Vol. 860 No. 1
175. Deputy Michael McGrath asked the Minister for Finance his views on the Fiscal Council report which highlighted the lack of planning for the public finances beyond 2015; and if he will make a statement on the matter. [45883/14]
I note the views expressed by the Fiscal Council in their update of their fiscal stance, and welcome their assessment that targeting a deficit of 2.7% of GDP could be considered conducive to prudent economic and budgetary management.
With regard to the Council's assertion that Budget 2015 represents a 'missed opportunity' and further consolidation should have been implemented, our overarching fiscal goal has always been to reach a deficit below 3% of GDP in 2015. On the basis of Budget forecasts, this will be achieved. While further consolidation would have improved the headline deficit figure, I have a number of other issues to consider such as social cohesion and the need to safeguard the ongoing economic recovery.
I agree wholeheartedly with the Council's view that we need to break the pattern of boom and bust economics evident in the past. The fiscal framework, which this Government has put in place, will provide a valuable structure to guide fiscal policy over the coming years. However, there are a number of technical and timing issues relating to EU implementation of fiscal rules which need to be resolved. For example, the expenditure benchmark links growth in expenditure to the potential growth rate of the economy. The updated Commission projections on potential growth, on which assessment with the benchmark would be based, were not available in advance of the Budget. As these estimates can display significant revisions, there was no solid basis to forecast assessed expenditure in the outer years. This limitation was specifically highlighted in the budgetary documentation. A fuller assessment will be contained in the SPU in April. With regard to the revenue forecasts not reflecting Government's intention to reduce the tax burden in coming years, I would strongly make the point that this is the correct approach to take. What is reflected in the budgetary arithmetic is what is being legislated for in the coming year. Budgets cannot be framed on the basis of general policy principles such as that to reduce the level of income tax in the future. These decisions will be taken on an annual basis taking account of the economic and fiscal situation at the time.
176. Deputy Michael McGrath asked the Minister for Finance if he will provide in tabular form the annual cost of the artists exemption tax relief in each year from 2005 to 2013; the number of persons benefitting in each year; his plans to review the scheme; and if he will make a statement on the matter. [45884/14]
The information regarding the annual cost and numbers availing of the Artists' Exemption is set out in the table for the years 2005 to 2012, the most recent figures available. The fall in the cost of the exemption in recent years reflects both the introduction of an annual cap of €40,000 on the exemption since 2010 and the impact of the economic downturn on the incomes of artists.
|
Year |
Cost of Artists Exemption - €m |
Number of Claimants |
|
2005 |
34.8 |
2,220 |
|
2006 |
65.9 |
2,890 |
|
2007 |
27.4 |
2,650 |
|
2008 |
21.8 |
2,630 |
|
2009 |
22.1 |
2,590 |
|
2010 |
9.6 |
2,350 |
|
2011 |
5.5 |
2,520 |
|
2012 |
4.8 |
2,490 |
As the Deputy will be aware, my officials will be carrying out a review of the artists exemption in advance of Budget 2016. The terms of this review have not yet been finalised. I will be considering the matter further in the coming weeks and I will announce details on the terms of the review in the new year.
177. Deputy Michael McGrath asked the Minister for Finance the number of approved retirement funds in operation here; the annual income tax take from approved retirement funds; and if he will make a statement on the matter. [45885/14]
Approved Retired Funds (ARFs) form part of the regime of flexible options on retirement first introduced in 1999. They are investment options into which the proceeds of certain pension arrangements can be invested on retirement. Under the "ARF option" individuals are entitled, subject to conditions, to take their retirement lump sum and, with the balance of their pension fund, either purchase an annuity, invest in an ARF or take the balance in cash subject to tax. Where the ARF route is chosen, beneficial ownership of the assets in the ARF vests in the individual.
ARFs are managed and held by Qualifying Fund Managers and any investment income or capital gains arising is exempt from tax while the funds are invested in the ARF. Distributions or drawdowns from the ARF by the beneficial owner are subject to income tax at the owner's marginal rate.
