Ceisteanna Eile - Other Questions

Brexit Preparations

James Browne

Ceist:

6. Deputy James Browne asked the Minister for Finance the steps he has taken to date and plans to take in preparation for post-Brexit customs checks at ports here, specifically Rosslare Europort; and if he will make a statement on the matter. [9766/19]

What steps has the Minister for Finance taken to date, and what steps does he plan to take, in preparation for post-Brexit customs checks at ports here, specifically Rosslare Europort?

I am informed by the Revenue Commissioners that in keeping with their role and responsibilities, they are strongly focused on facilitating the efficient and timely movement of legitimate trade post Brexit. During 2018, the Revenue Commissioners chaired an interdepartmental group established to consider the adequacy of port and airport infrastructure and facilities post Brexit. The group included representatives from the Revenue Commissioners; the Departments of Agriculture, Food and the Marine and Health; the HSE's environmental health service; the Department of Transport, Tourism and Sport; the Office of Public Works; the Department of Justice and Equality; and An Garda Síochána.

Regarding Rosslare Europort, the group identified the infrastructural requirements, including service and accommodation requirements. Following a Government decision in September 2018, the OPW was tasked with leading the engagement with relevant stakeholders with a view to ensuring that the necessary additional infrastructure for both the central case and the no-deal scenarios becomes operational in a timely manner. This work is ongoing towards having the necessary temporary facilities in place to cater for a no-deal scenario in March 2019 as well as permanent facilities in place by 1 January 2021.

As regards staffing and resources, I am advised that Revenue is on track to have appointed over 400 additional staff nationally to customs and related roles for Brexit during the period from September 2018 to 29 March 2019. Of these additional 400 staff, 30 are being assigned to Rosslare Europort. These additional staff will bring the total Revenue staff in that port to approximately 50 by the end of March.

I am also advised that on 30 January, Revenue, together with the Department of Agriculture, Food and the Marine, hosted a customs Brexit information seminar in Wexford town. This was part of an extensive trader engagement programme where it contacted traders who trade with the UK to highlight and work on the many issues that will be generated by Brexit.

I understand that the Government is set to use emergency planning powers to provide border inspection facilities to provide facilities for customs and agricultural inspections at Rosslare Europort. The OPW has either purchased or leased a 16-acre site at Rosslare Europort or is in the process of doing so in order to provide customs sanitary and phytosanitary inspections. Regardless of whatever Brexit takes place, the UK will attract third party status and sanitary and phytosanitary inspections will be required with regard to animals and fish one way or the other. Can the Minister confirm whether the purchase or lease is complete and can he outline in detail the timeline for planning, design and building of this facility? When will it become operational? Is it true that these facilities are meant to be only temporary? The Minister confirmed that in his reply. What is the timeline for providing permanent facilities? Did the Minister state that it will be 2021. Will he use emergency powers in terms of planning to provide those facilities?

I will be doing so in order to ensure that Rosslare Europort is at the right stage of readiness for dealing with a disorderly Brexit. I understand that the purchase of the proposed site has been completed. If I am wrong in that assumption, I will contact the Deputy about the matter in the coming days. However, my understanding is that its has happened. In the context of what will be located there, the plan is that there will be 13 inspection bays for trucks coming off ships, parking for 35 trucks, a dedicated area for live animals and a public office with counters and hatches to deal with the public. Additional office accommodation for an additional 90 staff will be also required within the port area. Regarding my comments about temporary to permanent, I am only using the word "temporary" because of how quickly we must do this work. My expectation is that it will become permanent.

The site that has been purchased is 2 km from the port. One must pass several exit roads to get to it. How does the Minister propose to ensure the integrity of the lorries leaving Rosslare Europort to get to the customs facility? Will customs officials be following those trucks? Will they be guiding them - one in front and one behind - to ensure that the goods actually get to the customs check and their integrity is protected once they get there for inspection or will it simply be an honour system? The access road down to the port has been desperately in need of an upgrade for the past few years. I am told that Transport Infrastructure Ireland and Wexford County Council have funding to provide an upgrade but that Iarnród Éireann is refusing to contribute. This is a matter into which the Minister might look.

