Ceisteanna Eile - Other Questions

Mortgage Lending

Paul McAuliffe

Ceist:

4. Deputy Paul McAuliffe asked the Minister for Finance if his attention has been drawn to the fact that some financial institutions are declining mortgage applications in cases in which applicants are on the temporary wage subsidy scheme, TWSS; if there are measures he can take in relation to the matter; and if he will make a statement on the matter. [16281/20]

I had the pleasure this week of attending the launch of the latest phase of affordable housing with the Minister for Housing, Planning and Local Government, Deputy Darragh O'Brien. It is great for any politician who attends such events to see the pleasure of any young families in being able to purchase their own homes. Unfortunately, however, many young families now have a level of uncertainty concerning their applications to financial institutions and the drawdown of funding because their employer is availing of the TWSS. In his discussions with the banks, has the Minister drawn their attention to this matter? Have the banks given him information about the numbers of people impacted by this issue? Has he outlined to the banks that on the one hand the credit rating of employers that avail of the wage scheme will not be impacted but, on the other, we find that their employees are affected?

I absolutely appreciate the concerns many people are experiencing about mortgage applications and drawdowns at a difficult time, and my Department and I are maintaining close contact with the Central Bank and the Banking and Payments Federation Ireland, BPFI, as the lending industry works to address the difficulties Covid-19 is causing for both borrowers and lenders. The Central Bank has advised that it expects all regulated firms to take a consumer-focused approach and to act in their customer's best interests at all times.

In the context of mortgage applications, lenders continue to process applications and have supports in place to assist customers impacted by Covid-19. If customers have any queries or concerns about the impact of Covid-19 on their mortgage application, they should contact their lender directly or consult the supporting information document on the BPFI's website on the impact of Covid-19. However, subject to the regulatory framework, the decision to grant or refuse an individual application for mortgage credit is a commercial and contractual decision to be made by the regulated bank and it is not appropriate or possible for me to instruct lenders in that regard.

The regulations governing mortgage credit require lenders to make a thorough assessment of the consumer’s creditworthiness. The assessment must take account of factors regarding the consumer's ability to meet his or her obligations and it must be carried out on the basis of information on income and expenses. In regard to all of that, however, I welcome the recent statement from the pillar banks that mortgage applications from people in receipt of TWSS payments will be assessed on a case-by-case basis.

I thank the Minister for his reply. I understand the regulatory framework, but when my constituents, Derek and Sandra, attended my clinic last week and told me about their mortgage application, it was very difficult as a Member to explain to them why we have such a large stake in the ownership of many of these banks and yet they feel they are being treated unfairly. I accept the statement by the banks that there will be no delay, but I fear we are just pushing this process on to the next stage, because the issue my constituents had concerned their ability to draw down a previously approved mortgage. They have not been in any way impacted financially, they continue to receive the same remuneration from their employer and their employer assures them that there is no long-term financial difficulty, yet they are not able to draw down the mortgage. I urge the Minister to press the banks on both these issues.

We need to get a positive approach, particularly where the State has shareholdings in these banks. The TWSS will have to be extended. This will cause other issues for people who have had no reduction in their income, who are not at any risk of losing their jobs and who have paid a substantial deposit, amounting to thousands of euro, which they are going to lose as a result of the approach that has been taken by a number of the banks. The Minister needs to lay down the law as much as he can at that meeting tomorrow. I hope that he can then make a public statement to inform people as to what the approach of each of the banks will be after that meeting.

I understand the concerns of Deputy McAuliffe's constituents, Derek and Sandra. I want to be in a position to ensure that if a loan is made available to Derek and Sandra, they will always be in a position to be able to repay that loan without facing additional financial hardship or difficulty. We are all aware of the huge stress and anxiety that can also be caused by the development of debt and by issues relating to mortgage arrears, and I am looking to ensure that a balance is achieved between the granting of mortgages at this point and trying to avoid the difficulties of our very recent past. I reiterate to Deputy McAuliffe my view, which has been echoed by the banks, that this issue should be dealt with on a case-by-case basis.

Deputy Doherty will be well aware that many of the issues he is asking me to act upon are matters for the Central Bank of Ireland and are independent of me as Minister of Finance.

I thank the Minister and I accept his bona fides in this matter. As well as the responsibility that we have, and as someone who purchased a home in 2008, I know all about the issues relating to protecting those people who may not have long-term financial security. We also, however, have to ensure that we have a functioning housing market and that we continue to allow people who can to purchase a home. I thank the Minister and I urge him to maintain the pressure he is placing on the banks, both this afternoon and in the coming days.

I completely understand the issue that Deputy has raised. I again recognise the concern that many people have who have not seen their incomes change. The Deputy made a crucial point about citizens moving on to the income support wage subsidy scheme. In many cases, their income has not changed, which is one of the reasons we brought in the scheme. Even though the income has not changed, I am aware of the issue to which the Deputy is referring. I hope that the clarification given by the banks makes progress on that matter. If we do get to the point where the scheme is extended, then of course we need to ensure that an unintentional consequence of that is not the exacerbation of the issue the Deputy has raised.

