Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions

Banking Sector

Pearse Doherty


1. Deputy Pearse Doherty asked the Minister for Finance the correspondence or contact he has had with retail banks and the Central Bank regarding the use of allowances under the mortgage lending rules for mortgage applicants who are required a minimum deposit of 20% but have properties affected by mica and pyrite. [44865/21]

In June, thousands of homeowners and families affected by the mica and pyrite scandal travelled to Government Buildings in order to send a clear message, which was that they would not be forgotten. While I will ask the Minister about his involvement and responsibility in ensuring these families get 100% redress, I want to focus on families looking to move house because their houses are crumbling before them. However, since they already own a house that is mica-affected, they are required to have the 20% deposit. There is no equity in their houses. Has the Minister engaged with financial institutions, some of which he is a major shareholder in, to deal with this issue and ensure that they use the scope they have to make sure mica-affected families are properly addressed?

The Deputy already knows what the macroprudential rules are and how they are operated so I will directly answer the question he has put to me. With regard to my engagement with the Central Bank, the operation of the macroprudential rules is an independent function of the Central Bank and it is not appropriate for me to contact it on how it operates that policy. It is set and implemented by the Central Bank, through our banks. With regard to our retail banks, I want to underscore that this is a commercial decision made by those banks. They decide to whom and how they lend and what the terms of that loan are. I cannot influence or enforce what that will be; it is a matter for them to make.

That being said, I am aware of the huge importance of this issue in the many communities that have been affected by mica and I will, across the period in which the work of Government is being finalised on this, raise the issue with the banks.

I would appreciate it if the Minister would do so. While we do not expect the Minister for Finance, even where he is the majority shareholder in a bank, to tell it how to lend its money. I am sure there has been communication between the Department, if not the Minister, and some of these financial institutions on the motion passed by the House which called for 100% redress and that financial institutions would play their part in that. Will the Minister elaborate on whether that wider issue of a contribution from the banking sector, which will see its assets restored? If you have a €200,000 mortgage on a house in Malin Head, which is full of pyrite, it is not worth €200,000; it is not worth anything. Under the redress scheme, I hope, with 100%, it will go back to the original value. We have engaged with banks in the past about people buying remediated houses that were done under the mica scheme, but this is a separate issue in terms of making sure the leeway is used, especially for mica-affected families.

It is a separate issue and I am aware of its huge importance and the chronic stress and anxiety it has caused. While the Deputy recognised that I cannot influence a lending decision made by our banks, I will raise this issue in the coming weeks, in the context of the Government response to mica that will be put forward.

I appreciate the Minister will raise that specific issue which has affected many families who want to buy a second property. I have asked the Minister about the wider issue and given voice to the motion he supported in the House which called for 100% redress and that the financial institutions would play their part. Can he outline to the Dáil whether he or his Department have had contact with any of the banks with regard to their contributing to a scheme that will be announced later on this year?

To date, I have not had engagement with the banks on a contribution they may, or may not, make to a scheme such as this in the future. Obviously, there is an intensely important need that we have to strive to better meet on behalf of the communities for whom the Deputy is raising this issue and the families who do not have a home. The issue we will need to consider is how this will be paid. This is a matter the Government will have to consider because this is as big and difficult as the mica and pyrite issues. Other homeowners are concerned about issues with their properties. The issue of how this will be paid for is a matter on which I will engage in the coming weeks, with the Minister for Public Expenditure and Reform, Deputy McGrath, and the Minister for Housing, Local Government and Heritage, Deputy O'Brien. To answer the Deputy's direct question, to date, I have not had a discussion with the banking sector on that. I look forward to working with my colleagues in government to finalise a plan on this.

Tax Code

Gerald Nash


2. Deputy Ged Nash asked the Minister for Finance his views on the activities of certain companies (details supplied) in respect of corporation tax; if he will act to amend the Ireland-Malta tax treaty to ensure that companies can no longer use tax shelters outlined in a recent report to minimise their corporation tax bills; and if he will make a statement on the matter. [44846/21]

Pearse Doherty


5. Deputy Pearse Doherty asked the Minister for Finance his views on the impact of the competent authority agreement entered into by the Revenue Commissioners and the Maltese tax authorities in shutting down the structure known as the "single malt"; if he or his officials were at any time aware that the single malt structure was still in use despite the provisions of that agreement; and if he will make a statement on the matter. [44867/21]

We should all be shamed by what we read last week. After the Minister learned of the single malt tax dodge in 2018, he moved to close the structure down. The Minister said in 2018 that the Ireland-Malta tax agreement would "eliminate any remaining concerns about such structures". Thanks to Christian Aid, we now know a knock-off version of the single malt is still available. Did the Minister know that Irish-registered companies could still move profits to Malta to avoid corporation tax after the 2018 agreement was signed? Is the Abbott case, which was reported last week, news to him and are there more?