Either way, this is not just a port. It is a very large community with approximately 1,500 people living in it. There is already chaos down there regarding trucks getting in and out of the port. What facilities will be put in place to facilitate the local community? What engagement with the local community in terms of providing these facilities and this road has taken place?

To answer the core question regarding how we will deal with the area between the port and where the checking will take place, a traffic management system will be required to do that. A system of automatic number plate recognition will be put in place to ensure that as trucks and other vehicles are leaving the port, we can track how and when they arrive in the area within which they will be checked. If that system is not in place due to the speed with which all this could happen, alternative systems will be put in place to ensure the integrity of the procedures that will operate at the port. I will follow up on the Deputy's comments about Iarnród Éireann's alleged unwillingness to invest in infrastructure that might be needed in order to discover whether there is a need for me to intervene.

Tax Reliefs Data

Joan Burton

Ceist:

7. Deputy Joan Burton asked the Minister for Finance the savings that will accrue to the Exchequer from the €1 million cap on special assignee relief programme, SARP, recipients; the reason this was not extended to existing beneficiaries to date in 2019; the number of persons who accessed SARP in 2017 and 2018, respectively; the tax cost in 2017 and 2018; the number of existing beneficiaries that earn over €1 million; and if he will make a statement on the matter. [9968/19]

This question relates to SARP, which is the tax break for executives, particularly those earning over €70,000. In 2016, the cost of that tax break rose to €18 million per year. It was availed of by nearly 800 executives. I am concerned about a number of very highly paid people getting very high tax reliefs. I know the Minister has capped it this year for new people and for existing executives from next year. Can he give us the figures for 2017 and 2018?

SARP continues to be an important incentive. As the Deputy is aware, under the Finance Act 2018, there is no change in the level of income tax relief available in 2019 for existing beneficiaries of the programme and the new cap of €1 million is scheduled to apply to such taxpayers from 1 January 2020. In bringing forward such an approach, I was mindful of the need to proceed in a balanced way that, on the one hand and on the basis of the most up-to-date data, sought to curtail the extent to which tax relief would be available and, on the other, recognised the need to proceed in a measured and considered way in respect of those who have already taken decisions to relocate to Ireland on the basis of the programme as it applied up to the end of 2018.

It is not possible to accurately quantify the savings that will accrue to the Exchequer from the €1 million cap as this requires an estimation regarding the number of new applicants to SARP in the course of 2019 and their individual salary levels. However, curtailing the level of income tax relief was not only about prudent management, it was also about addressing the equity issues that arise from a small number of very high earners getting very significant levels of tax relief. The imposition of a cap at this level will have no effect for approximately 98% of SARP participants based on 2016 data. For example, in 2016, there were only 18 individuals out of a total of 793 with annual salaries in excess of €1 million; in 2015, there were such eight individuals out of a total of 586; and in 2014, there were such two individuals out of a total of 302.

The information provided by the Minister suggests what I always felt about SARP, namely, that it is one of those schemes sold off the shelf by accounting and law firms around the world so people who are interested in tax avoidance might now be using Ireland for that purpose. In 2016, the scheme had some four people who earned over €3 million. Therefore, effectively, their contribution in terms of tax payable stopped at €1 million. This was worth at least €600,000 per year to each of those four people.

The Minister referred to tax justice and tax equity.

It is wrong. I can understand why Deputy Michael Noonan favoured this so much as it was very much his contribution to tax policy in 2012, when there was no activity at all in Ireland. However, it is time this scheme was drawn in.

As I said, it is precisely because of the concerns the Deputy has just articulated that I have decided to make this change. In terms of its revenue impact, in the grander scheme of what we collect, I expect it will make a small contribution over time. I have decided this change has to be made on the grounds of tax equity. It was an appropriate and a correct decision at a point in 2012, when, as the Deputy said, the level of economic activity under way was very low and we were all working hard to try to attract more investment into our country, particularly jobs-rich investment. Having reviewed two aspects - first, the growth in the number of individuals who were in the scheme and, second, the growth in the number of individuals at the top end of the scheme and the amount of tax relief they were earning - I decided the reapplication of the cap was necessary. That is what I have done and I will review the impact of that cap on job attraction and job retention across 2019.

