Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions

Tax Code

Pearse Doherty

Ceist:

89. Deputy Pearse Doherty asked the Minister for Finance if he and his Department will confirm a date for the introduction of a vacant homes tax; and if he will make a statement on the matter. [62650/21]

We all know that the State is in the grips of a housing emergency. There are policies that could change the dynamic and provide solutions to the housing needs our people face. The Government's Housing for All plan chose to kick the can of the vacant property tax down the road for yet another year. Will the Minister confirm a date for the introduction of a vacant homes tax?

I want to begin by apologising to the Acting Chairman and the Deputies for the fact that I will need to leave early because I have an engagement at the European Council this evening. I have already conveyed apologies to Deputy Pearse Doherty and Mairéad Farrell, and I thank the Minister of State, Deputy Fleming, who will take over from me in a few moments.

I will quickly answer the question put to me by Deputy Farrell. The Government's Housing for All strategy includes an action from my Department to collect data on vacancy with a view to introducing a vacant property tax. My expectation is that we will receive information relevant to the design of the vacant property tax in the first quarter of next year and I anticipate, in the aftermath of that, I will be able to bring proposals to Government and the Dáil.

The Finance (Local Property Tax) (Amendment) Act has enabled Revenue to collect certain information on vacant properties in the local property tax, LPT, return forms submitted by residential property owners last month in respect of the new LPT valuation period from 2022 to 2025. This information, together with information from other available sources, will be used to assess the merits and impact of introducing the design of a vacant property tax.

Before introducing the tax, it is important to have a sound understanding of the quantity, locations and characteristics of long-term vacant properties. It is also essential to identify the reasons for vacancy, and whether this is long term or short term in nature. There may be genuine and acceptable reasons for vacancy, such as refurbishment work, the temporary absence of the owner for medical reasons or pending the grant of probate for a deceased person's estate. Appropriate exemptions from any charge will have to be considered in addition to acceptable periods of vacancy.

We need this urgently. Since 2016, Sinn Féin has called for the introduction of a vacant homes tax as another lever to increase supply, end the scourge of dereliction and put vacant homes back into use. In June 2017, my colleague, Deputy Ó Broin, called on the Government to introduce a vacant property tax in budget 2018, a budget that was negotiated between Fianna Fáil and Fine Gael. That was four years ago. No vacant homes tax has been introduced in any year since. The Government published its Housing for All plan on 2 September without any firm commitments on introducing a vacant property tax to penalise those who allow residential properties to remain idle and unused. What has been committed to is a data collection exercise. Will the Minister confirm that he rejects the conclusions of the 2018 Indecon report that was the grounds for the Government's previous rejection of a vacant homes tax? If he plans to introduce this tax, will he spell out its design?

The commitment to a vacant property tax is clear in Housing for All. The 2018 Indecon report reflected the housing market as it stood then but we are now in a situation where we need to make even more urgent use of properties and land available for housing and accommodation purposes. That is why the Housing for All strategy contains a different commitment to the introduction of a vacant property tax.

That said, the vacant property tax is only one of a number of measures we will need to implement to make progress in tackling the housing needs in our country. We are making progress. The construction of more than 30,000 homes had commenced by October 2021. That is an increase of 49% on the previous year. That is a signal that our strategy is working.

In a note to the Joint Committee on Housing, Local Government and Heritage in September, the Department of Finance cited analysis on vacant dwellings by GeoDirectory. In its quarter 2 report for 2021, GeoDirectory found that more than 92,000 homes, or 4.5% of the housing stock, lay vacant in June this year. Recent research suggests we have the tenth highest vacancy rate in the world. It is a national scandal. Why has the Government not introduced a vacant property tax in each of the past five years? Will the Minister commit to doing so as soon as possible? I know he has said he will give us further details in the future but we need this as soon as possible.

I also draw the Minister's attention to recent stories in the Business Post, which found the Minister and the Department massaged the facts regarding rates of vacancy to undermine the proposition of a vacant homes tax. Most recently, it was reported that briefing notes provided to the Minister for Finance cherry-picked data relating to vacancy rates, omitting documented evidence of high residential vacancy rates. That is completely unacceptable. Does the Minister agree? Will he commit to expediting the introduction of a vacant homes tax as soon as possible?