I propose to take Questions No. 2 and 5 together.

As is always the case, I have to emphasise that it is not appropriate for me to comment on the tax affairs of an individual business. I am advised by Revenue that the competent authority agreement with Malta, to which the report refers, was clearly set out as addressing arrangements that would otherwise exploit mismatches between the two countries' rules - specifically their rules on company residence and domicile. The objective of the competent authority agreement was to counteract arrangements that sought to take income out of the charge to tax in Ireland, on the basis that a company was not resident for tax purposes, in Ireland and out of charge to tax in Malta, on the basis the company was not domiciled in Malta. This competent authority agreement addresses issues in which there is a mismatch of residence and domicile provisions, which could otherwise result in double non-taxation.

I am advised by Revenue that this competent authority agreement provision is operating as intended and companies should not be able to avail of double non-taxation, on the basis of a mismatch of residence and domicile provisions. The report provides no evidence that the competent authority agreement was ineffective in achieving this objective. I have repeatedly demonstrated that I am committed to taking action to ensure the Irish tax code is in line with new and emerging international tax standards. The January 2021 update to our corporate tax roadmap outlines actions that have already been taken. The Deputy will be aware as to what many of them are, from the anti-tax avoidance directive, ATAD, work to control foreign company rules, updated transfer-pricing rules and the substantial widening of the scope of the exit tax regime.

It should also be recognised that Ireland has a long-standing general anti-avoidance rule, which goes beyond the stand required in the EU ATAD. It is intended, in the upcoming finance Bill, that we will complete the transposition of the anti-tax avoidance directives with the introduction of interest-limitation rules and anti-reverse hybrid rules. It is intended that these rules will take effect from 1 January, but this work is not complete. As I have set out in the update to the corporate tax roadmap, I am committed to taking many other actions.

I find it hard to understand or accept that the agreement is working in the way in which the Minister intended.

The Minister of State, Deputy Fleming, responded to me in the Dáil last week and informed me that "One case is being discussed and the Revenue is keeping a close eye on that". What precisely was meant by that? Can the Minister confirm to the House that there are no other company structures taking advantage of the kinds of arrangements of which we were made aware last week? Companies will say that they are lawfully exploiting these kinds of arrangements. I do not believe that was the Minister's intention in 2018. When he learned of this case last week and when he was advised by Revenue, as he has been, about the nature of this case, did he move to contact the Maltese authorities to tighten up this loophole? In my view, it needs to be tightened. Christian Aid warned of the possibility of these kinds of structures being enabled continuously, even post the 2018 agreement, but that advice does not seem to have been taken. I would be interested to see if the Minister could establish that there are not more companies taking advantage of this. Will he move to tighten up these arrangements?

We know that some of these large profitable companies will organise their tax affairs in a way to limit their tax liability. In 2017, after parliamentary questions and campaigning by Christian Aid, the Minister called out aggressive tax planning and closed it down as a result of the agreement. The problem is that while the agreement appears to be working in terms of what is in it, it is narrowly defined and therefore there is this cat and mouse game. They have found a way around it. There is a complex arrangement in terms of the acquisition of Alere into three incorporated companies here but tax resident in Malta and so on. The money goes around in a carousel and no tax is paid and now there is a situation where there is a dodge of €477 million that is avoiding being taxed. When this comes to light, and surely Revenue has seen this because there are only four Irish companies that have been incorporated in Malta since that period and these are the four companies in question, surely there must be knowledge. What I want to know from the Minister is how come we are not shutting this down? I can understand the cat and mouse game that goes on but once we become aware we need to shut it down. Can the Minister please reassure us that this will come to an end? I know the Minister cannot mention companies and he is restricted in that regard but we need reassurance that this is going to stop.

I thank the Deputies. Deputy Doherty touched on a point I was going to make to Deputy Nash regarding information that was contained in the Christian Aid report. That report noted that since the changes were made by me and accepted by the Dáil in November 2018, only four companies have been incorporated in Ireland with a place of business registered in Malta. The measures that I brought in have had an effect and have played a key role in changing a behaviour that I described at that point as not being acceptable. I am not aware of any further such behaviour but of course I will be receiving an update from the Revenue Commissioners on this issue and if there is further action that I need to take on this matter, I will do so.