I am advised by the Revenue Commissioners that there is no requirement on Qualifying Fund Managers (QFMs) who hold and manage ARFs on behalf of individuals to make returns to Revenue in relation to the number of ARFs under management or the value of ARF assets held by them. I am further advised that, as the income tax take from actual drawdowns from ARFs forms part of the total income tax take and is not readily identifiable within that overall income tax yield, it is not possible to provide the data requested by the Deputy.
Separate tax collection data is available on the tax paid by QFMs on imputed or notional distributions from ARFs and "vested" PRSAs. The deemed or imputed distribution arrangements were introduced in Budget and Finance Act 2006 to encourage drawdowns from ARFs and 'vested' PRSAs (to which the notional distribution arrangements were extended in Finance Act 2012) so that they are used, as intended, to fund a stream of income in retirement. The imputed distribution arrangements, under which a percentage of the value of assets in an ARF or "vested" PRSA is deemed to be distributed each year (unless sums equivalent to that value are actually drawn down), are not intended to nor do they give rise to significant tax revenues as they do not apply to actual draw-downs from ARFs and 'vested' PRSAs which are taxed in the normal way. By way of indication, the amounts received by the Revenue Commissioners from tax paid on imputed distributions has averaged about €4 million per annum in the period 2007 to 2013.
178. Deputy Michael McGrath asked the Minister for Finance his views on following the example of the UK in exempting charity music sales, including the recent Band Aid 30 single, from VAT; and if he will make a statement on the matter. [45886/14]
I would first of all say that I have not received any requests or proposal in relation to the VAT treatment of the Band Aid charity single.
In Ireland charities are exempt from VAT, which means they do not have to charge VAT on the goods or services they supply, such as CDs, but in addition they cannot claim back the VAT charged on the costs associated with their charitable business. In this case, where a charity produces a CD and supplies it themselves, it will be exempt from VAT in Ireland. However, where a charity makes an arrangement with a CD distributor to supply the charity CD on their behalf, then the CD sales are liable to VAT at the 23% VAT rate.
The situation is different again in the case of electronically supplied music. Under the current rules which apply until 31 December 2014, supplies of music, including charity singles, within the EU are charged to VAT in the Member State of the supplier. In this case, if the Band Aid single is being supplied from the UK, UK VAT rules will apply to that sale. Supplies of electronically supplied music into Europe, for the most part, are made from Luxembourg, where the VAT charged on these sales is at the standard VAT rate applying in Luxembourg. From 1 January 2015 the place of supply for electronically supplied music, including charity singles, will be the place of the consumer, and as such sales of electronically supplied music to Irish consumers will be liable to Irish VAT. In all cases, the standard VAT rate is the VAT rate charged on CD and electronically supplied music.
The VAT treatment of goods and services is guided by the EU VAT Directive, with which Irish VAT law must comply. Other than where supplied by a person who is exempt from VAT, such as a charity, the VAT Directive does not make provision for exempting from VAT the supply of CDs or electronically supplied music, whether the supply is for charitable purposes or not.
With regard to the UK Government's press release agreeing "to waive VAT on sales of the Band Aid anniversary single", from a technical perspective, and given EU VAT constraints, it is not clear what specific arrangements are being proposed by the UK, nor what arrangements are in place between the Band Aid charity and the distributor of the charity single in this regard.
179. Deputy Michael McGrath asked the Minister for Finance if he will provide all unpublished reports in the possession of his Department relating to matters arising from the banking crisis; his plans in respect of publication of these reports; and if he will make a statement on the matter. [45887/14]
I am aware of a number of reports that have been produced by third parties in relation to matters arising from the banking crisis which remain unpublished at this time including those produced by McCann Fitzgerald and Ernst and Young in relation to governance matters in INBS.
I have been advised that given the on-going nature of the investigations by the Authorities, including in particular the investigation being conducted under the Central Bank's Administrative Sanctions Procedure into historic lending practices at INBS, the reports cannot legally be published at this time. Publication of the reports may be considered when those proceedings are concluded or when any Garda investigation has been finalised (or any proceedings arising from such investigation are concluded).