I completely reject any claims that the information and guidance my officials prepare for me is in any way massaged or in any way excludes important information that I need to make decisions. I receive full, impartial and comprehensive input and advice from my officials on this and every other matter. The information notes I receive and the evaluations that are given to me are part of how that guidance is provided to me. I have had ongoing engagement with my officials on this matter and they have provided me with comprehensive briefings on this and other issues. I repeat that I reject any claim that the information provided to me is in any way massaged or presents anything less than a full picture of this issue.

I will say again that the impact we are making at the moment, although we know we need to do more, is that 31,000 homes were commenced over the past 12 months. I have outlined to the House how we will deal with this issue and make the design choices on the vacant property tax.

Covid-19 Pandemic Supports

Cathal Berry

Ceist:

90. Deputy Cathal Berry asked the Minister for Finance the position regarding the employment wage subsidy scheme, EWSS, in response to further public health restrictions imposed to reduce the spread of Covid-19; and if he will make a statement on the matter. [62420/21]

Richard O'Donoghue

Ceist:

91. Deputy Richard O'Donoghue asked the Minister for Finance if he will re-examine the figures in respect of the EWSS with regard to the hotel and hospitality sectors (details supplied). [62659/21]

As the Minister will be aware, the EWSS has been instrumental in saving thousands upon thousands of jobs across the country over the past couple of years. There have been some recent changes to it, however. Perhaps he could outline these changes because I am receiving many queries from small and microbusinesses across my constituency.

I propose to take Questions Nos. 90 and 91 together.

The objective of the wage subsidy scheme is to support employment and maintain the link between the employer and the employee insofar as is possible. The EWSS has been a key component of the Government's response to the Covid-19 crisis. It is an economy-wide scheme that operates across all sectors. In monetary terms, the overall support provided today by the EWSS is more than €6.6 billion, comprising direct subsidies of almost €5.7 billion and PRSI forgone of €902 million to 51,700 employers in respect of more than 696,900 employees.

The eligibility criteria for the EWSS are based on self-assessment principles. The legislation provides that an employer must be able to demonstrate that his or her business will experience a 30% reduction in turnover or customer orders between 1 January and 31 December 2021, by reference to the corresponding period in 2019, as a result of the business disruption caused by the pandemic.

I draw attention to the fact that despite the exit from most public health restrictions during the summer, eligibility criteria were not tightened in the Finance (Covid-19 and Miscellaneous Provisions) Bill 2021, which was enacted in the summer and which extends the scheme beyond the end of June 2021. Indeed, the reference period to which the metric must be applied was broadened in that Act to span a full year, thus relaxing the conditionality to qualify to benefit from the scheme in most cases.

Many businesses were fully closed or limited in their capacity to trade due to the public health restrictions in place during the earlier months of 2021. This change in the assessment period meant that such businesses could generate the equivalent of up to 70% of their calendar year turnover from 2019 or customer orders for the remainder of 2021 and still remain eligible to claim support under the scheme.

To address the specific question regarding businesses, for example, hotels that are operating at just over 70%, such businesses would not be eligible for the EWSS as their turnover exceeds the threshold for support. The scheme is a calibrated in such a way as to ensure support is available for those businesses most adversely impacted by the pandemic. The eligibility requirement of a 30% reduction in turnover has been a key feature of the scheme since its since introduction. I have no plans to alter that criterion.

Deputies will be aware that against the background of the imposition of revised public health restrictions, the Government decided last Thursday that the enhanced rates of the EWSS subsidy will apply for a further two months, that is, December of this year and January of next. This will give certainty to businesses when they need it most.

In addition, the Covid restrictions support scheme, CRSS, is being extended to the end of January. Provision is also made to allow me to extend this scheme up to 30 April 2022 by ministerial order if deemed necessary. As Deputies are aware, and I thank them for their support last night, amendments to the Bill were tabled this week to give effect to the EWSS and CRSS schemes mentioned.

To conclude, the Government will, as we have done since the onslaught of this pandemic, continue to monitor developments closely and make the right decision at the right point.

I thank the Minister for that very useful response. I have a specific question. I am glad he brought up the hospitality industry. As we all know, there is quite a large fluctuation in turnover in hospitality businesses because of the seasonality associated with their sector. Is it a case that if a hotel, for instance, is not enrolled in the EWSS scheme for the month of December, it is also not eligible for entry to the scheme for January? If it is the case that it is also ineligible with regard to turnover for January, is that something the Minister might wish to consider amending?