To refer to an earlier discussion, the view of the Dáil probably prevailed in regard to not increasing the cap of €500,000 for the top paid executives. In this case, there is merit in lowering the cap further to around the €500,000 mark. We are talking about somebody earning €1 million for whom the tax break will be worth the guts of €300,000. That is generous and could be minimised. We do not simply want to attract people to Ireland for the purposes of tax avoidance. We are also helping people in this situation with private school fees to the tune of some €5,000. We should continue this conversation so we get to a point where there is an equitable balance in favour of ordinary taxpayers.

I am happy to continue this dialogue with the Deputy and the committee throughout this year. The only objective of the scheme should be that we are providing support to individuals who play a role in either the retention or creation of jobs. Having evaluated the scheme against those objectives, I decided that the reapplication of the cap was needed in the context of the growth of the scheme, in particular the growth of a number of earners at the highest end of scheme. When I realised the amounts of that were involved in the relief as it stood, which the Deputy pointed out, I decided this change in policy was needed.

Question No. 8 replied to with Written Answers.

Brexit Issues

Joan Burton

Ceist:

9. Deputy Joan Burton asked the Minister for Finance the effect of a no-deal hard Brexit on customs clearance and other requirements for importing from the UK and Northern Ireland, respectively; his views on the implication of a no-deal hard Brexit for VAT and business; and if he will make a statement on the matter. [9967/19]

The Minister discussed Rosslare with Deputy Browne. Will the Minister provide details on the recruitment of customs clearance officials? All of these businesses will have to be revived in the context of even a difficult Brexit. While we are all still hopeful there will not be a hard Brexit, we will not know for a couple of months. There seems to have been relatively little recruitment overall of customs officials. The Minister might give us the details.

When the UK leaves the EU, it will become a third country from a customs perspective and the free circulation and free movement of goods between the EU and the UK will end. This will increase substantially the number of businesses that will have to complete customs formalities and other related obligations for trade with the UK and through the UK landbridge to the EU. This will present a significant challenge for many of those businesses which, up to now, have not had any experience of third country trade and customs formalities.

I am advised by Revenue that a priority for it is to facilitate the efficient movement of legitimate trade in the new trading environment. It has undertaken an extensive trader programme and has written to all businesses that trade with the UK, highlighting the Brexit-related Revenue supports available to them, and it has invited them to a series of Brexit seminars where it outlined customs procedures and the steps that businesses should be taking to prepare for Brexit.

Revenue’s focus to date has been on east-west trade with the UK. As the Deputy will know, the Government has made it clear it is committed to avoiding the return of a hard border on the island of Ireland. In the event of no deal, there will be intensive discussions between the Government, the European Commission and EU partners regarding the customs formalities necessary for the movement of goods north to south.

In regard to VAT, under existing rules, when the UK becomes a third country, VAT on import will be chargeable at the point of importation unless the importer is approved to use the current deferred payment system, which allows approved traders to defer payment of certain charges, including customs and VAT at import, until the 15th of the month following importation.

I have included a measure in the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019 to allow for postponed accounting for import VAT. This is being introduced to alleviate the immediate cash flow burden for Irish traders arising from Brexit. Under this system, importers will not pay import VAT at the point of entry but will instead account for import VAT through their bimonthly VAT return.

Figures released last week by the Revenue Commissioners show that only 117 customs officers have been hired as part of the 3,000-person recruitment campaign. I simply do not understand that low volume. Taking into account the different ports and airports we are aware of, not to mention towns on or near the Border, 117 people would barely fill a one-day shift cycle at one large port or Border town. In Dundalk, the old customs premises seem to be pretty much totally refurbished, and the Minister might confirm this, given it is what everybody who has looked at this believes and is what everybody has been told. This is in the context of the changes that may happen post Brexit. The Minister might comment.

The commitments I gave in regard to figures for additional staff for the Revenue Commissioners were that an additional 400 would be recruited by the end of this March, and we will deliver that. A further 200 will then need to be recruited and, in turn, we will deliver that as well. The 3,000 to which the Deputy referred might be the number of people who applied for these roles. There was a high level of interest in this work and we have been able to build up a large panel of employees to do this work.