Credit Unions

Gerald Nash

Ceist:

5. Deputy Ged Nash asked the Minister for Finance his plans for a new credit unions Act; his views on the recommendations from a recent report (details supplied) by an organisation; if he will amend the Credit Unions Acts 1997-2012 to allow additional financing for credit unions for social housing; and if he will make a statement on the matter. [16291/20]

Pádraig O'Sullivan

Ceist:

7. Deputy Pádraig O'Sullivan asked the Minister for Finance the timeframe for the review of the policy framework within which credit unions operate. [16285/20]

Brendan Smith

Ceist:

67. Deputy Brendan Smith asked the Minister for Finance if detailed consideration will be given to the issues raised in correspondence (details supplied); and if he will make a statement on the matter. [16384/20]

I congratulate the Minister for Finance on his appointment as chairman of the Eurogroup. I wish him well in his endeavours at what is, putting it mildly, an interesting time for our economy and the economy globally.

The ongoing situation regarding the Covid-19 penalty for mortgage holders who have taken a payment break and the treatment of mortgage applicants who are on the TWSS by the so-called pillar banks brings again into stark relief the need to develop a real alternative to the commercial banks. The credit union movement stands ready to fill this gap. The Irish League of Credit Unions, ILCU, has urged the Government to amend legislation so that credit unions can provide, for example, up to €900 million in funding for social housing projects. Is this something to which the Minister will commit to doing?

I thank the Deputy for his good wishes. I propose to take Questions Nos. 5, 7 and 67 together.

The Government recognises the key role that credit unions play in the delivery of financial services to local communities across Ireland, the need for which is now heightened. Credit unions account for approximately one third of the consumer credit market and are well positioned to provide credit to support our recovery.

The economic outlook arising by virtue of Covid-19, including reduced demand for new lending, has increased the challenges the sector is already facing.

As a result it was agreed that the credit union advisory committee would report to me on challenges and opportunities for the sector, including the consequences of Covid-19, and any relevant recommendations. I understand this report is complete and I expect to have it in a few days' time.

Several commitments in the programme for Government relate to credit unions. These will be expanded upon in the coming weeks and months by the new Government, taking into account work already completed such as the credit union advisory committee report noted earlier and a separate report on directors which was finalised in February 2020. I will take into consideration the report submitted to me by the organisation referred to by the Deputies in their questions and the views of other key stakeholders.

The questions also referred to social housing. Since 1 March 2018, credit unions have been permitted to invest in tier 3 approved housing bodies for the provision of social housing through a regulated investment vehicle. This could be up to the value of €700 million. As such, the Government and the Central Bank have now fulfilled their roles and it is up to both the credit union and social housing sectors to develop any specific funding mechanisms. I will, however, continue to engage with the credit union movement on this matter and on mechanisms that may enable a vehicle to be established to invest in AHBs.

More broadly in terms of engagement with the credit unions in recent weeks I have had two separate opportunities to meet all leaders of the credit union movement in Ireland to deal with and understand some of the issues Deputy Nash referred to. It is my intention to speak to them again, maybe as soon as next week, to continue to understand the impact of Covid-19 on their movement and the kind of issues we need to consider as a result.

I am pleased that some progress appears to have been made or is about to be made with the credit union movement. There is considerable potential that could be unleashed especially at this anxious moment in our economic history. Given the social importance of the credit union movement it is important that credit unions would have the opportunity to invest in social and affordable housing initiatives. The idea complies with their social and community ethos. We should remember that a considerable number of those saving with the credit union movement include those on local authority social housing waiting lists and those who will look to organisations like the credit union to support them as they move potentially to purchase a home.

Has the Minister considered, or will he consider, a new credit union Act to allow the credit union movement to engage in providing additional financial products to a broad market? Apart from the benefit of the community and social ethos of the credit union movement, we need more competitiveness in our banking system to provide value for the consumer.

I will comment briefly on the question about a new Act. I am not going to give a commitment now on new legislation until I know what the legislation would be needed for and its role. However, I am open to any changes that I believe can play a positive role in supporting the role of the credit union movement in Ireland.

Deputy Nash touched on two points that I accept. The first is the really important social and community role that members of the credit union movement play throughout the country. The second is the fact that we need to continue to try to find new sources of competition and diversity in how financial services and products are provided to citizens. I am altogether aware of the role the credit unions have played in supporting their members who were subject to income and job difficulties at what was, and continues to be, a difficult time for our country.

I congratulate the Minister on his recent appointment. It is a great personal honour for him and I know that he will do Ireland proud in Europe. I wish him the best of luck in his new venture.

