifying VAT obligations, a draft directive laying down detailed rules for the refund of VAT to businesses in member states where it has no base, and a draft regulation amending a previous regulation as regards administrative co-operation under the "one-stop" scheme and the refund procedure for VAT. The Council noted the progress made and also the need for further work on the dossier during the UK Presidency and the forthcoming Austrian Presidency.
Additional information not given on the floor of the House.
Council discussed the main issues to be resolved in order that agreement be reached before the end of the year on modifications to EU rules regarding reduced rates of value-added tax applied by the member states. Council agreed to return to this in December. While Ireland is prepared to contribute to further work in the area, we will continue to protect our zero and reduced rated items. The structure of VAT rates is a sensitive political issue for certain member states who can face costly consequences from pressures to reduce particular rates of VAT.
The Commission presented three papers on cross-border mergers and acquisitions in the financial services sector: a communication on intra-EU investment in the financial services sector, a working document on cross-border consolidation and a working paper on review of article 16 of directive 2000/12/EC. Presidency conclusions were agreed supporting the continuation of the Commission's work in reviewing the obstacles to cross-border consolidation in the financial services sector and the issue will be further discussed at future ECOFINs.
Council was briefed on the financial consequences of the reform of the EU's common market organisation in the sugar sector that has been proposed by the Commission. The issue of funding for the action plan to aid African, Caribbean and Pacific countries and the restructuring package for member states was discussed in this context. There were no conclusions.
The annual meeting between members of ECOFIN and members of the European free trade area took place at lunch time. The topic for discussion at this year's lunch was employment and growth in the context of globalisation.
I thank the Minister for his reply and welcome him back to the House. The detail in the answer makes a welcome change to the previous lack of openness that accompanied ECOFIN meetings.
Will the Minister say what position he adopted at yesterday's meetings in regard to a number of agenda items? He mentioned the discussion on the new VAT directive. This was on foot of a decision made in 2002, when nine of the then 15 countries decided to adopt the lower rate of VAT for labour-intensive industries, and Ireland chose not to. The Minister might say why that was, and whether Ireland is still of the same opinion.
It was also reported before the ECOFIN meeting that Commissioner McCreevy was meant to be in attendance to outline obstacles which he says exist with regard to difficulties in banks being able to merge. Does the Minister agree with the Commissioner or does he think measures need to be taken to protect the very limited Irish input which exists in the ownership of financial institutions? How would they be affected by any new proposals coming from Mr. McCreevy's office? With regard to reports issued before the meeting on the possibility that a number of countries would use the enhanced co-operation mechanism for a shared approach to corporation tax, was that discussed at the meeting and does the Minister share the reluctance of most parties in this House to go down that road in a collective European Union sense?
We have economic and tax models which have ensured our unemployment rate stands at half the EU average and our growth rate is more than 2.5 times the euro zone average. These models include low taxes on employment and enterprise and different indirect taxation levels. It is a question of how a tax system is structured.
The one-stop scheme idea concerns business consumer and Internet type businesses and the operation of a VAT regime in which businesses do not have to register for VAT in respect of each country in which they trade. Common rules are being devised which would enable such a system to work more efficiently and the benefits of this proposal may be seen for people operating such businesses in Ireland.
Discussions took place to reach agreement before the end of the year on modifications to EU rules on the reduced rates of VAT applied by member states. The Council agreed to return to this issue in December. We are prepared to contribute further to work on the area and will continue to protect our zero and reduced rate items. When this dossier came before us in the past, efforts were made to reach a compromise based on losing a zero VAT rate, of which we are not in favour. The compromise proposal that has emerged under the UK Presidency seems to protect our position in that regard and, therefore, our disposition towards it has changed. We are now prepared to work further to determine whether a consensus may be built around the proposal.
