Ceisteanna Eile - Other Questions

EU Budgets

Thomas P. Broughan


28. Deputy Thomas P. Broughan asked the Minister for Finance the position with regard to the proposed introduction of a budget for the 19 eurozone countries in the EU; and if he will make a statement on the matter. [25244/19]

The eurozone budget is a major project of the French President, Mr. Macron, and other European federalists. The meeting in Luxembourg seems to have been very disagreeable. I believe the Dutch finance Minister threatened to walk out after 12 hours of negotiations. At the end of it all, the meeting resulted in a budgetary instrument for competitiveness and convergence. What exactly is happening regarding the eurozone budget?

Last December, leaders of the euro area member states requested finance Ministers to work on the general features of a possible budgetary instrument that would be focused on competitiveness and convergence. This instrument will be open to members of the euro area and to member states currently outside the euro area who are preparing to join the euro. Its aim is to support reform and investment projects that strengthen competitiveness and convergence in the euro area.

Leaders agreed last December that the size of the budgetary instrument would be agreed in the context of the wider negotiations for the post-2020 multi-annual financial framework, MFF, and agreement on the general features would be a step in putting this in place.

At a meeting of the Eurogroup in inclusive format on 13 June - in other words, non-eurozone finance Ministers were present - my colleagues and I agreed on a term sheet that outlines the general features, representing the culmination of six months of work on this proposal. We agreed on the general principles underpinning the budgetary instrument and on its key features. We also agreed that the size of the financial envelope for the instrument would not be determined until it is discussed within the context of discussions on the wider MFF. This is not due to take place until we have had further discussion on the MFF, most likely in the autumn.

On 21 June, this week, the Taoiseach and leaders of the other euro area member states will participate in the euro summit and will be updated on progress we have made.

I was present for the whole meeting on 13 June, which lasted until 4.30 a.m. on Friday. It was a difficulty meeting at times but it was not disagreeable. There was appreciation of all that we need to find ways of strengthening how the eurozone is formed. It is a question of how.

Having a eurozone budget was always a key ambition of European federalists, such as President Macron. The aim is to have many budgetary decisions transferred to Brussels eventually. The Minister said that if we had this kind of instrument, his policy would be to have it anchored in the general EU budget. Is that the position? I note from reports of the meeting that we are included with the Netherlands, Austria and Finland as countries that take a very critical view of the proposal. What size is envisaged? President Macron obviously wanted a percentage of all European GDP. This involves a massive fund. This does not seem likely to be the case. It seems that it will be between €15 billion and €18 billion. What role will this House have, even after the meeting this week? Will we have a chance to make a decision?

On the policy background, it would probably be unfair to say this is a consequence of economic federalism. First, President Macron wants a stronger and more integrated Europe but he is as aware as many former French Presidents of the importance of national sovereignty. Second, with regard to the scale of the funding instrument, it is difficult to put a figure on it because there are very contrasting views around the table on how big it should be. Third, this is why I am putting forward the case that it needs to be inside our overall European budget. I am eager to avoid being in circumstances in which there is a need both to fund an increased European budget, which will be the case and in which Ireland will play a role, and meet another demand, the exact magnitude of which is difficult to quantify. That is why I hold the view, along with some member state colleagues, that it is better to deal with the funding in the context of our discussions on the MFF, which allows us to put a figure on what is required. I am always available to answer questions on this, particularly at meetings of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach and the Committee on Budgetary Oversight.

Are French newspapers correct in saying that finance Ministers have effectively approved the eurozone budget and that the European Council will now do so? In other words, have we embarked on this road? They seem very positive about the meeting, writing that President Macron has secured a victory and that we are going forward on this basis.

Regarding the size of the fund, I note that we are net contributors to the overall EU budget. That looks likely to be even more the case as the years go by. We may be significantly affected by Brexit. The Minister and his colleagues have spoken about infrastructural projects, stabilisation of economies and so on. Will this fund be of much value to Ireland? We will not be drawing down from it. In fact, it will principally go to some of the weaker and newer economies that may join the European Union, such as North Macedonia.

It is worth making clear that the eurozone's so-called budgetary instrument for convergence and competitiveness, BICC, will almost certainly only apply to countries in the eurozone. This has been at the heart of the debate on it. Regarding the claims of French newspapers, it is up to other countries' newspapers and governments to decide whether they have made progress on their national priorities. It has been agreed that there is value in putting an additional eurozone mechanism in place to help countries that get into difficulty. That is of value to us because we have learned that sharing a currency with other countries means we all depend on the strength of each other. That is why on balance there is value in a budgetary instrument like this. There is a "but". First, its funding has not been agreed; and second, its governance has not been agreed. They are matters in which we have a national interest and on which I will update the House as we move forward on this issue.