180. Deputy Michael McGrath asked the Minister for Finance the licensing costs incurred by off-trade alcohol retailers; and if he will make a statement on the matter. [45888/14]
I am advised by the Revenue Commissioners that section 43 and Schedule 1 of Finance (1909-10) Act 1910 provides for liquor licences and Section 59 and Schedule 2 of the Finance (No. 2) Act 2008 provide for the current rates of excise duty payable on these licences.
The 1910 Act provides for five types of retailer off-licence, i.e. spirits, wine, beer, cider and 'sweets'. The latter two licences are rarely issued as a beer retailer's off-licence entitles the licence-holder to sell cider by retail for consumption off the premises, whilst a wine retailer's off-licence entitles the holder of the licence to sell 'sweets' by retail for consumption off the premises.
Liquor licences must be renewed annually. Each off-licence type costs €500 and the duty is charged presently on a standard, flat-fee basis. Therefore, a typical off-licence selling wine, sprits and beer will pay licence duty of €1,500 annually.
181. Deputy Robert Dowds asked the Minister for Finance the amount of corporation tax in total collected by the State in the years 2009, 2010, 2011, 2012 and 2013. [45913/14]
182. Deputy Robert Dowds asked the Minister for Finance the amount of corporation tax collected from the pharmaceutical sector in the years 2009, 2010, 2011, 2012 and 2013. [45914/14]
183. Deputy Robert Dowds asked the Minister for Finance the amount of corporation tax collected from the ICT sector during the years 2009, 2010, 2011, 2012 and 2013. [45915/14]
184. Deputy Robert Dowds asked the Minister for Finance the amount of corporation tax collected from the financial sector during the years 2009, 2010, 2011, 2012 and 2013. [45916/14]
I propose to take Questions Nos. 181 to 184, inclusive, together.
I am advised by the Revenue Commissioners that the information requested by the Deputy in relation to the amount of Corporation Tax collected by the State is published on the Commissioners' Statistics website http://www.revenue.ie/en/about/statistics/index.html under "Revenue Net Receipts by Taxhead on an Annual Basis". Sectoral analysis of these receipts, in so far as they are available, is also published on the same Revenue webpage under "Revenue Net Receipts by Sector".
Earlier years can be located at http://www.revenue.ie/en/about/statistics/index.html under Revenue Statistical Reports 1996-2012, in the "Total Revenue" chapter.
Updates to these statistics will be published in due course.
185. Deputy Robert Dowds asked the Minister for Finance the total cost to the State of corporation tax write-offs for all companies in the years 2009, 2010, 2011, 2012 and 2013. [45917/14]
186. Deputy Robert Dowds asked the Minister for Finance the total cost to the State of corporation tax write-offs for companies in the pharmaceutical sector in the years 2009, 2010, 2011, 2012 and 2013. [45918/14]
187. Deputy Robert Dowds asked the Minister for Finance the total cost to the State of corporation tax write-offs for companies in the ICT sector in the years 2009, 2010, 2011, 2012 and 2013. [45919/14]
188. Deputy Robert Dowds asked the Minister for Finance the total cost to the State of corporation tax write-offs for companies in the financial sector in the years 2009, 2010, 2011, 2012 and 2013. [45920/14]
I propose to take Questions Nos. 185 to 188, inclusive, together.
It is assumed the Deputy is referring to the cost to the Exchequer of the main tax reliefs available to companies. The following table shows the estimated cost, on a straight line arithmetic basis, of
- Section 766 Research and Development Credit;
- Section 486C 3 year Start up Relief;
- Section 291A Intangible Asset Relief;
- Section 285A accelerated capital allowances for energy efficient equipment;
|
Year |
Research and Development Credit |
Start up Relief |
Intangible Asset regime |
Energy efficient Capital Allowances |
|
- |
€m |
€m |
€m |
€m |
|
2009 |
216.1 |
n/a |
1.2 |
1.6 |
|
2010 |
223.7 |
4.6 |
20.3 |
0.6 |
|
2011 |
261.3 |
6.8 |
76.2 |
1.3 |
|
2012 |
281.9 |
5.5 |
108.0 |
1.0 |
An estimated cost for Section 486B Renewable Energy Relief is not included to protect the confidentiality of the information of the relatively small number of taxpayers using this relief.