In regard to what the Deputy said about Border towns, in particular, we are not planning to have staff in place to facilitate the development of infrastructure on the Border. To address her point on the ports, it is worth bearing in mind that the additional staff we are talking about recruiting for Rosslare Port will mean a significant increase in the number of staff it would have available.

I am conscious of the fact that the Government is recreating a customs clearance industry and that particular new arrangements are being established which will utilise technology. Nonetheless, at each service point for Border-based transactions when crossing to or from the United Kingdom, there will have to be some kind of oversight, preferably electronic, and there will also have to be a physical presence with people being available to conduct inspections as required.

The same pertains to other people and veterinary inspectors in particular. During the debate on the Bill, there has been very little information from the Government, perhaps because the Minister himself has not been taking part. He has, however, been quite forthcoming this morning. Businesses along the Border are desperately worried. The head of Dublin Port showed the new booths there the other night on television. No one along the Border, though, knows what is going to happen. People are guessing.

We are not planning to have the same infrastructure in place at or near the Border as in Dublin Port. That is exactly what we are trying to avoid at the moment. On recruitment and the resources sought by the Revenue Commissioners to deal with the new customs procedures to be put in place, I have made those resources available. I gave an overview on Tuesday evening of the different sections of the Bill I am responsible for. As I stated some weeks ago in committee to Deputy Burton and other Deputies, if the Revenue Commissioners need additional resources beyond what I have made available to them, then I am very willing to engage on that. Deputy Burton made a valid point. This is the creation of a significant amount of new activity. I refer to the work of customs agents in particular. That work is going to be important in the days ahead and it is the kind of work that has not happened in our economy on this scale for decades.

Financial Services and Pensions Ombudsman

Pearse Doherty

Ceist:

10. Deputy Pearse Doherty asked the Minister for Finance his views on whether sections 44(2) and 50(3) of the Financial Services and Pensions Ombudsman Act 2017 are in need of amending (details supplied). [9848/19]

This question concerns the amendment and revision of section 44(2) and section 50(3) of the Financial Services and Pensions Ombudsman Act 2017. I am concerned about the interpretation of this Act which means that any court proceedings at all involving a consumer is enough for ombudsman's office to wash its hands of the complaint. I know of a case where proceedings were struck out by the court. Those proceedings were not related to the specific complaint made to the Financial Services and Pensions Ombudsman, but the office could not investigate the claim because of the interpretation of the Act. There is a need for this Act to be amended.

I thank the Deputy for bring this matter to my attention and the attention of the House. One of the functions of the Financial Services and Pensions Ombudsman is that he may advise and, as appropriate, make recommendations to the Government in respect of any proposed legislative changes concerning financial services or pensions.

I sought the ombudsman’s observations on section 44(2) and section 50(3) and he has not identified any difficulty with the operation of either section. Section 44(2) of the Act, among other things, prescribes that a complainant may not make a complaint to the Financial Services and Pensions Ombudsman, FSPO, where the conduct giving rise to the complaint is or has been the subject of legal proceedings before a court or tribunal. I need to stress that it is the conduct giving rise to the complaint that is referred to here. This is considered to be the right approach, as it would not be appropriate for the FSPO to become involved in an issue which has already been, or still remains, before the courts.

The FSPO provides an avenue for resolution of complaints about the conduct of financial service providers or pension providers as an alternative to the courts. It cannot undertake investigations in parallel to an issue which is being litigated or has been litigated before the courts. Subsections (1) and (2) of section 50 provide a counterbalance to this restriction. These allow the ombudsman to investigate a case where he believes the provider has initiated legal proceedings to frustrate an investigation. Section 50(3) prescribes that the ombudsman shall not investigate or make a decision on a complaint where "there are or have been proceedings (other than where the proceedings have been stayed under section 49) before any court in respect of the matter that is the subject of the investigation".