Irish Fiscal Advisory Council Reports

John Curran


29. Deputy John Curran asked the Minister for Finance the actions he will take on foot of the recent publication of the report of Irish Fiscal Advisory Council; and if he will make a statement on the matter. [25242/19]

The report recently published by the Irish Fiscal Advisory Council raises significant concerns about our corporation tax, particularly about what is considered to be in excess. The report specifically suggested that the Government needs to make a credible commitment to not using potentially short-lived corporation tax receipts for long-lasting spending increases. In light of that recommendation, can the Minister indicate what budgetary changes he will make and what budgetary approach he will take to avoid becoming reliant on the significant increases we have seen in corporation tax receipts?

It is worthwhile to begin the answer to that question by acknowledging what we have already done. That is why the change in the value added tax, VAT, rate for the hospitality sector was so important. That kind of base-broadening, which never happened in the past, is part of what we need to do to reduce our future reliance on the corporate tax stream. Moreover, for the first time our budgetary figures for this year are built on the assumption of collecting less corporation tax this year than we collected last year. The value of that will depend on our ability to keep expenditure in a better place than it was last year.

Regarding what we are going to do in the future, next week I will outline two things. The first of these is a process by which we aim to gain a better view of the sustainability of our corporation tax receipts. Second, if we stick to the current fiscal rules, the current health of our economy might lead to future expenditure decisions that might create the risk to which the Deputy refers. In my paper next week, I will outline different options for the management of that risk. I hope we can debate them in the House during the coming months, with a view to making a decision on them in budget 2020.

I thank the Minister for his reply. The Irish Fiscal Advisory Council suggested that somewhere between €3 billion and €6 billion of corporation tax receipts could be considered in excess. What figure does the Minister regard as in excess?

The Minister mentioned broadening the tax base, but the reality is that everything accounted for by the increase in corporation tax revenue has already been spent on current expenditure or an increased capital budget. Therein lies the challenge. How do we roll back from that? It was a significant increase. If there is a shock to the economy the reduction in corporation tax revenue might be very quick. It might not be phased in over several years. It is important that we deal with it. I am specifically interested in the range of €3 billion to €6 billion. How much of that does the Minister regard as in excess?

Regarding the degree of risk, the estimate of €3 billion to €6 billion out of the total figure we are collecting in corporation tax is very high. In regard to its future accuracy, I note that this figure is difficult to quantify at this point. This is because a global process is now under way that will change the background to corporate tax policy in all developed countries. What are we going to do about it? I am starting efforts to understand how much of the tax that we are collecting is likely to continue in future. The trade-off will concern the degree to which tax continues to be levied where value is located. The more we go in that direction the better it is for Ireland. As against that, certain decisions may be made at a global level regarding the relationship between where tax is collected and where consumption occurs.

I thank the Minister. There are two sides to this coin. We obviously cannot continue to spend the full amount we claim in corporation tax, because the Minister clearly recognises it is not a sustainable source of tax. We cannot build an economy on that in the long term. That presents a short-term issue. What will the Minister's approach to the next budget be? Up to now we have been using our corporation tax revenue for current or capital expenditure. We have seen significant overruns. I really do not want to get into the detail of the national children's hospital, but we cannot have overruns like that if we are trying to cut back on capital spending. Finally, the Minister mentioned putting funding into the rainy day fund for Brexit, which is something I support. The following question must be asked. Should more of the surplus accounted for by corporation tax revenue that is considered to be in excess be put into that fund to address the inevitable cyclical change?

The first and most important thing we can do is run a surplus in our national finances. We will run a surplus this year, provided that we continue to deliver our expenditure plans as we did up to the end of May. If we deliver that surplus it will represent 0.2% of our national income, approximately €600 million of revenue, which we will not spend. The best and most effective thing we can do is increase that surplus so that if there is a change we are not spending all that we collect. Deputy Curran has not done this in his questions today, but I must make one point. On one hand I increasingly hear Members of the Dáil saying we need to ensure we are not reliant on corporation tax receipts in future. I accept that. That is why we need to run a larger surplus. On the other hand, Members say we need to spend more in other areas. We cannot do both. We are in the middle of trying to strike a balance that is sustainable for our economy and for the Dáil. The short answer to the Deputy's question of what we can do is that we can increase the surplus in the national accounts.