The table does not show the cost of other Corporation Tax deductions such as normal capital allowances, losses, etc., as they would not generally be considered "write-offs", rather they are a standard part of the tax computation of most countries to calculate taxable income.
I am advised by the Revenue Commissioners that a sector specific breakdown of these reliefs is not readily available.
189. Deputy Robert Dowds asked the Minister for Finance the number of companies which paid an effective corporation tax rate of less than 10%, that is, a rate of less than 10% after tax write-offs are taken into account; and the proportion of the total number of companies this is. [45921/14]
190. Deputy Robert Dowds asked the Minister for Finance the number of companies which paid an effective corporation tax rate of less than 5%, that is, a rate of less than 5% after tax write-offs are taken into account; and the proportion of the total number of companies this is. [45922/14]
I propose to take Questions Nos. 189 and 190 together.
I would like to point the Deputy to a paper published on the website of the Department of Finance titled Effective Rates of Corporation Tax in Ireland: Technical Paper, April 2014, which comprehensively reviews the different methodologies that are used to calculate the effective rate of tax, and may be viewed at the following link: http://budget.gov.ie/Budgets/2015/Documents/Technical_Paper_Effective_Rates_Corporation_Tax_Ireland.pdf
As there is no single internationally agreed method of measuring the effective rate of Corporation Tax, it is not possible to compile the information requested by the Deputy.
However, the Deputy may be interested to note a piece of work that was carried out by the Revenue Commissioners as part of the Economic Impact Assessment of Ireland's Corporation Tax Policy, which was published on Budget Day. The paper titled Corporation Tax A Note on the Context and Concentration of Payments, is essentially a profile of corporation tax payments. It contains comprehensive analysis of the different component elements of Ireland's corporation tax revenue including a breakdown of tax paid by sector, location and concentration levels (by companies and corporate groups) in the period 2008 through 2012 (as 2012 is the most recent tax year for which full tax returns information is available). This document can be viewed at the following link: http://budget.gov.ie/Budgets/2015/Documents/Corporation_Tax_Context_Concentration_Corporation_Tax_Payments_Revenue.pdf
191. Deputy Pearse Doherty asked the Minister for Finance the effect of contract manufacturing on Ireland's exports in 2014; and the way his Department is calculating this effect and knock-on effects on growth and so on. [45930/14]
The issue of 'contracted production' and its impact on the Irish national accounts has recently gained some public comment. This phenomenon has been under observation for some time by staff of my Department. Indeed, the Economic and Fiscal Outlook that accompanied Budget 2015 contained a box on the issue to which the Deputy may wish to refer if he requires a detailed explanation of the impact of contracted production: (http://www.budget.gov.ie/Budgets/2015/Documents/141014%20Economic%20and%20Fiscal%20Outlook%20REV%202.pdf). However, it is important to stress that the contribution of contracted production to growth cannot be calculated with precision with the publicly available data to hand.
It should be recalled that large movements in GDP relating to activities of the foreign-owned sector in Ireland are not new. Foreign-owned firms are generally large, high-turnover enterprises concentrated in certain sectors. As such firm-specific and product-specific developments can have a bearing on measured GDP.
Notwithstanding these developments relating to contracted production, there is no doubt that economic recovery has gained momentum this year and that it has broadened to include a recovery in domestic demand. High-frequency data such as retail sales, industrial production and purchasing managers' indices (PMIs) are all in strong positive territory. Employment growth resumed in 2012 and the Live Register continues to fall month-on-month. This recovery has manifested itself in tax revenues which are expected to come in €1 billion (or 2.5 per cent) above original expectations.
Returning to the issue of contracted production, it should be recalled that it involves very little employment effect or second-round impact on the wider economy and complicates the task of forecasting net exports. As developments are sector-specific and product-specific they have the potential to unwind or accelerate with potentially large impacts on measured GDP. National accounts estimates for the third quarter of this year are due for publication in mid-December and will show the most recent developments in contracted production.