On the financial services issue and cross-border consolidation in the EU financial sector, the Commissioner, Mr. McCreevy, was present for that part of the meeting and outlined the Commission's position. Three papers were presented on cross-border mergers and acquisitions in the financial services sector, namely, a communication on intra-EU investment in the financial services sector, a working document on cross-border consolidation and a working paper on the review of Article 16 of EU Directive 2000/12/EC. Presidency conclusions were agreed with regard to supporting the continuation of the Commission's work on reviewing the obstacles to cross-border consolidation in the financial services sector and the issue will be further discussed at future ECOFIN meetings.
I believe in ensuring that an internal market on financial services will be of benefit to us. The more the Single Market integrates, the greater the experience for Ireland. The financial services industry in Ireland will function more effectively if obstacles do not get in the way of cross-border mergers and acquisitions. Ireland has experienced six takeovers of banks by international players such as Skanska, Rabo and Bank of Scotland. This results in increased competition, improved products and better deals for consumers, and the more we are open to it, the better. While we all share the desire to see that the headquarters of major Irish banks are retained in Ireland, we must ensure that Ireland continues to have a strong banking system. Competition has had a positive impact and an internal market in financial services is in the interest of this country.
During the course of the ECOFIN meeting, did Ministers have opportunities to discuss, formally or otherwise, the prospect of rising interest rates in Europe and, in particular, the problem that such a situation poses for economies such as Ireland's, where there are high levels of personal indebtedness and mortgage debt? A 1% interest rate increase over the next year will have disastrous implications for the personal budgets of many young families, for example, in the case of couples with 100% mortgages costing €600,000.
Interest rate policy is exclusively a matter for the Governor of the European Central Bank. I do not speculate on such issues, for obvious reasons.
The European economy is experiencing a slight recovery, with a possible 1.2% growth this year. While that figure varies significantly from our experience, it is to be expected of the euro area. Unless evidence is found of second round effects with regard to recent oil prices, that recovery will hopefully be taken into account when the central bank considers this issue. I do not want to say anything that might suggest there will be any change to the current situation of extreme vigilance by the Governor of the ECB.
During the course of the ECOFIN meeting, did Ministers formally or informally discuss the prospect of rising interest rates?
I do not know what informal discussions may have taken place among others but I did not discuss the matter with anyone at ECOFIN. As the Deputy is aware, the proceedings of the euro group meeting, which took place the preceding night, is confidential.
Can the Minister tell us whether the proposed EU directive on motor vehicle or passenger car tax and related taxes was discussed at yesterday's ECOFIN meeting? I specifically refer to the possibility of an EU directive on vehicle registration tax as it applies in this jurisdiction. If that issue was not addressed, does the Minister expect it will be discussed at a future meeting of European Finance Ministers? In anticipation of such a directive, can he assess the implications for motorists in terms of what may replace the VRT and the impact of such a change on the Exchequer and the economy in general? Will he advise us as to his expectations with regard to this signalled intent?
The matter was not discussed at yesterday's meeting, nor am I aware of its planned discussion under the UK Presidency. The Austrian Presidency will set its own agenda. I have not been advised that the matter is of imminent concern. VRT tax take is an important part of our tax revenues.
Tax Code.
Damien English
Ceist:107 Mr. English asked the Minister for Finance the level of repayments to taxpayers in each of the past three years and to date in 2005; and if he will make a statement on the matter. [33125/05]
I am informed by the Revenue Commissioners that the number of reviews of tax liability sought by PAYE taxpayers in the past three years which resulted in refunds are as follows: as of 23 September 2005, there were 322,361 such reviews and the amount refunded was €282 million; in 2004, there were 350,016 reviews and refunds of €278 million; in 2003, there were 314,298 reviews and refunds of €265 million; and in 2002, there were 304,272 such reviews. The amount refunded in 2002 is not immediately to hand but I will revert to the Deputy with the information as soon as possible.
PAYE is a tax collection system which was designed to collect an employee's tax liability for a year on a cumulative basis over the year. The correct amount of tax can only be collected where the employee has claimed and been granted in the annual notice of tax credits and standard rate cut-off points all the reliefs to which he or she is entitled. Revenue can only allow tax credits or reliefs on the basis of the information that is known to them. If the information on the tax credit certificate is incorrect or incomplete because of inadequate information received from the taxpayer or if there is a change in circumstances in the course of the tax year which is not notified to Revenue, the system will not operate as intended and the tax deducted will be incorrect.