The answer to the Deputy's first question is "Yes". In order for a company to participate in this scheme from next year, it must be participating in the scheme for the month of December. I am aware of concerns that have been raised by a number of hotels that have a very high seasonal dimension to their business.

For a hotel or any business to be excluded from the scheme at the moment, however, means that its business performance is better than a 30% decline against the period in 2019. That means that business is trading probably not in line with how it would have hoped given the pandemic but is still trading better than a 30% decline in its turnover. The challenge is that any threshold I fix will have businesses that fall just outside of it. I am aware that is the case for some.

I thank the Minister for that clarification. To address the final part of my question, I accept his bona fides that the EWSS is to support jobs and employees. Reports have emerged over the past 48 hours, however, that some of the money used to subsidise companies went on to basically provide dividends for shareholders, which is not the intended goal of the scheme. I know the Minister is not happy with that and has gone on record to say that he is seeking to tighten up the restrictions or conditionality associated with it. When are we likely to see higher levels of conditionality associated with the EWSS? Will it require any changes to primary legislation to bring that in?

The overwhelming majority of companies that have participated in the EWSS went into it because they genuinely believed they would need it at that point. They did so based on the effect of the pandemic on their business. The near overwhelming experience both Revenue and I have had is that of employers participating in the scheme in good faith. It is the case that a number of companies that found that their business performance was better than expected have returned the EWSS payment that was available. I will repeat what I said yesterday. Companies that find themselves in that position should consider their choices with regard to a scheme that has played such a vital role in protecting our economy and should continue to act in good faith.

With regard to the commitment I have given, I have said at this point that I will consider this matter. I want to be very careful that we do not make changes to the scheme that might preclude businesses that may well be profitable but are far less profitable than they were in the past from participating into the future and still need this scheme to have a viable and successful future.

My question to the Minister is on the 18% of hotels that will be excluded from the scheme due to their turnover going over the 30% threshold. Some of these companies have earned 71% and 72% on projected turnovers. This stops them from entering the EWSS. These 11,000 jobs must be protected. These 11,000 employees will end up being on the pandemic unemployment payment, PUP. At least if these employees are on the scheme, their employer is still paying a PRSI contribution into the system. It will help keep 11,000 people in jobs this year.

I thank the Deputy for raising this issue. I acknowledge that he has raised this with me on a number of occasions. I appreciate that a number of businesses we value and that provide very valuable employment to our country find themselves in a position that they are slightly outside the entry threshold of a 30% decline in their business.

This figure of 70% has now been consistently in place since our wage subsidy schemes have been introduced - both for temporary wage subsidy scheme, TWSS, and the EWSS. We have always had and clearly communicated an unchanging reference period for turnover and reference decline threshold. For some time now, under the EWSS in particular, we have maintained the approach that a business can only enter the scheme if their its turnover decline is 30% or more. I have no plans to change it because of how clear it has been for so long. Any threshold I fix is will face the challenges of business that are slightly outside of it.

Some 11,000 people could end up on the live register, which will cost money to the taxpayer anyway. If they are in employment, while there is a reduced PRSI contribution, their employer is still giving money back to the State. It does not cost the full amount to have somebody on a PUP payment. This keeps people employed. It keeps people within the sector that has been hit not only last Christmas, but now this Christmas. The Minister is interfering with their margins into next year. Not only are they down 28% or 29% this year, the Minister is now putting them in a position where they have no working capital for the first two months of next year. That is putting hotels in trouble, which may mean that he will have to correct that. They could end up with the banking system or the social welfare system. This is a way bigger picture altogether. This can be fixed for €7.5 million. Other companies have received €108 million under the scheme and they have been in the newspapers this week.

I am not interfering with any business; I am supporting business. While I appreciate the companies to which the Deputy has referred are facing many difficulties and challenges and they have like many other businesses had a tough couple of years, I reiterate that fundamentally the reason they are outside the scheme at the moment is their trading performance is better than a 30% decline versus 2019. For some time, we have made clear that to enter the scheme, a company’s change in business and change in turnover has to be greater than a certain figure. That was clearly communicated in budget 2022 and in many other statements from me during the year. Therefore, while I appreciate that not being able to access this scheme can have an effect on the business, equally it is important that I am consistent in saying that if the entry into this scheme is a certain figure, it does not change suddenly. It is for that reason that this figure is being maintained.