Insurance Costs

Bobby Aylward


30. Deputy Bobby Aylward asked the Minister for Finance the measures taken to meet and engage with insurance companies regarding excessive premiums being charged to consumers particularly in counties Carlow and Kilkenny; if he has investigated the possibility of opening up the insurance market here to new providers in order to increase competitiveness in prices charged for motor insurance; and if he will make a statement on the matter. [25241/19]

I would like to ask the Minister for Finance what measures have been taken to meet and engage with insurance companies regarding excessive premiums charged to consumers, particularly in counties Carlow and Kilkenny, and whether he has investigated the possibility of opening the insurance market here to new providers in order to increase competitiveness in motor insurance. I would like him to make a statement on the matter. I would also like to raise the issue of green cards after Brexit. What will be the situation for people who want to do business in the North?

Many people are not aware that they must have green cards post Brexit. Who is responsible for issuing green cards? If someone wants to do business with a company, will a card issue automatically? What is the position? There should be a campaign to make people aware of what will be required because I do not think they are aware at present.

As outlined to the Deputy in previous responses to parliamentary questions, the stakeholder consultation formed the foundation upon which the two primary reports of the cost of insurance working group were developed. The consultation process involved a wide range of stakeholders representing different voices within this sector, including representative bodies, the major individual motor insurance providers and interest groups. The impact of excessive premiums being charged to consumers from all counties was a feature of the engagement with industry.

Let us put this in context. I recently met representatives of Insurance Ireland. The question about the profits of companies has been raised. The profitability of the 17 insurance companies for 2017 was over €200 million. To date, only three companies have reported profits for 2018 of that level. The other 14 companies have not yet reported their profits. The have already reached or gone close to the full level of profits for the previous year. The sector will be highly profitable to the tune of hundreds of millions of euro. I have stated clearly and openly to Insurance Ireland representatives that they need to correspond and speak with their members. I have said that profitability needs to be passed on to premium holders at every level, including motor insurance and all other premium holders, excluding non-life.

Good faith has been shown in this Chamber by Deputies Michael McGrath and Pearse Doherty among others. We have received co-operation in passing legislation. We passed three Bills last year and one Bill this year. I hope we will get more through. The Minister for Justice and Equality is working on the Perjury and Related Offences Bill and there are Bills proposed by Deputies Michael McGrath and Pearse Doherty. Good faith must flow in both directions. The cost of premiums must be reduced in all of the different areas immediately rather than having to wait six or 12 months to see what happens with the report from the Judiciary and the Judicial Council Bill.

The cost of motor insurance is simply unsustainable. Although the Minister of State provided some facts, I would go so far as to call it daylight robbery of our citizens. Sole traders and small and medium-sized business operators in the taxi and bus transport business are being pushed to the pins of their collars at a time when more people are out spending. They should be experiencing an increase in business.

A car is also important for young people, especially those living in rural areas. They need cars in order to get to college, to work and to social occasions. In addition to NCT costs, the cost of driving lessons and taxes on fuel, they are expected to pay a small fortune on motor insurance. The cost of insurance also affects working families and older people who, in many cases, have never made a claim previously but nevertheless experience increases.

I acknowledge that there has been some levelling out but we need to grasp the nettle and take more definitive action. We must examine the possibility of opening up the insurance market to new providers and increasing competitiveness. That is why I am asking about new providers. Ireland is a part of Europe. Why not open up to new providers and force companies to bring down their insurance costs?

It should be noted that the nature of the EU Single Market is such that insurance undertakings authorised in other member states are allowed conduct business in the Irish market on either a freedom of service basis or a freedom of establishment basis. Consequently, there are no restrictions preventing companies entering the market here if they wish.

I will highlight some facts. Motor insurance is down 24.5% since the peak. Deputy Aylward asked about green cards. I have a concern about green cards. Insurance companies have informed customers who require green cards to enter Northern Ireland that if there is no deal, they should apply in writing and the cards will be sent out. A green card is effectively a certificate. I do not believe that is sufficient. Between now and 31 October, green cards should automatically sent with all policy renewals. I see no reason that cannot happen. For any policy not renewed within that period, the insurance companies should automatically send out green cards. That will deal with the matter once and for all. Subsequently, green cards should be sent with all renewed premiums. That is the way to deal with the matter in order to ensure that people will not end up getting pulled to the side of the road in Northern Ireland and being obliged to admit that they do not have the correct certification.