The vast majority of taxpayers are conscious of the credits and reliefs they are entitled to and, where claims are necessary, take the required action. Revenue makes every effort possible to inform taxpayers of their entitlements and, where additional tax credits are claimed, the necessary adjustments in the taxpayer's affairs are speedily made.
Some reliefs need not be claimed as they are given at source, for example, pension contributions, permanent health insurance, medical insurance and mortgage interest. Others need only be claimed once as they will remain constant in the taxpayer's profile over the year, for example, basic tax credits, PAYE credit and trade union subscriptions. In this instance, once claimed, the reliefs are automatically carried forward from year to year. The only reliefs that need to be claimed on an ongoing basis are those that are expenditure related, such as medical expenses relief. Such claims give rise to the greater part of repayments of tax since the relief cannot be quantified until after the end of the year.
Revenue is already very proactive in the manner in which it ensures that PAYE taxpayers are made aware of their entitlements and facilitated in claiming these. Revenue keeps this issue under constant review and takes whatever steps are necessary with regard to public information campaigns to continue to inform taxpayers of their entitlements and to simplify, as far as possible, the arrangements for making these claims. The upcoming bulk issue of more than €2.2 million in tax credit certificates for 2006 will be the focus of an information campaign, as will the roll-out of the PAYE on-line system in early 2006. I emphasise, however, that the primary responsibility for ensuring that Revenue has the most up-to-date information on a taxpayer's affairs lies with the taxpayer.
I thank the Minister for his reply. His figures suggest that one in five people obtain a tax review and, on average, receive a €750 refund. While I do not suggest that the remaining four out of every five would receive a similar refund, has the Minister looked hard at the take-up on various reliefs where there is likely to be under-claiming?
I have conducted a calculation exercise, without the resources available to the Minister, on the back of an envelope, so to speak. I estimate that on DIRT, approximately 5% of the refund is taken up, that is, only 5% of those eligible for a refund obtain one. These are mostly elderly people with deposit accounts. On bin charges, according to figures from the Department of Finance, approximately 15% of the relief is taken up. On medical expenses, using Central Statistics Office data on how much people spend on medical care, the take-up is approximately 20%. On rent, the take-up is around 40%. The take-up of relief rises for home carers, where the figure is approximately 75%. In this context, at least €350 million per annum of taxpayers' money is not getting back to them.
I accept that the Revenue Commissioners produce information leaflets but will the Minister charge Revenue with completing a statistical exercise to estimate how much tax relief is being taken up and how much is not? Let us obtain some hard data in this area. I believe the figures I have come up with are not very far wide of the mark and if that is the case, then over a four-year period where a look-back is possible, we are talking about €1.2 billion to €1.5 billion of taxpayers' money that is not being returned to them.
Everyone wants to see a fair tax code where people who are well off pay their way. The other side of that coin is that we want to see those who deserve it getting their money back. Will the Minister take more of an interest in returning this money to taxpayers instead of simply reciting the fact that the Revenue Commissioners do certain things and the obligation is on the taxpayer? Let us do something to return the money to where it belongs.
I cannot comment on the Deputy's specific points. If he forwards his data to me, I can give him a considered reply. This is an issue that is ongoing and I accept the Deputy's general argument. I can consider his suggestion when he forwards his information which I will ask Revenue to examine.
What is the current situation in the Department and the Revenue Commissioners with regard to refunds for taxpayers in the building industry? The Comptroller and Auditor General made a detailed comment on this matter. It has also been the subject of a number of reports of ongoing fraud cases, including one involving 294 contractors and another involving 22 taxpayers in the building industry. The Comptroller and Auditor General has indicated that this is a significant area of fraud. What has the Minister done to address this issue?
The Revenue Commissioners are following up these matters and I can get a detailed response from them as to what they are doing to try to deal with the query raised by the Comptroller and Auditor General.
Is it true that the refunds have been suspended?