I would be interested in establishing, insofar as the Minister can, what kind of prior knowledge Revenue had of this kind of arrangement? Has it signed off on it? Generally speaking, to the best of my knowledge and experience, Revenue would have knowledge of arrangements of this nature. Given the scale of the company, one would imagine Revenue keeps a very close eye on these kinds of operations. Can we be absolutely reassured that there are no other firms incorporated in Ireland using these kinds of structures to dodge and avoid their corporation tax bills either in Ireland or elsewhere? The Minister is right; Christian Aid does acknowledge in its report that the competent authority agreement has worked effectively, to a point, in that it appears there are only a small handful of companies taking advantage of these kinds of arrangements now. However, should we tolerate four companies taking advantage of this kind of arrangement? I do not think so.

As the Minister said, I have acknowledged the fact that the agreement does work to a certain point. All the four companies are Abbott subsidiaries so surely someone is looking at this. Does the Minister dispute the findings of the Christian Aid report? The key thing here for me - and let us be clear about this - is that Abbott broke no law. It wants to reduce its tax liability. Revenue can say that is in compliance or it could have said that the anti-avoidance measures could take precedence here. When a company finds a way around something, the Minister or the Department should be alerted. Was the Minister aware of such a structure being in existence? Will he put on the Dáil record what measures he is going to take? The budget is coming up in a few weeks. Can the Minister give us assurances that if a company has found a way around the Irish-Maltese agreement, that will be expanded to make sure new arrangements are brought into its scope?

The Christian Aid report shows that the number of companies that have been registered in Malta since the measures I brought in took effect is small. Was I aware of this behaviour? No, I was not. Will the Revenue Commissioners be informing me of the detail of the affairs of any one taxpayer? No, they will not. They will advise me on the generality of any matter. As to me laying out on the floor of the Dáil what I am planning to do to deal with any potential concerns regarding tax avoidance, that would only create the opportunities for those measures to be avoided. I am not going to, nor would I ever, lay out in detail any anti-avoidance measures I am going to put in place for the simple reason that if one lays out that detail and gives enough notice of what is going to happen, it creates the very kinds of opportunities that the Deputies appear to be united in wanting to prevent companies taking advantage of. I was not aware of this matter and I will of course, through the Revenue Commissioners, receive advice on the generality of it and whether any action is needed. However, I am not going to communicate any action that I may or may not take because I want it to be effective if I deem that action is needed.

Tax Code

Pearse Doherty


3. Deputy Pearse Doherty asked the Minister for Finance if he will introduce a vacant property tax in the context of budget 2022; if so, the current status of those plans; the date by which it will be introduced; and if he will expedite those plans in the context of the housing emergency. [44866/21]

We all know the State and its people are in the grip of a housing emergency and there is a lack of genuine affordable homes. We have rip-off rents that continue to squeeze incomes and harm people's lives. There are policies that could change the dynamic and provide solutions to people who need them. The Government's Housing for All plan kicked the can down the road when it comes to the vacant property tax. I call on the Minister to inform the Dáil why this measure is being delayed. Will he consider expediting it and introducing it in light of the escalating housing crisis that is right across the State now, not just confined to the capital city?

I am of course aware of the huge challenges we have in providing affordable homes, providing homes for those who need them most and the great challenge of increasing rents. That is why I am absolutely committed to delivering the measures that are outlined in Housing for All. There is no delay whatsoever to those commitments. I am committed to the introduction of such a tax. Before I look at what that tax will be and what its structure will be, it is important to gain further information about the level of vacancy we have in our country, the duration of those vacancies and the reasons for them. That information is going to be collected as part of the local property tax revaluation that is under way. That information will be collected in November. I expect it will be shared with me soon after that and at that point, when I have the evidence that I need to design what will be an important and fundamental tax, I will act. The timings and the commitment that I have given in Housing for All will be honoured.

That is the problem; the Housing for All plan does not actually deal with the urgency of the crisis that we have. In June 2017, my colleague, Deputy Ó Broin, called on the Minister to introduce a vacant home tax. Time went on and on and house prices became unaffordable. Rents are going through the roof and families are pressed in terms of their housing needs, and more time went on. What is the Minister planning? The reality is, and it has to be called out, that more time will go on.