I do not accept the ombudsman's position. I find it quite surprising. I have worked with that office and I have introduced and passed legislation that impacts on that office. I am referring to a situation where a consumer has taken a complaint to the ombudsman. The complaint concerns payment protection insurance, PPI, and completely different from what was before the courts. What was before the courts was also struck out. It was not adjudicated upon. In response to the complainant, the ombudsman stated that although it noted the proceedings were struck out, nevertheless it took the position that the matter had been subject to legal proceedings. The PPI issue was not subject to legal proceedings and was not part of that case. An issue concerning this individual's mortgage was before the court, and because of that it was deemed, under these sections of the Act, that the PPI issue was before the courts. That was the case even though PPI issue was never adjudicated upon. It was simply struck out. It is unacceptable that where the courts have not ruled on the substance of an issue, the Financial Services and Pensions Ombudsman is locked out from engaging with the complainant.

Given the work the Deputy has done with the office of the Financial Services and Pensions Ombudsman, I hope he is aware, and I am sure he is, of how seriously that office takes its responsibilities and the important work it does in this area. The office has indicated to me that it does not believe there is a need for this change to the Act. All I have in the details supplied as part of this question is information on the policy issue as opposed to the particular case referred to by Deputy Doherty. If the Deputy, however, would be willing to share with me the specific details of the case, I will be happy to raise it with the Financial Services and Pensions Ombudsman and get a more detailed answer for him. From the work I have done with the ombudsman, and what that office has shared with me regarding how it does its work, I think it gets the balance right on the vindication of the rights of consumers and citizens. If the Deputy believes the office of the Financial Services and Pensions Ombudsman is being frustrated in its work in not following up on an issue that the Deputy takes seriously, I would be surprised by that and I will be happy to investigate the matter further for him.

I appreciate that and I will take up that offer from the Minister. This is a serious issue and not an isolated one. It is part of a broader concern. We are familiar with this legislation. I believe it was pushed, to a certain extent, to catch up with my own legislation at the time. It may have been slightly rushed. I think there is an issue with what is in the Act. Let us look, however, at the case and see how that applies. I am also conscious that the ombudsman’s office is under significant pressure. I hope it has the resources to help it deal with the cases before it. We learned last week, through a parliamentary question, that it has 1,200 tracker mortgage cases to deal with. About half of those cases are live and the other half are awaiting the outcome of an independent appeals process. That will put a huge burden on the office of the Financial Services and Pensions Ombudsman, given the number of cases to be dealt with at one time. I will give the details of this case to the Minister. If this is going to be the approach of the ombudsman’s office to cases, then I am concerned. Legitimate claims to the Financial Services and Pensions Ombudsman may be frustrated.

I have three points in response. Regarding the resources available to the office of the Financial Services and Pensions Ombudsman, I recently visited its new facilities located around the corner from the Houses of the Oireachtas. Those new facilities allow the ombudsman’s office to meet citizens and follow up on issues raised. It will also be possible for the Financial Services and Pensions Ombudsman to be involved in mediation on important issues brought to the office.

Turning to the substantive issue raised by the Deputy, it is not unusual for the ombudsman, and similar bodies, to state that it will not adjudicate on issues that are either in the courts or have been dealt with by the courts. That is because one of the roles of the Financial Services and Pensions Ombudsman is to try to provide alternative ways to resolve issues apart from having to go to court.

Third, as I have said, if the Deputy will give me the details, as he has said he will do, I will follow up on the matter. In my engagement with the ombudsman's office, I have found that it takes and discharges its responsibilities very seriously. I discussed with the ombudsman's office the specific consequences that may affect the organisation in trying to deal with the tracker mortgage issue.

Estimates Process

Thomas P. Broughan

Ceist:

11. Deputy Thomas P. Broughan asked the Minister for Finance if there will be more further revised estimates in relation to Budget 2019; if he is continuing to rule out a second Budget in 2019 in the event of a disorderly Brexit; and if he will make a statement on the matter. [9814/19]

When this Government started in 2011, we had a second budget - a mini-budget - that year. In 2009, we had a kind of major budget to address the deficiencies in the 2008 budget. If there is a general election this year, it is probably inevitable that we will have a second budget. After the revisions and rescheduling that we discussed in the House last week, is it not likely that regardless of what happens on Brexit, the Government, if it is still in office, will have to come forward with another budget?