I cannot confirm or deny that at present.
I have assembled the information to which I referred earlier and can forward it to the Minister. What I have calculated is based on CSO estimates of how much is spent on out-of-pocket medical expenses and on what we know of bin charges through the local authorities. It is also based on what we know of the number of people who claim DIRT refunds. Only 1,000 people claimed DIRT refunds while there are 36,000 people on the small income exemption limit. Clearly, there is under-claiming. I do not have a monopoly in this area. I can forward my data to the Minister, but they are back-of-an-envelope in nature.
I understand that.
I ask the Minister to undertake a study, to ask Revenue to look hard at this issue and come back with some hard data. I will send my guesswork to the Minister.
I take the Deputy's point on board. I will have the issue checked out in more detail.
Archaeological Sites.
Dinny McGinley
Ceist:108 Mr. McGinley asked the Minister for Finance his plans to develop and refurbish facilities at Doe Castle, County Donegal; and if he will make a statement on the matter. [33093/05]
There are no plans to undertake any major conservation work at Doe Castle, County Donegal. A comprehensive programme of conservation work was undertaken at the castle during the period 1996 to 2001. This involved a major restoration of the medieval tower house to provide a suitable indoor location on the site for the important MacSweeney grave slab. All works carried out in the intervening period have been of a routine, maintenance nature.
I thank the Minister of State for his reply but am disappointed with his negative response. I do not know how familiar he is with Irish history but Doe Castle has been associated with many major events over the past 400 or 500 years. It was built in the early 1500s. Red Hugh O'Donnell, who was one of the most important people to come from Donegal and was known as the fighting prince of Donegal, was fostered there. When the Spanish Armada was wrecked in 1588, survivors of the disaster found shelter and protection in Doe Castle. Owen Roe O'Neill, on his return from Spain in 1641, landed at Doe Castle and began his conquest of Ulster from there. When one takes all of these things into consideration, the castle is probably the most historic building surviving in Donegal, if not in Ireland. There is one major investment required, to re-roof the great hall.
Doe Castle is already a great tourist attraction. Approximately 5,000 people per month visit the castle, the seat of the MacSweeney family, during the summer season. If the castle were re-roofed, there would be a triangle of attractions in the area, namely Doe Castle itself, the Glenveagh Estate, in which the State has invested heavily and which attracts 100,000 visitors per annum, and the Glebe Gallery, bequeathed by Derek Hill. If the main hall of the castle were re-roofed, it would generate enough finances to make the castle self-sufficient.
I urge the Minister of State to have a sympathetic look at this project. In two year's time we will commemorate the Flight of the Earls. The year 2007 is the fourth centenary of that event. The earls did not leave Doe Castle but the nearby village of Rathmullan and while the main celebrations will be in Rathmullan in 2007, there is no reason we should not have a banquet to mark the departure of the earls in Doe Castle. That can only be done, however, if the great hall is re-roofed. I urge the Minister of State and the Minister to provide funding of €200,000 to complete the job. I would then welcome them both to the official opening, even if nobody else in the House would do so.
Is the Deputy not going to ask me to do a detailed cost-benefit analysis?
He has done one already.
The cost of the analysis would be €200,000.
Deputy Paul McGrath could do some extrapolations too.
The Minister of State, Deputy Parlon, should agree to this before he leaves the Office of Public Works.
I agree with Deputy McGinley that Doe Castle has a fine history. The castle has been vacant since 1890. The Land Commission took it over in 1932 and the Office of Public Works took charge of it in July 1934. The national monuments section of the OPW undertook an extensive programme of conservation work on the site, including a major restoration of the medieval tower house which is the primary structure associated with the castle, and the conservation of the MacSweeney grave slab. This programme of work was completed in 2001. The medieval tower was roofed with Irish oak and stone slates. Oak floors were fitted along with an oak staircase which provides access to the upper levels of the castle. A key holder allows visitors to access the castle.