Departmental Reviews

Catherine Connolly

Ceist:

92. Deputy Catherine Connolly asked the Minister for Finance the status of the promised review of the help-to-buy scheme; the person or body that will carry out the review; the terms of reference of the review; the timeline for the review; and if he will make a statement on the matter. [62328/21]

My question is specific. I ask about the status of the promised review of the help-to-buy scheme, the entity carrying out that review, its terms of reference and its timespan. Before I get the reply, let me wish the Minister and his colleague, the Minister of State, Deputy Fleming, a happy Christmas and a happy new year, just in case the good cheer vanishes in his answer.

I thank the Deputy. I do not see any reason as to why the good cheer would evaporate and it certainly will not for me-----

It would need to be a comprehensive answer.

I want to return the festive wishes to the Deputy. The short answer to her question is that I just finished the Finance Bill last night in the Dáil, including with her good self. We have just completed the Finance Bill for this year. The review will be completed well in advance of next year's finance Bill. As of yet, I have not set the terms of reference, initiated the process as to who will do the work or indicated by when the review will be complete. If I were to give the Deputy my judgment now, I would say it would need to be completed probably before next summer, so that we would have time to consider its findings. I would say that we will be able to indicate what the terms of reference would be and how the work will be done early in the new year. Given that we have just finished the Finance Bill, I hope the Deputy will bear with me when I say that I cannot give her a clearer answer today to those questions.

I certainly appreciate that the Finance Bill has taken up all of the Minister’s time. However, this scheme was introduced in 2016 and became operational in 2017. The most recent formal review was many years ago. The tax strategy group did a chapter on it with various options. They pointed out that the scheme is four times more expensive than envisaged. The comments from the ESRI, which have been repeated many times, are that the help-to-buy scheme is adding to demand pressures. Social Justice Ireland states that the help-to-buy scheme has disproportionately benefited purchasers who buy higher-value properties. Indeed, anecdotally, in and around Galway, we are now helping professional people. The scheme is there to help everybody and I have no problem with that but, generally, professional people have a much higher salary than others. For example, consultants are now benefiting from this scheme, and rightly so because it is there. However, the scheme is certainly not helping those that it was intended to help to get on the housing ladder. The urgency of the review can not be overemphasised.

The scheme is helping many to get on the properly ladder and it is helping many who need support when they are buying their first home. More than 29,000 first-home purchasers have benefited from the scheme since it was set up. On the reviews that we have had, while the Deputy is correct that the most recent independent cost-benefit analysis of this was in 2018, this process is subject to a review in the tax strategy group papers that are published every year. This scheme is examined regularly by my Department. While the cost of the scheme has gone up since it was first implemented, it has been extended for longer than had been anticipated. More properties are participating in the scheme. We also made a change last year to give additional support to first-home purchasers due to the many changes that were happening because of the pandemic. I believe this scheme provides valuable help, but we will have a fundamental look at it in 2022.

I do not believe that the scheme has achieved the purpose for which it was intended at all, which is bad enough. However, it has also contributed to the housing affordability problem without a doubt. I am not alone in thinking that. All of my colleagues in opposition have said that. More importantly, the ESRI has said it. Social Justice Ireland, who keep their ears close to the ground, based on research, have repeatedly said it. The scheme is helping people who are already in a position to have a deposit for a house. I would like the review to examine the salaries of the people who are availing of the scheme, their professions, whether they are single persons or a couple, the amount of the deposit that they had and whether the recipient could afford a house in the first place. We need a detailed analysis of the scheme to see whether it is achieving the purpose that it was set out to achieve. I will be the first to say "Sorry", if I am wrong. However, we need that review and we need clarification on who will carry out the review and its terms of reference, which are extremely important.

On the additional points that the Deputy has made, 11% of the purchases that were made of homes in our country over the past 12 months or so were covered by the help-to-buy scheme. I do not accept that a scheme that supports the purchase of approximately one in ten homes is itself the cause of the significant house price inflation that we are facing. The cause of where we are at the moment is the well documented and understood issues relating to lack of supply that the Government is making progress on. Some 60% of those who used the help-to-buy scheme, on the analysis that we have done, did so while needing this scheme to help fund their deposits to buy their first home. That is valuable help. It is help that nearly 30,000 people have benefited from and they need it. However, the issues to which the Deputy referred and the questions that she posed will be looked at in the review of the scheme, which will take place next year.