I will follow up with a question. The Minister acknowledges that in the programme for Government there are various technicalities that we need to work out in respect of credit unions. There are also commitments to enable and support the credit union movement to grow and to support credit unions in the expansion of services to encourage community development. The Irish League of Credit Unions believes there is a disconnect under the policy framework between the Minister for Finance, who has official responsibility over credit union policy, and the Central Bank, which is responsible for regulation but which has no developmental role and no understanding of what the Irish League of Credit Unions terms the volunteer-led democratic organisation of the movement. Is that something the Minister can examine? Does the Minister intend to publish any terms of reference? If so, when?

I thank the Deputy for his good wishes. I will absolutely do my best to live up to my responsibility as Eurogroup president and to fulfil the mandate I have been given.

Deputy O'Sullivan put a question to me. I hope in the coming days to receive a report that will consider several of the issues the Deputy has touched upon. The Deputy asked about the relationship between the regulator and the credit union movement. There are always issues in the relationship between any part of our economy that is being regulated and the regulator. Yet, in my engagements with the Central Bank on regulation of the credit union sector I find the bank officials appreciate the difference between this part of the financial services sector in our economy and the larger banks and larger organisations. They recognise that and that recognition is reflected in the decisions I have taken on levies as well. When the report is available there might be an opportunity for me to return to the House with an update on the report and hear the views of Members on the future of the movement.

I have one other point. There is also a commitment in the programme for Government to develop funding options to deliver retrofitting with suitable retail partners such as An Post and the credit unions. I understand the Irish League of Credit Unions has been developing a deep retrofit loan product in recent months. It would be a positive step if this was advanced promptly. Will the Minister clarify where this is at?

Decisions on any individual products, such as the product Deputy O'Sullivan has referred to, are a matter for the regulator and the Central Bank. I am aware of work that the credit union movement is doing on this and on several other exciting ideas. I will find out the status of that product and I will report back to Deputy O'Sullivan on it.

Student Accommodation

Denis Naughten

Ceist:

6. Deputy Denis Naughten asked the Minister for Finance if third-level student accommodation providers that have refused to refund accommodation costs to students forced to leave college due to the Covid-19 pandemic will not receive State Covid-19 supports; and if he will make a statement on the matter. [16287/20]

No student accommodation provider should be able to avail of financial supports from the State if the provider is not prepared to refund students who have been forced to leave college early. This not only applies to private accommodation providers. The University of Limerick had to be shamed into refunding students. It is not good enough that students are not being refunded fees for half a semester despite the call from the Minister for Education and Skills that he would like to see private providers of student accommodation provide pro rata refunds to students.

I should make clear to the House that the issue Deputy Naughten has raised is frequently raised with me in my constituency and elsewhere.

Currently, there are no tax incentive measures specifically targeted at the providers of student accommodation. Section 50 of the Finance Act 1999 provided for a student accommodation scheme whereby expenditure incurred on student rental accommodation could be set against the rental income from the property and against other Irish rental income, thereby reducing the taxable income of the person incurring the expenditure. The relevant provisions in the Taxes Consolidation Act 1997 are contained in Part 10. That scheme has now terminated insofar as the termination date for incurring qualifying expenditure has now passed.

Deputy Naughten has raised the issue with me and I entirely accept the seriousness of the matter he is raising. I know the issue really matters to students and their families. Currently, no tax exemptions are available for the development of purpose-built student accommodation. Any tax reliefs that are now being drawn down are on the basis of decisions made in our past.

I am not in a position to change the nature of tax relief schemes that existed before this point or intervene in how they are being drawn down. I accept that the point raised by the Deputy is very important. As Minister with responsibility for finance, I do not have policies that are capable of dealing with the issues raised by him. They are matters for the Departments of Education and Skills or Housing, Planning and Local Government.

I accept the Minister's response, but numerous reasons are being given by this sector for refusing to provide refunds. The fact is that student accommodation is shared by between three and up to seven students, which makes it impossible for them to socially distance. Tax reliefs are still being claimed by more than 200 providers throughout the country. In 2017, 246 providers claimed the relief. They were given tax relief to build these facilities. Some of them got free sites and others will come back, cap in hand, under the PUP scheme, the TWSS or the rate relief scheme because they will be unable to rent this accommodation during the summer months. The Minister for Education and Skills has said that she cannot do anything about this and Deputy Donohoe has said he cannot do anything about this. The reality is that these businesses are pocketing the money of students who do not have it and something needs to be done.

I am being very clear that the tax relief that is probably at the source of the kind of support to which the Deputy referred was terminated in 2008. It is now gone from the tax code. There are currently no further tax exemptions available for the development of purpose-built student accommodation. It is a serious matter.

The Ministers for Education and Skills and Housing, Planning and Local Government have sought to make progress on this issue. If the Deputy thinks I may be able to help him to deal with specific issues concerning this matter, I am very happy to engage with him. If somebody is on the wage subsidy scheme, it is because we are trying to allow his or her job to be retained. If somebody is on the PUP, it is because he or she no longer has a job.

The reality is that some of these providers will avail of some of the Covid-19 supports that are being put in place, whether that is restart grants or rate reductions from local authorities. I put it to the Minister and his colleagues in government that a clear and unambiguous message has to be sent out from the entire Government that we will not tolerate a situation where private providers are not prepared to refund students. If they cannot show that they have refunded students, then they should not be eligible for other supports.