Deputy McGinley referred to the fact that Doe Castle receives 5,000 visitors per month, although I am not sure if his figures are correct. Donegal Castle has approximately 50,000 visitors per annum and Glenveagh is also a major tourist attraction in the area. There is no further funding available under the National Development Plan 2000-2006. If the provision of further facilities are to be considered, it would be a matter for the successor of the NDP and the Minister for the Environment, Heritage and Local Government. I am sure the Deputy will make a case to him in that regard.
I will. Unless the castle is reroofed, it will crumble. When we eventually get around to carrying out the major work of reroofing the great hall, it will have deteriorated and will cost much more. In other words, a stitch in time saves nine.
Having stood for so long, suspicions of its imminent demise might be a little exaggerated.
Departmental Appointments.
Liam Twomey
Ceist:109 Dr. Twomey asked the Minister for Finance the number and proportion of appointments made by the Top Level Appointments Committee in the past five years of persons outside the public service; the number of persons outside the Department where a vacancy occurred. [33109/05]
The Deputy will be aware that the Top Level Appointments Committee, TLAC, recommends candidates to Government for the most senior appointments in the Civil Service. Subject to certain exceptions, TLAC deals with all posts at or above assistant secretary level or equivalent across the Civil Service. The Government is the appointing authority for posts at secretary general level and the TLAC recommends up to three candidates, if found suitable, for posts at this level. The Government appoints the secretary general from among the recommended candidates. In the case of posts below secretary general level, for example, assistant secretary posts, the appropriate Minister is the appointing authority and one candidate is recommended by TLAC to the Minister for appointment.
Some 70 TLAC competitions were run over the past five years, 14 of which were at secretary general level and 56 were at assistant secretary level and equivalent. No post was filled by a person from outside the Civil Service in the past five years, even though two posts were filled by open competition rather than by competition among eligible officers across the Civil Service. Some 13 posts, including four at secretary general level, were filled by people from outside the Department where the vacancy occurred.
I thank the Minister for his reply. I note that recently the Secretary General of the Taoiseach's Department indicated that there was a need to bring in more expertise into the senior levels of the public service. Against that background, the Minister revealed that out of 70 competitions, just two were open competitions, neither of which produced anyone from outside the Civil Service. Does the Minister think there is a need to change the practice of recruitment so that more outsiders will begin to come into positions in the public service? Surely it is long past the time when we rely exclusively on home grown talent to come up through the ranks. If there is expertise and talent outside, the public service should avail of it. I recognise that the morale of people who wish to apply for these posts is at stake and everyone should have a fair chance, but zero out of 70 posts is an extraordinarily low and unacceptable percentage.
Does the Minister believe there needs to be more progress in opening up competition generally. Even 13 of the 70 coming from outside the sponsoring Department is an unacceptably low figure. We ought to have professionalisation of the Civil Service where skills in financial management or human resource management can be transferred between Departments. This silo approach to Departments is not acceptable. Will the Minister take up the suggestion of the Secretary General of the Taoiseach's Department and initiate a serious programme of reform in this area so that we will begin to see new talent in crucial areas? Clearly project management skills within the public service are seriously depleted relative to the task that must be addressed.
I recently said that there is a need to open up opportunities from the private sector to the public sector in many specialised and technical areas. There is also provision in the social partnership programme for open competition in these areas. In fairness, there is much churning within Departments. By the time people get to assistant secretary level, they may have served in two or three other Departments. They may have come in at principal officer level to that Department, therefore, the Deputy is not getting the full story in the reply.
Making positions available for open competition is a matter for TLAC. The senior civil servant referred to, who is a senior member of TLAC, indicated that the body is open to considering, consistent with the maintenance of morale and the expertise available within the service, how there might be some cross-fertilisation with the private sector. Contracting out to the private sector should be engaged in to a much greater extent. Exchange programmes should be taking place in technical areas as well as in the wider policy formulation, administrative and commercial areas. Civil servants who have come back into the system following a degree of knowledge and practice in the commercial world would have more experience.
This is an area in which we must be creative and innovative, consistent with acknowledging and giving opportunities to those in the system who are providing a good service and who would be suitable for senior positions.
Written answers follow Adjournment Debate.