The Department of Finance gave the housing committee a plan last week that stated the data will be collected and analysed in quarter 2 of 2022. What is the reason for the delay? Will the Minister make a commitment, as it was not provided in the report given by the Department to the housing committee, to a vacant property tax or is it something he is still considering? Will he commit to that? The situation is contained in the Department's report. Some 92,000 houses, 4.5% of homes, lay vacant in June of this year according to statistics from the GeoDirectory given to the housing committee by the Minister's Department. That is a national scandal on his watch. Time will go on. House prices will go through the roof. Rents are still going up. Meanwhile, more time will go on.

Time will be used to ensure that when I make a decision on the introduction of this tax, it will be a tax that is effective and plays the role I want it to play which is the conversion of vacant properties into homes that families and those who need housing will use. Bringing in such a measure on the use of property is something I need to get right. It needs to be effective and must be based on evidence. The time we are talking about is only that which is needed to collect information on the number of properties, how long they have been vacant and why they are vacant. That is information which is needed in order to get the design of this tax correct. Throughout the period referred to by Deputy Doherty, I accept the housing needs of too many people have not been met in the way they want or I want. It is also the period in which the number of homes built in our country has increased year-on-year. I want it to increase further and will play my role in making that happen.

Unfortunately, the Minister has played a role in this. He has incentivised the vultures and the speculators. We saw it in the debate earlier on about the core part of Housing for All where developers can avoid the provision of 20% social and affordable homes, and that is part of the Minister's plan. Therefore, he has, unfortunately, had an influence. Where he has not had an influence is in the four years after we called for a vacant property tax. He still has not introduced it. The Minister wants to know the location and size of every vacant home in the State, and the length of time for which it has been empty, before he will even consider a tax. Perhaps he will outline the broad view of what he is thinking. What size should be taxed? How long does he think a property should be vacant? Does he think it should just be in urban areas or will it be across the country, because there is a housing emergency throughout the State or has he none of that thought out after four years of us asking for a vacant property tax?

Actually, I have much thought out in relation to what we will do.

The Deputy wants to give a speech. I want to put in place a tax that will make a difference.


I will continue with the work that is under way because, of course, I am aware of the need to get more homes built and to turn vacant properties into family homes. That is the reason we have Housing for All, in which there are record levels of investment. It is also the reason that year-on-year, during the last Government, more money was made available-----

Will you answer any of my questions?

-----to build more homes and which led to those homes being built. As the Deputy knows, it is simply not appropriate for me to comment on-----

I want to know what you are thinking of doing.

-----the detail of a policy in relation to taxation until it is communicated in a finance Bill or on budget day. That is what I will do.

That is because you do not have the detail. That is the problem.

The Deputy has asked his question and has received his answer.

EU Funding

Peadar Tóibín


4. Deputy Peadar Tóibín asked the Minister for Finance the amount of funding Ireland is set to receive from the EU recovery fund; his views on the amount of funding Ireland is set to receive; and if he will make a statement on the matter. [45183/21]

The total cost of the Government's handling of Covid, when the taxation measures, wage subsidies, grant supports and liquidity schemes, etc., are taken into consideration, for 2020 and 2021 was €41.3 billion, which is a phenomenal figure. The Comptroller and Auditor General's estimated cost of the banking bailout was €41.7 billion. These are two figures which are very similar. Yet, we see very little from the European Union with regard to helping this country. We hear that less than €1 billion is coming from the European fund.

Will the Deputy put his question to the Minister?

Will the Minister tell us why this amount is so low and how we can improve on it?

Of the money we spent on Covid and supporting our society through a time of such challenge, I am unclear what element of that spending the Deputy was against. Was he against the introduction of the pandemic unemployment payment? Was he against the introduction of the employment wage subsidy scheme? Was he against putting more money into our hospitals as our citizens needed support and healthcare at a time of such crisis? Perhaps the Deputy, in outlining his concern regarding why the debt has increased by so much, of which I am aware, will also outline what elements of the spending I implemented during this crisis he is against.

On the role of the European Union, the recovery plan being brought forward by the EU and the funding we are accessing, it is the case that other countries are accessing more. This is for reasons such as the scale of the countries and the harm caused to those countries by Covid. However, the total amount of funding still being made available through the recovery fund is €1.16 billion. In my book, €1.16 billion is still a large amount of money. Some €853 million of which can be used to support the kind of investment we need in helping our economy and society recover. There is €176 million being provided through the European agricultural fund for rural development. While I accept the point raised that these fund elements are lower than other countries, it is still a gigantic amount of money. Of course, as the Deputy will know, the biggest help the European Union provided during this period was the decision the European Central Bank made to intervene in financial markets to facilitate countries borrowing. Without that action, the kind of response we put in place would have been more difficult and the cost would have been even higher.