It is clear that the softly-softly approach has not worked to date, despite numerous requests by the Minister and other Ministers. It took a lot of time to get the University of Limerick to hold up its hands and refund students. We need private providers to do the same, and we need to roll up our sleeves on this issue.

The principle is that we are all in this together. Many, but not all, providers of student accommodation have done the right thing during this pandemic. It is clear that many others have opted out of doing that. The problem is that they are opting in to the supports. Some supports are structured in terms of companies that have people working for them in accommodation, and are being subsidised by up to €410 by taxpayers who are the mothers and fathers of those students that have been shafted by providers. Many providers are able to defer paying their taxes by a number of months because of issues with Revenue.

I agree with Deputy Naughten. We have to make it very clear, in words and otherwise, that this is not acceptable. If we are all in this together, then students who had to fork out a fortune for student accommodation that is not being used must be refunded. Some of the accommodation has been sublet. We need to examine how we can tell providers that, if we are all in this together, they will not get support payments if they will not play the game with students.

The level of support the two Deputies are referring to involve the breadth and speed that have made such a difference in protecting our country at a time of significant risk to jobs and our public health. When claims are being made about the future of those supports, let us also acknowledge that those supports were introduced by this and the previous Governments and have saved jobs and protected incomes at a time our country was at significant risk.

I listened to the suggestions put forward by the Deputies regarding the TWSS. A person working on repairs to accommodation for one of these companies may be in receipt of payments under the scheme. If the Government goes down the path of withdrawing the scheme, and a foreperson, carpenter or person looking after student accommodation loses his or her job as a result of that decision, will the two Deputies take responsibility for that? They will correctly say that it is the responsibility of the Government based on the decisions it has made.

The role of the wage scheme and its future is to keep people at work. The issues the Deputies referred to are very serious. Progress has to be made on them, and I will offer any help I can to the Ministers for Education and Skills or Housing, Planning and Local Government in that regard. I am not going to jeopardise jobs in our country through changing the scheme to deliver other objectives. I have to keep in mind that people in the companies to which the Deputies referred could depend on the scheme for their jobs. I have a duty to them.

Wage Subsidy Scheme

Louise O'Reilly

Ceist:

8. Deputy Louise O'Reilly asked the Minister for Finance if his attention has been drawn to employers that are paying their employees 70% of their wages using the TWSS but are making them work 100% of their former hours; his plans to address the matter to ensure that workers are paid for 100% of the hours worked; and if he will make a statement on the matter. [15751/20]

I join others in wishing the Minister well in his new role. Is he aware that in some instances employers are paying their employees 70% of their wages despite requiring them to do 100% of their work while availing of the wage subsidy scheme?

Deputy Paschal Donohoe: I thank the Deputy. I am advised by Revenue that the question of an individual’s entitlements in an employment context, and the question of what wages an employer may or may not be in a position to pay such an employee in light of the impact of the pandemic, are matters that are outside the remit of the scheme. The scheme has no role in the employer-employee relationship insofar as the terms, conditions and entitlements of the employment are concerned.

The TWSS is provided for under the Emergency Measures in the Public Interest (Covid-19) Act 2020. Of necessity, the legislation was developed quickly, having regard to the objective of getting financial assistance to employers and employees. It is predicated on the employer wanting to keep the employees on the payroll and retain them until business picks up. The amount of the subsidy for each employee is based on his or her average net weekly pay reported for January and February 2020. However, the employer is expected to make the best efforts to maintain the employee’s net income reflected in the average net weekly payment for January and February 2020 for the duration of the scheme. At the same time, there is no minimum amount that the employer must pay as an additional payment to be eligible for the scheme, but for Revenue operational systems reasons the employer will need to enter at least €0.01 in gross pay when running its payroll.

Finally, details of subsidy payments made by pay date are available to view in each employee’s myAccount record on Revenue’s online system. This facility allows employees to see whether their employer is participating in the scheme and being refunded a wage subsidy on their behalf. Where the amount of subsidy paid is available from the relevant employer payroll submissions made to Revenue, that amount is also displayed.

Employees can see that and they do not need to the Minister to point them in that direction. They see that their bosses are getting the subsidy and their wages have been reduced by 30% while their hours remain the same.

The Minister said he will ask employers to make their best efforts. Good luck with that because many of them do not seem to be making an effort. This is not a significant problem, but I am interested in hearing from the Minister if he has a view on whether this should be tackled.

Sinn Féin proposed the implementation of an income support scheme back in March but that was not the route the Minister went down. Of course, we supported the emergency measures. We recognised the need for those, but now that these have been implemented there is surely a case to be made for them to be monitored. Employees are logging on and can see that their employer is getting a subsidy. They note also that they are working 100% of their hours for 70% of their wages. Does the Minister have a view about that practice and what he might be able to do about it?