The central scenario that is forecast in budget 2019, as prepared by my Department, is the assumption that the UK will make an orderly exit. This would involve a transition period being agreed that extends or replicates existing frameworks until the end of next year. In other words, it is assumed that the UK will remain in the Single Market and customs union during this period. The baseline forecasts for 2021 onwards assume the EU and the UK will conclude some form of trade agreement. It is clear that the impact of Brexit on the economy and the public finances remains highly uncertain. The timing and nature of the UK's exit remains unclear. As more information becomes available, my Department will update and publish its assessment in the stability programme update which will be submitted to the Commission in April. Additional information will be available at the time of budget 2020, which will be introduced in October of this year. This will enable the Government to design the appropriate budgetary policy response. As I have said before, there will not be an additional budget for this year. The appropriate policy response to a disorderly Brexit, in the short term, is to allow the automatic stabilisers to provide a counter-cyclical support for our economy.

Dr. Mark Cassidy, who is the chief statistician with the Central Bank, expressed surprise at yesterday's meeting of the Committee on Budgetary Oversight that in budget 2019, the Minister did not budget for a significant surplus as a cushion, given that we knew we were heading into some kind of Brexit and perhaps - hopefully not - a cliff-edge Brexit. Those of us who are interested in finance have had a chance to look at the European semester report, which acknowledges that the economy is continuing to strengthen but notes that the improvements in the budget balance are stalling. Most of all, we have had a continual history of under-forecasting. I am thinking particularly of the disastrous management of the national children's hospital. As I mentioned recently, I have been reading the Minister's management committee notes on risk factors. Given that these facts and issues are coming together, is the Department of Finance carefully managing expected expenditures or unknown expenditures this year?

I will take a supplementary question from Deputy Burton.

I would like to ask the Minister about the announcement he made regarding the new proposed treatment in respect of VAT and imports. Has he done an estimate of what the cost of this new treatment will be? What will be the impact on cashflows? How will it be accounted for? What are the expected cashflow implications? For how long will those implications persist? What does he expect the cost of that measure to be?

Three questions have been asked. As I have already said to Deputy Broughan, I am planning that there will be just one budget this year. That budget will be delivered in October of this year. We ended up moving to a very slight surplus of 0.1% last year. As I acknowledged at the time, that surplus was driven by corporation tax figures in November and December which came in even higher than expected. During the debates in this House on the two budgets for which I have been responsible, no Deputy has called on me to run a higher surplus. It has not happened yet.

I often compliment Deputy Boyd Barrett on the detail of the proposals he puts forward. I also argue that they would be disastrous.

They would involve a big surplus.

I do not recollect those policies yielding a surplus. If the Deputy ever holds the job of Minister for Finance, it is very unlikely that he would make the case for sustained surpluses within our economy.

I am sure the Deputy would be looking to spend the surplus immediately.

The Minister has set a challenge for the Deputy.

Deputy Burton asked how much the move we have made in relation to deferred accounting will cost this year. We do not have a figure for the cost this year, for the simple reason that if a disorderly Brexit takes place, it will clearly create economic costs and difficulties which we have tried to quantify. It is difficult for me to be able to say what exactly the mitigating effect of this move would be. The effect for this year is more likely to be a cashflow effect, rather than a cost effect.

We continue to hear ominous reports regarding the possibility of a no-deal Brexit, or something that incorporates elements of a no-deal Brexit. A week or two ago, Commissioner Oettinger told us that a no-deal Brexit would produce a general recession in this country that would be incredibly serious for indigenous industries like agrifood. The Governor of the Bank of England has said he expects something like a cliff-edge drop in growth - it could be 9% or 10% - which would bring us into major depression territory. I wonder what preparations, if any, have been made by the Department of Finance to have some sort of a cushion for such circumstances. I agree with my colleague that the characteristic shared by the budget proposals the Minister has received from the left every year is that they have all been well balanced. We have been prepared to come up with new taxes to balance our proposals. The key point is that the Department needs to be very ready.

There is a difference between a budget being balanced and a budget moving into surplus. I am quite happy to look at the different proposals and alternative budgets that Deputies submit to me. However, I do not recollect Deputies Broughan or Boyd Barrett ever saying we should raise money that we should not spend.

No, we have done so.

I stand to be corrected by the Deputy.