Covid is obviously a real illness and we needed to be careful regarding the management of that illness. However, Ireland took a role which was an extreme outlier role compared with every other European country. No other European country's restrictions were as severe or as long as those introduced by Fianna Fáil and Fine Gael.

In financial terms, for example, our annual spending in 2020 increased by 20%. In Denmark, it increased by 5% while in France, it increased by 8%. The European average increase in spending during 2020 was less than 10%. However, due to the overextended and over-severe restrictions, our spending amount was a radical outlier. No other country took the route we took nor did it cost any other country the same in financial terms.

On the cost of this, we are edging towards a national debt of €280 billion. We will have a deficit of €14 billion next year, €7 billion in the year after that and €7 billion in the following year. We are talking about a paltry sum of less than €1 billion with regard the fund from the European Union.

Will the Deputy follow with a question?

It reminds me of Ireland's instincts during the banking crisis when we were seen to be the best boy in the class. We do not shout loud enough for what we need.

Instinct is appropriate here and it was an appropriate word for the Deputy to conclude his question on. What instinct of his is motivating him? During the many lockdowns we had to go through when our country was going through waves of Covid, at what point would he have lightened the public health measures? At what point would he have made the decision, when there were hundreds of people in our hospitals and we had community transmission rates in the thousands on some days, to reverse the public health measures that were in place at that point? He was not involved in that decision nor, indeed, should he have been. He is not a member of Government. It is a responsibility I have. During that period, we put public health measures in place that were very demanding. It is also the case that due to the measures and the vaccination programme put in place by the Government, and the economic support plans we implemented, we were able to reduce the number of people who could have died. Every life that has been lost, every person's health that has been affected and every family that has grieved is a grievance and a loss too many. Our measures were successful in helping many people escape the spread of this deadly disease.

We are now seeing a recovery taking place within our economy, a reduction in the number of people unemployed, and increase in the amount of money being spent in our domestic economy that up to a year ago would have looked unlikely. Of course, I acknowledge the difficulty and harm caused by decisions we had to make, but I put the case to the House that in many cases those measures were successful in saving lives and preventing further ill health.

Sometimes we are very insular and inward looking in this country.

We handled this crisis in a radically different manner from every other European country. Yes, we had a crisis here. The majority of people who died of Covid caught it in a nursing home or hospital, which were the epicentre of the Covid crisis in this country. This area was radically mismanaged by the Government and we need a full investigation into how it was handled. The truth of the matter is that countries like Denmark and Germany opened pubs and restaurants, for example, months before we did. They did so safely, using antigen testing. They used the proper logic to open those services and they allowed people to go back to work earlier. The Covid crisis cost their countries radically less as a result.

It has been reported in The Sunday Times that the State will pay €19 billion over a 30-year period into funds to cover the cost of the Covid crisis and we will get a total of €2 billion back. For most people, these figures are as large as the banking crisis figures, yet there is precious little debate around the issue. There is stony silence around the massive costs to the State.

I do not hear much stony silence in regard to the costs. A growing theme of the public debate that is under way is an appreciation of the increase in our national debt and what that could mean for generations to come. Unlike the banking guarantee, the debt incurred in dealing with the Covid crisis played a direct role in saving jobs in our domestic economy at a time they were needed. It played a role in directly supporting income at a time it was needed.

The Deputy made the case that our public health measures were too demanding and out of line with elsewhere. However, when we brought in the measure to allow restaurants to open up more safely by way of the display of Covid vaccination certificates, he was against it.

I raised the question of antigen testing.

The Deputy will come into the House and say the public health measures are too demanding but when the Government brings forward a plan to lighten and moderate those public health measures and allow restaurants to successfully reopen in the way they did this summer, Deputy Tóibín is against it. He talked earlier about his instincts. He says he is in favour of changing public health measures to allow restaurants and cafés to open, but when we introduced a measure to enable our hospitality sector to successfully open across the summer period, Deputy Tóibín was against it.


We are well over time, Minister.

Denmark, Germany and every other European country opened in a manner-----

Of course the Deputy does not want it acknowledged that the measure succeeded. He is against stony silence except when a charge is being made about him.

Question No. 5 answered with Question No. 2.