The very reason the temporary wage subsidy scheme was introduced was to protect jobs and income. It has had a massive effect in doing that. It is possible that employers, because of the financial circumstances they are in and concerns they might have about their viability, may work with their employees in efforts to protect the future of their company and the jobs of people working in that company. They may ask them to take voluntary pay cuts or to make changes to their work arrangements to protect jobs and protect the viability of their company. If that is to be done, it is to be done for one purpose only and that is to keep a job, to keep an employer in operation and to keep a firm in existence so a job is available tomorrow. That is the only reason those changes should be made, and I and the Revenue Commissioner have been clear that if we become aware that the temporary wage subsidy scheme is being used by employers for purposes other than that, they will be subject to enforcement action by the Revenue Commissioner.

The Minister talked about protecting jobs and that is important. The reason we supported the passing of the emergency legislation was to do exactly that, but not to protect jobs at all costs and not to protect employers who seek to exploit this scheme by claiming money from the State and forcing their employees to work 100% of their hours. It is all very well to say there should be an agreement between the workers and the management and the business owners, but what if that does not happen? These are vulnerable workers. They want to keep working but they are working for 70% of their wages, in some instances without their agreement. They have come to us, and I am sure to the Minister in his constituency office, to advise that they believe it is not fair that their employer is benefitting from a State scheme.

Does the Minister agree that this is an anomaly? Will he agree to examine this and to insert a clause into the scheme to ensure this cannot happen? I stress that it is in the minority of cases, but where it is happening it is not right and it should be stopped.

The purpose of this scheme is to protect jobs. That was the overriding objective I faced at the time that I introduced it. It is possible that companies are reducing the wages they are paying their staff because their revenue has gone down, they have lost clients and they are worried they might not be around tomorrow. That is the reality facing those who are working in those companies at the moment and those who own them. They are worried about their future and whether their company will still be around. Those people in those companies are deeply concerned about whether they will have a job. Therefore, it is possible in those circumstances that wages will be reduced for a period to give a fighting chance for the job to be kept and for the employer to continue into the future. That is the only reason that should happen. The purpose of the TWSS is not to facilitate wage reductions on behalf of employers who might have other motives. The purpose of the scheme to keep people in work.

The Member who tabled Question No. 9 is not here. We will move on to Question No. 10 in the name of Deputy Doherty.

Covid-19 Pandemic Supports

Pearse Doherty

Ceist:

10. Deputy Pearse Doherty asked the Minister for Finance the tax treatment of the Covid-19 pandemic unemployment payment and payments under the temporary wage subsidy scheme; the way in which liability will be calculated for 2020; the way in which it will be collected; the planned tax treatment of both payments in cases in which the liability due exceeds unused tax credits for 2020; and if he will make a statement on the matter. [16296/20]

I want to ask about the tax treatment of the temporary wage subsidy scheme, TWSS, the way in which the liability will be calculated for 2020, the way in which it will be collected and the planned tax treatment of the payments in cases in where the liability due exceeds the unused tax credits for 2020. This is a significant worry for workers whose employers are benefitting from the TWSS and who may potentially face paying a lump sum payment at the end of the year or over a short period of time into 2021.

I am aware this is a matter of concern to many who are participating in the TWSS. Even at the very point the TWSS was launched, I and the Revenue Commissioner were at pains to make this point clear.

I will answer the specific questions Deputy Doherty put to me. At the end of 2020 Revenue will have all available information for each employee who received TWSS payments. Revenue will also have details of any pandemic unemployment payment, PUP, made by the Department of Employment Affairs and Social Protection. The payment details from both schemes will be included against an employee's tax record and a preliminary end-of-year statement will be created that will show an employee's end-of-year tax and USC position, that is, his or her tax or USC for the year balanced or underpaid or overpaid.

If an employee is in an underpayment position he or she may be entitled to additional tax credits and reliefs such as health expenses. He or she will need to complete their 2020 income tax return online through Revenue's myAccount to claim any additional tax credits or reliefs. Revenue will collect any tax owing by reducing an employee's tax credits and rate band so that the liability will be collected evenly during 2021 and, indeed, possibly beyond that. Alternatively, should an employee wish to pay his or her underpayment in part or in full, he or she can make a payment to settle any underpayment through myAccount.

Revenue will adopt a fair and flexible approach to collecting tax due on payments made under the TWSS to avoid any undue hardship on employees.

This is one of the issues we addressed when the scheme was introduced. The scheme has been extended and will be extended again. It needs to be extended for affected sectors right out to the end of the year. However, if we take it that it will potentially run for 22 weeks, for those workers and employees who have benefitted to the maximum amount of €410, it is more than €9,000 in untaxed income from which they have benefitted. If it is extended, that figure will go up. There is a huge anxiety here because they do not know what this means. They do not know if the underpaid tax will amount to hundreds or thousands of euro at the end of the year. They have no way of calculating it. There is no online calculator for the Revenue, which I am suggesting to the Minister today. Revenue is extremely efficient and excellent in terms of the Revenue Online Service, ROS. A type of online calculator would be beneficial.