I do not accept that the cost of insurance policies is coming down. We can see the position on a daily basis from reading the newspapers. Voluntary groups in particular are suffering because of insurance. They are being crippled and will ending up closing down. Last week, the Irish Independent reported that insurance companies enjoyed a profit surge of over 1,300% in 2017. The article stated that new figures for the industry show that the 17 general insurance undertakings in the market made a combined operating profit of €227 million in 2017. That is the latest overall data for the sector. I accept that these figures incorporate insurance cover for homes, drivers and businesses but it speaks to a more important point. These insurance companies are making incredible profits. We are not seeing any savings whatsoever being passed to the consumer. That is the most important point. Consumers continue to be charged premiums that amount to daylight robbery. From 2013 to 2016 the average motor insurance premiums increased 70%. More premiums have fallen recently - I accept that - but they are still 50% above 2008 levels. We can talk all we like but the real action is happening and people are being screwed badly. Whatever form it takes, we need to do something.

The Government has been tinkering around with insurance costs for three years,. To be honest, a snail would be faster in addressing the issues. Young motorists in particular are affected, especially those under 25 years of age who may have been driving abroad. Many have full licences with no claims and so on. People working in family firms here are affected. Many of them are being charged thousands for their annual insurance. There is an extraordinary risk to the social fabric of society. We could see businesses closing and voluntary organisations unable to continue. The Minister of State seems to be merely promising us report after report. If I get an insurance quote at the moment and contest it, pretty quickly on the telephone most of the companies will give a 5% to 10% discount, if not eliminate the entire increase. It is an indication of how much money they are making if a premium of a policyholder increases dramatically but then, after a conversation, it can be dropped.

I am surprised that someone of Deputy Burton's experience knows so little about insurance. She delves in and out but she is never here when we are passing the legislation.

What is the Minister of State talking about?

The Minister of State is answering the question.

He is talking through his hat.

The Deputy delves in and out. The speed at which this is moving is the fastest at which I can bring it along. People may not be happy with that, but we have to deal with the structures that are in place. The Judicial Council Bill is the way forward. If we get it through at the end of this session, it will be a major benefit.

Anyone who accepts the calculations of the data for the increase in motor costs must accept that the same people have calculated the figures on the way down, in other words, a decrease. Deputy Aylward should note that we are doing everything we can. I have thanked those who have provided support from all sides of the House and in the other Chamber. I am thankful to the people who come in and help, but those who come and who want to hinder, like Deputy Burton, I do not thank at all.

The Minister of State is being an idiot once again.

I do not think that remark was really necessary.

Budget Measures

Pearse Doherty


31. Deputy Pearse Doherty asked the Minister for Finance when the review of betting tax changes made in budget 2019 will be completed; and if he will make a statement on the matter. [25529/19]

I am asking about the review of the betting tax and the urgency of this matter. Can the Minister for Finance put the reply on the record?

The increase in the betting duty rate from 1% to 2% and the increase in the intermediary duty rate came into effect on 1 January 2019. The last time that the betting duty rate was increased was in 1975. Since then, the rate had gradually decreased to 1%. It now stands at an all-time low.

In the course of last year's Finance Bill process, I acknowledged that smaller independent bookmakers may have difficulty competing with larger bookmakers with retail and online operations. At the time, I agreed to review an alternative proposal put forward by the betting sector. I have held numerous meetings with representatives of the independent betting sector and have met directly with companies to hear their views.

They have furnished me with a proposal and I am now engaging with the European Commission to ascertain whether that can be implemented. In the tax strategy group paper that will be published by the summer we will provide an update to the Oireachtas on the options on that issue.

The quarter 1 receipts and returns will show a big disparity because the independent bookmakers in which approximately 1,800 jobs are at risk have made the returns but have not been able to pay the 2%. I have raised this on several occasions with the Minister. I know we need to engage with the European Commission but I appeal to the Minister not to leave this until the autumn. If there is a way to signal to the industry that a change is coming, that will give them the confidence to go to their bank managers and hold on a little longer knowing they do not have to close down their shop. Many of these are in rural isolated communities. I would appreciate that.

I am aware of the impact of this change in the levy. We will track the tax collection as we move through the year. The purpose of the tax strategy group process is to indicate what options there are for budget day decisions.