I will send it to the Minister

I am sure the Deputy will correct me if he is moving to a hawkish position on the national finances of the country.

We would spend properly in health, in particular. We would fund the health budget. We would also focus on housing.

If that is the Deputy's view, his surplus credentials are already weakening. I have outlined on a number of occasions all of the different things we have tried to do to deal with a no-Brexit scenario. In response to some earlier questions, I outlined where the Revenue is from a staff point of view and the work we are doing from an infrastructure point of view. A number of weeks ago, the Department of Finance published its forecast for what will happen to our economy in the event of a disorderly Brexit. The forecast points to an immediate and sudden change in our growth potential for 2019 and 2020.

Betting Regulations

I will allow Deputy Pearse Doherty to introduce Question No. 12, which is in the name of Deputy Maurice Quinlivan.

Maurice Quinlivan

Ceist:

12. Deputy Maurice Quinlivan asked the Minister for Finance if the review of the recent increase in betting duty and the examination of proposed alternatives will be accelerated in order to provide as much clarity as possible for the sector; and if he will make a statement on the matter. [9850/19]

This question relates to the increase in betting duty. I welcome the postponement of the VAT increase on food supplements because it represents common sense. We discussed this at the committee. We also discussed the impact the betting duty is having on the sector. A number of independent bookmakers have already closed. Others are saying clearly and seriously that there is no way they can trade through the year unless they know a change is coming. They know that a review is taking place within the tax strategy papers. Can the Minister indicate to the House when that work will be completed? Can it be separated from the tax strategy papers to give the industry certainty, one way or the other, about what is coming down the line?

The increase in betting duty from 1% to 2% and the increase in the betting intermediary duty rate came into effect on 1 January 2019. The last time the duty rate was increased was 1975. At 1%, betting duty was at an all-time low. Receipts from betting duty represented less than 1% of all excise receipts in 2017. It is likely that this will also be the case in 2018.

In the course of last year's Finance Bill process, I acknowledged that small independent bookmakers may have difficulty competing with larger bookmakers with retail and-or online operations. At the time I agreed to review an alternative proposal put forward by the betting sector. My officials are considering this proposal, including the compatibility of a core element with EU rules, and will set out analysis and options in relation to betting duty at the tax strategy group meeting in July. The papers will be published shortly afterwards.

While work on the review is under way and there has been engagement with the industry, we must ensure that any potential change in either the model or the rate is fully compliant with EU regulations. This work is now happening.

If it were the case that clarification regarding the proposal from the industry cannot be provided until July, I would accept that, but that is not what I am hearing. I understand significant work has gone on within the Minister's Department in respect of it. We welcome the fact that this is under review. I understand there has been significant engagement with different parts of the sector regarding their proposal but the issue is that bookmakers and their banks are saying there is no way they can continue to incur those losses month after month. Bookmakers are telling their banks that a change may be coming but the banks are asking when they will know that. Knowing in July or August is a bit late for some of them. We also have a scenario whereby some of the larger operators are poaching some of the best staff within these sectors because there is a knowledge within this sector that there is an issue with many small independent retailers. People who have been trained by and are loyal to those retailers are worried about their own future, and that is normal. The sooner we can give certainty to this sector one way or another, and I hope it will not be that the Government will not change its position but that it will legislate for the industry proposal, the better.

As I said, much work has already taken place regarding this issue. I thank the Deputy for acknowledging that. It is my intention to meet some representatives of the sector to have a discussion with them on the issue. I will not give a commitment at this point on how I will handle the tax strategy group papers because if I begin to pare out one sector or one issue from the entire process, the entire process runs the risk of being undermined. I am aware of some of the consequences this move may cause. It is difficult for me to disentangle the effect of this move from some of the broader changes that are taking place in this sector, but my officials are examining this alternative proposal and are looking at whether it is compatible with EU law. I plan to be in a position in the coming weeks to meet representatives of the sector and look at where this work stands.

If I may pick up on a different matter raised about the planned change on the tax on health supplements, this is a decision that was made by the Revenue Commissioners to allow more consideration of the issue. However, I want to highlight that they have emphasised to me their very significant concerns regarding the operation of that law in that sector. They have raised serious matters with me that will be further considered. I want to indicate to those in the sector that serious work will need to take place on this matter with the Revenue Commissioners, and I will be playing my part in that.