The Minister mentioned that it would be spread over 2021 and possibly beyond. When will a decision be made on whether it will be 2021 or whether it will go into 2022? What will happen to those employees who have their employment terminated either at or before the end of the year and who have an unpaid tax liability? Will they have to pay it in a lump sum? I have asked a number of questions but most important is the suggestion that we need an online tax calculator that will give examples of the potential liability across a range of individuals.

That is a very helpful suggestion because I am aware of the concern with regard to this matter. It is worth making the point that the whole purpose of this scheme being brought in is to keep a job, and the reason the payments in respect of it need to be taxed is that most social welfare payments are, in principal, taxable. It is important to maintain fairness in how income supports that are being made available for the State are taxed or are not taxed.

To deal with the substantive point the Deputy made, it is a good idea and I will talk to Revenue about it to see if we can provide clarity to individual taxpayers on what their individual circumstances could be.

On the Deputy's second question on whether a decision will be made on 2021 and beyond, I imagine the view of the Revenue Commissioner will be that the amount of time the taxpayer has to settle the outstanding liability could vary from taxpayer to taxpayer, depending on his or her circumstances and on the bill.

Regarding the Deputy's final point, if a person loses his or her job before the end of the year, I imagine that if there is a liability, it will travel with him or her as he or she moves into the next tax year regardless of what his or her job is, but I will double-check that. I will get back to him on it. I will also certainly consider the suggestion he made regarding a calculator.

I thank the Minister for taking up that suggestion.

The concern in this regard is there is a lack of awareness of what the liability will be for employees in the first instance. It could be substantial, particularly if it is extended. We also know that those benefitting mostly from the TWSS and the PUP are those in low-income sectors. Those hit hardest as a result of the pandemic are in hospitality and tourism, where the average income is quite low. In terms of accommodation and food, for example, their spend is just under €350. Other sectors, such as retail, are also /low income.

When these tax liabilities are spread over 2021, it means, in effect, a net wage cut for the employee. It is a cut in take-home pay because the person's tax liability will be higher. As the Minister discussed with my colleague earlier, employers are reducing wages as well. We can see from official figures that a 7% reduction in weekly take-home pay is the average. There may be a need to consider setting a maximum tax liability that an employee should have to take in a certain month. We need more clarity on this. In social welfare, for example, where there is an overpayment, whether it is a mistake by the Department or by the individual, a maximum amount can be deducted from a social welfare. We need to give certainty to employees that Revenue will not take more than X per week. Next year we will continue to deal with the pandemic. This will have an impact on take-home pay. Many of these employees are struggling week-to-week, whether with mortgage costs or rent costs, insurance costs, crèche costs, etc.

It is precisely because I understand that so many are suffering with costs relating to crèches, paying their mortgages and worries about their income that we brought in the wage subsidy and PUP schemes. When the Deputy refers to the anxieties of citizens and taxpayers, that is what motivated me, the previous Government and this one to bring in both schemes.

I am concerned about the Deputy's suggestion to set a maximum amount that could be due in dealing with tax liabilities under the TWSS because some participants are not on low incomes and are, in fact, middle-income workers, and they are on the scheme because we wanted to protect their jobs. For example, low-income workers can look at other people on the scheme and see that their income is quite a bit higher theirs. It is fair that we have a principle that if there is a tax liability due, the right amount should be paid by all. Bringing in a cap might get in the way of that.

It is not a cap. It is about ensuring the deductions by Revenue would be spread over a longer period.

That is also something that the Revenue Commissioners will want to look at but the answer I gave to the Deputy earlier is that the Revenue Commissioners will be flexible in how they implement this. He made the point, which I have often seen reported, about the concerns of those on low-incomes. While it is the case, I hope, by the scheme working that if a tax liability is generated for the future, it will be small. I am aware that small tax liability could form a large share of that person's income. I absolutely understand that. That is why we need to have flexibility in how this matter is dealt with.

I take the Deputy's point. If we can clarify the amount that is due, that could be helpful in helping taxpayers understand the scale of the liability, if one at all is due.

Covid-19 Pandemic Supports

Bríd Smith

Ceist:

9. Deputy Bríd Smith asked the Minister for Finance the steps he will take to ensure persons are not charged interest on loan or mortgage deferrals by banks and other lending institutions, specifically such institutions in which the State has shares, etc., during the Covid-19 crisis; and if he will make a statement on the matter. [16300/20]

Paul Murphy

Ceist:

16. Deputy Paul Murphy asked the Minister for Finance the actions he will take to stop banks charging interest on Covid-19 mortgage breaks. [16311/20]

I have been informed that I can take Deputy Paul Murphy's question and the earlier one. For the Minister's information, these are Questions Nos. 9 and 16. We are taking a step back to the previous question. Questions Nos. 9 and 16 were to be taken together and Question No. 16 is in Deputy Paul Murphy's name.

I thank the Acting Chairman. I want to ask about the banks and the rip-off that is currently going on of the 160.000 people who availed of a mortgage break. The banks, obviously, originally lied and stated that they had to charge interest before it was revealed that they did not have to. They have been choosing to charge interest costing a married couple on average over €6,000. The question is, what will the Minister do about it? How will he stop this rip-off?

It is due to my work, and work that was done by the banks, that the payment breaks are in place in the first place. These are 160,000 payment breaks. That means there are tens of thousands of mortgage holders availing of these breaks. I want to ensure that if this issue develops across this year, we are not in a position that any additional profit is being made from this and that these payment breaks and, in particular, the point at which mortgage holders exit from them, are dealt with carefully and fairly.

There are costs that develop from the implementation of these payment breaks. There are costs involved in bringing in payment breaks in the first place and these are costs that must sit somewhere. As they are being dealt with by the banks, it is important that those who are in receipt of them are clear about where they stand and about the kind of expense that might be incurred by them in the future, and that it is open to those exiting these payment breaks to move back onto a mortgage repayment schedule that is the same as the one they left in terms of the average monthly payment.

While there are concerns and debates around these mortgage breaks, the fact that they have been brought in has been a significant help to the many tens of thousands of citizens who need them, and we now need to look at how they can continue to be protected as we deal with the consequences of this disease.

What the Minister is actually saying is he will not do anything about this rip-off. He is saying that what is being done is good enough and people should be happy about it. He is saying that there is nothing he can do about a cost of more than €6,000 a year for a couple in which one or both have lost their jobs and who are facing a crisis situation and he is not even looking to do anything about it. He does not mind that the banks lied to him and lied to the public and that they are able to get away with that. That is simply not acceptable. It will not be acceptable to the people who are faced with paying that €6,000. We have a situation where there is partial State ownership of a number of banks but the Minister is not talking about using that State ownership or doing anything further to deal with this issue.

What I have done to support those who are facing the kind of pressures that the Deputy is referring to includes the wage subsidy scheme, the introduction of the PUP, the support that has been made available to companies to keep them in operation to keep them trading across that period. That is the track record of this Government and the work that I have done.

The payment breaks that have been brought in that are of support to tens of thousands of mortgage holders are a result of work that the Government and the Central Bank did in dealing with the banks. I reiterate my expectation, as I said days after this initiative was announced, that this is not an opportunity for profiteering, and that those availing of these mortgage breaks who need this support and who deserve help at a time of such difficulty should be treated fairly and transparently by the banks. I will focus particularly on what happens during the period in which these mortgage payment breaks come to an end.

It is not a case of what I have not done; it is a case of what I have done in supporting families at a time of such difficulty and supporting those who are paying these loans.

The Deputy's party leader, the Tánaiste, says that he does not fully trust the banks not to profiteer from this situation. The Minister is not even saying that. He is asking us to look at the good stuff the Government has done elsewhere rather than at the absolute scandal whereby banks were, correctly, pressurised to offer mortgage breaks but, when people took up those mortgage breaks because of the crisis, continued to load interest upon them. These are people who cannot afford to pay. The banks have scandalously lied to the Government and to the public. They suggested they had no choice but to charge interest. When this was exposed as a falsehood and it was shown that they had a choice, the Government's answer was that, while it cannot fully trust the banks, it is not going to do anything about it. It is an utter scandal and it proves the point that banks should be in public ownership and public control and that they should be run for the interests of society rather than society being run in their interests.

The Minister for Finance owns the majority shareholding in AIB and Permanent TSB on behalf of the Irish people and they, and other banks, pulled the wool over his eyes and over those of the Taoiseach. Last week the Taoiseach denied that the minutes were accurate. He has since clarified that point further. When did the Minister for Finance become aware that the banks did not need to charge interest, as they suggested at the meeting of 11 May? What has he done since? How will he ensure that the banks do not profiteer? Does he believe that Permanent TSB, in charging people an additional €6,300 on a loan of €250,000 over a term of 30 years which has not been extended, is not profiteering? I welcomed the payment breaks when announced but it was my understanding from my engagement with the financial system that the banks would not charge interest at this time. Every single person who availed of these breaks now has more debt and has greater repayments as a result. When did the Minister for Finance become aware of this situation? Does he believe the bankers misled him at the meeting of 11 May? I refer particularly to KBC, which was not charging interest for low-income households in Belgium at that time.

I became aware of the clarified guidance from the European Banking Authority, EBA, on this matter shortly after it issued. That is when I became aware of it.

Does the Minister mean last Tuesday?

I cannot remember the exact date but I became aware of it when it was published by the European Banking Authority. In dealing with the banks, I have made it very clear that it is critical that this period, when Covid is having such a great effect on the lives and incomes of our citizens, not be used as an opportunity to make additional profit. When we see the financial statements which the banks are to make available in a number of weeks' time - I am basing this on guidance offered by other companies - we will see that they are no longer making the kind of profit they made last year and in recent years.