We welcome that, and that will be dealt with in detail in respect of the tax strategy group papers. I asked the Minister in committee whether it would be helpful if the Revenue postponed its implementation. He might answer whether that would be helpful.

The key area is in respect of the bookmakers. I would argue that this is different from some of the other work under consideration in terms of the tax strategy group papers because it comes from proposals to carry out this review that have been put and accepted by Government in the debate on the Finance Bill. That is different. There was no need for it to be tied into the tax strategy group papers although, all things being equal, that is where it should be dealt with. The issue is that there is uncertainty. The Minister acknowledged in the debate on the Finance Bill that this would lead to job losses, however they can be quantified. There is no doubt that it will put additional pressure on a sector already under pressure and under restructuring. If clarification on state aid rules comes from Europe and if the Department is in a position to identify a recommendation to change the position on betting duty, will the Minister indicate that to the industry, if it is available to him, prior to the publication of the tax strategy group papers?

The Deputy is looking for certainty on behalf of businesses that want to be able to offer certainty to their employees or to those providing funding or lending to them. He is then asking a hypothetical question about what I might do. All I will commit to doing at this point is continuing work that is already under way. My officials and my Department have done a lot of work in this area. At an appropriate point, I will then meet those who are involved in the industry itself.

Property Tax Review

Richard Boyd Barrett

Ceist:

13. Deputy Richard Boyd Barrett asked the Minister for Finance if he will provide a progress report on the plans to review the local property tax; and if he will make a statement on the matter. [9763/19]

As the Minister knows, People Before Profit opposes property tax, full stop. We believe the Minister would raise more money and it would be fairer to introduce a wealth tax and would help to get a budget surplus. However, given that property tax exists, he had promised a review at the beginning of last year and said people were deserving of certainty as to the future plans for property tax. Given the dramatic increase in property values and the potential for huge increases in people's property tax liability, what is happening with the review? What can the Minister tell us about what is coming down the line?

A review of the local property tax, LPT, is being carried out by the Department of Finance in conjunction with the Departments of the Taoiseach, Housing, Planning and Local Government, Public Expenditure and Reform and the Revenue Commissioners. The terms of reference require that in conducting the review, the review group is to have regard to the principle of achieving relative stability in the LPT payments of those liable for the tax and provide clear direction on the likely payments faced by households in 2020. This is to inform me in regard to any actions I may recommend to Government concerning the overall yield and its contribution to total tax revenue.

The review group was asked to look in particular at the impact on this tax of property price developments since the original valuation date of 1 May. I expect the review to include an examination of the outstanding recommendations of the 2015 Thornhill review of the local property tax. A public consultation process was conducted on this.

I expect to receive the final report of the review shortly. Once I have considered it, I will bring the report to the attention of Government with proposals for the next steps.

I want to make a few points. First, I believe the Minister owes it to transparent and accountable Government to tell people what will happen with property tax before the local elections. It would be a bit of a scam to wait until after the local elections and then see massive hikes based on the November revaluation date, which is promised.

Second, I would point out to the Minister that there were two major justifications for property tax at the time it was introduced. The first was that it would control property values and stop property bubbles happening again. It clearly failed to achieve that. The second is that it would give extra revenues to local authorities. I want to read a sentence from the Dún Laoghaire-Rathdown transport roads project document. It states: "Since 2015 these grants [the grants from the Department of Transport, Tourism and Sport] were replaced by Local Property Tax income, and, up to 2018, this has resulted in a reduced income to Roads Maintenance of approx. €500K". It has failed to control property prices and it has led to a reduction in the moneys available to local authorities.

What we have seen is a change in property prices. I am well aware of the consequences of all of that and of the concern it has caused for many regarding their future bills. The revaluation date is November. The bills are not due until next January. I will fulfil the commitment I have given to provide clarity and certainty on the matter.

Regarding the impact it has had on local government funding, I believe it has made an important and significant difference to local government funding but it is a decision of all councillors whether they want to increase or decrease it. That in turn has an effect on the resources available to their local authority.

Written Answers are published on the Oireachtas website.