May I come in again? I do not know what words to use to describe that response. The Minister is telling me that he first became aware of the situation when the EBA issued a clarification last week. Deputy Donohoe is the Minister for Finance. I do not know how many aides or advisers he has. He has a full Department at his disposal. The Central Bank published the letter it sent to me on 22 June on its website. I knew before 22 June, however, because of my engagement with the Central Bank. I wrote to the Central Bank at the start of June. I engaged with it before that. In my letter I pointed out that interest was not being charged in Spain or Belgium, countries which fall under the same EBA guidelines. That is why I wanted written confirmation. The Minister is giving the impression that he sat down with the banks, in some of which we hold the majority shareholding, and allowed them to spin him a yarn. He did not lift the phone to call the Central Bank to check what the situation was. He did not write to the Central Bank, as I did. It is obvious that nobody in his Department is looking at what is published on the Central Bank's website because it is there in black and white that banks do not have to charge interest and that doing so will not, in itself, create a risk of default or credit issue for the consumer.

I do not fully understand the allegation Deputy Doherty is making but I have stated again and again in responding to questions this morning-----

I am saying the Minister is not doing his job. I am saying he is asleep at the wheel.

My guiding interest in all of this is to protect and support the tens of thousands of families who are under pressure as a result of this pandemic. My track record in all of this is clear. I answered the Deputy's question regarding when I became aware of the engagement between the Central Bank of Ireland and the European Banking Authority earlier on. At that meeting, the banks made clear their understanding of the guidance that had been issued by the European Banking Authority. I knew that our Central Bank was engaging with the EBA on this matter. I wanted that engagement to take place. I became aware of the revised guidance from the European Banking Authority when it issued.

There was no revised guidance. The Minister should clarify the record. There was a clarification. On 22 June the Central Bank wrote to me-----

This was not actually the Deputy's question.

The Minister is completely asleep at the wheel. He has not protected the homeowners, who now have additional debt because the banks have charged interest. He has backed the banks on that.

The final question is in the name of Deputy Paul Murphy.

Deputy Doherty has made allegations in the Dáil.

Statements of fact; not allegations.

Hold on. This was not even Deputy Doherty's question. I am calling Deputy Paul Murphy.

My motivations have been repeatedly challenged. I point to the track record I have and the Government has in supporting families-----

Tell that to the families paying extra interest charges.

That is the action we have taken.

Covid-19 Pandemic Supports

Paul Murphy

Ceist:

11. Deputy Paul Murphy asked the Minister for Finance the way in which he plans to ensure that profitable companies do not benefit from significant corporate welfare in the context of supports being made available in the July stimulus. [16314/20]

My question relates to the upcoming July stimulus. In particular, how does the Minister intend to avoid giving large amounts of corporate welfare to profitable corporations? There are already profitable companies benefiting from the temporary wage subsidy scheme. One example is Aramark, which employs cleaners in Galway University Hospital. The company is benefiting from the temporary wage subsidy scheme and is paying its workers the minimum wage while getting paid the same amount as previously from the hospital. It is therefore getting money on the double. How will this and other corporate welfare be avoided in the July stimulus?

I will not comment on the affairs of any one particular company because its tax affairs and profitability are matters relevant only to it. The key point in regard to what Deputy Paul Murphy has just said is the thousands of people such a company employs. My guiding principle in the development of the wage subsidy scheme and the work we are doing is to protect those jobs, the families who depend on them and the future existence of such companies so that they can continue to employ people. That is the purpose of the temporary wage subsidy scheme. The criteria for accessing the scheme reflect that.

There are multiple companies in receipt of substantial State assistance in the form of the temporary wage subsidy scheme which are mistreating their workers. Dublin Airport Authority is attempting to lay off 1,000 workers and to replace them with agency staff. That is a State-owned company. Aer Lingus and Ryanair have also been attacking their workers. Does the Minister not agree that there needs to be basic conditions in the proposals for the July stimulus which would require companies availing of State supports not to undermine workers' wages and conditions? They could also require companies to be tax-resident in Ireland, which is to say, they would not be allowed to engage in massive tax avoidance. Such conditions could also require mandatory recognition of trade unions and access to trade union representation. These basic conditions should be met before companies are able to benefit from huge amounts of public money.

The whole purpose of the wage subsidy plan and the changes we intend to make to it is to keep people in work. The other issues to which the Deputy has referred are best dealt with in other Government policy decisions. The purpose of the wage subsidy scheme is to keep people in work and to ensure they have a job in the future. More than 400,000 of our citizens have kept their jobs and have a good chance of being able to keep them in the future because of this scheme. That is what it is doing. As important as these other matters are, Government has to deal with them in other ways.

If I was to remove the wage subsidy scheme and some of the companies to which the Deputy refers were then to stop employing people who are on the wage subsidy scheme, he would be accusing me in relation to that. It is my duty to put in place schemes on behalf of the Government that give the best chance possible for keeping people at work and allowing them a good chance to have their job in the future. That is what I and the Government will continue to do.

Written Answers are published on the Oireachtas website.