Richard Boyd Barrett
Ceist:61. Deputy Richard Boyd Barrett asked the Minister for Finance if he will introduce a windfall tax on banks and vulture funds; and if he will make a statement on the matter. [21569/23]
Ceisteanna Eile - Other Questions
Questions Nos. 56 and 57 taken with Written Answers.
Question No. 58 taken after Question No. 60.
Question No. 59 taken after Question No. 61.
Question No. 60 taken after Question No. 59.
Tax Code
Greedflation is something that now, somewhat indirectly, even the ECB is acknowledging. We see it in energy and the price of food. This question is about whether it needs to be tackled, and we believe it does, in the area of vulture funds and banks profiteering off the hikes in interest rates. Is the Government willing to respond by imposing a windfall tax on those banks and vulture funds that have made super-profits from the interest rate hikes we have seen?
As a small open economy connected to Europe, the US and the wider world, Ireland is committed to a competitive, transparent and stable corporation tax system. As the Deputy will be aware, the trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%. We are committed, under the pillar 2 agreement, to increasing to an effective rate of 15% for in-scope companies. Some of the main features of the current regime are its simplicity and that it applies to a broad base. Imposing additional taxes on certain sectors would involve increased complexity and could change the attractiveness of Ireland's corporate tax regime. While it is possible that imposing such taxes could lead to theoretical gains, there is a risk of such taxes leading to lower levels of economic activity and to companies passing the additional tax burden on to their suppliers or consumers.
A number of factors would need to be considered as regards introducing a windfall tax on banks, such as the potential for negative impacts on bank customers and bank employees, and further reduced appetite for competition in a sector that has recently seen the departure of two very significant retail banks. These issues have been considered and discussed with Deputies in detail in debates on various proposals relating to taxation of the banking sector.
Deputies will be aware that a banking sector-specific measure has been in place since 2014 in the form of a bank levy. As the levy is due to expire this year in law, my Department is currently carrying out a review to help inform consideration of its future. This has involved a public consultation that ran for a month and closed just last week. I hope to be in a position to announce my decision on the levy's future based on the review's findings and recommendations as part of budget 2024.
It is a very spurious argument to say that because we saw a few banks leave, we should not consider taking any measures to put taxes on the superprofits that the remaining vulture funds and banks are making. They are doing so at the expense of the incredible hardship mortgage holders are suffering who have seen vulture funds charging 7% and 8% interest, which means thousands of additional euro.
Even the mainstream banks are hiking interest rates and making superprofits. The banks that left did so in the tax environment the Minister is defending. They went because, frankly, they have no loyalty to their customers. They do not give a damn about them. They just left because it suited them. Is it the idea that we pander to entities that have no interest in their customers while their customers are being absolutely hammered, as they are at the moment, and not impose some kind of tax on the superprofits they are making to use those revenues to protect mortgage holders who are being crucified?
I am not pandering to anyone, but in the position I am in, I have the advantage of engaging directly with some of the world's largest companies that have invested in Ireland and continue to do so. One of the issues that is repeatedly raised is the importance of predictability, certainty and stability when it comes to corporation tax policy. That has served Ireland well. The Government has made the decision to be part of the OECD base erosion and profit shifting, BEPS, agreement. We will faithfully implement pillar 2. This House will have a role in that regard when I bring forward the finance Bill later in the year. We are at the table negotiating the final details of pillar 1 with respect to the reallocation of taxing rights. It does not serve Ireland well, given the strength of our foreign direct investment success - the fact that we continue to win investments - to change taxation policy on the hoof. That is not what I will do as Minister for Finance.
This is not a general discussion about corporate tax rates; this is a specific call for a windfall tax on vulture funds and banks that are profiteering at the expense of mortgage holders who have seen an increase in mortgage interest repayments to the tune of €4,000 or €5,000. These are unsustainable increases in a situation of bonanza profits being made by these vulture funds that affects hundreds of thousands of ordinary people. Even the EU has agreed to exceptional windfall taxes on the energy sector, which the Government still has not implemented, although it has committed to do so. I am arguing that in the case of vulture funds that do not contribute anything to our country - they just buy up people's mortgages and then charge them massive interest on their mortgage debt - or banks that are making superprofits on the basis of increased interest rates, it would be reasonable to impose a time-limited windfall tax while they are making superprofits and to use those revenues to protect mortgage holders.
When it comes to banks, because the existing levy comes to an end in law this year, we are carrying out a review. I will make the decision about the future of that levy known when the budget is announced. As the Deputy will be aware, I published a terms of reference for a review of the investment fund sector on 6 April. Specifically with regard to the taxation of funds, the review will examine the role of real estate investment trusts and Irish real estate funds in the property sector, including how they support housing policy objectives. There is a role for institutional investors in our housing market to provide the capital needed to meet critical housing needs. The review will take an evidence-based approach to assessing this role. There will be extensive engagement with the sector, relevant public sector representatives and other stakeholders, and Members of this House will have the opportunity to input into that review directly. I look forward to discussing it with the Deputy in the period ahead.
House Sales
Cathal Crowe
Ceist:59. Deputy Cathal Crowe asked the Minister for Finance the number of homebuyers in counties Clare, Limerick and Tipperary who have availed of the enhanced help-to-buy scheme since 23 July 2020; and if he will make a statement on the matter. [21469/23]
Barry Cowen
Ceist:63. Deputy Barry Cowen asked the Minister for Finance the number of homebuyers in counties Offaly, Laois, Longford and Westmeath, respectively, who have availed of the enhanced help-to-buy scheme since 23 July 2020; and if he will make a statement on the matter. [21517/23]
Jennifer Murnane O'Connor
Ceist:67. Deputy Jennifer Murnane O'Connor asked the Minister for Finance the number of Carlow homebuyers who have availed of the enhanced help-to-buy scheme since 23 July 2020; and if he will make a statement on the matter. [21451/23]
Will the Minister for Finance outline the number of homebuyers in counties Clare, Limerick and Tipperary that have availed of the enhanced help-to-buy scheme since 23 July 2020?
I propose to take Questions Nos. 59, 63 and 67 together.
The help-to-buy initiative announced in budget 2017 is an income tax incentive measure designed to assist first-time buyers with the deposit required to purchase or self-build a new house or apartment to live in as their home. With a view to increasing the supply of new housing and stimulating demand, the relief is only available in respect of new builds. In the July 2020 stimulus plan, the scheme was amended so that the level of support available to first-time buyers was increased to the lesser of €30,000, increased from €20,000, or 10%, increased from 5%, of the purchase price of a new home or self-build property; or the amount of income tax and deposit interest retention tax paid in the four years before the purchase or self-build. The scheme was extended in its enhanced form in budget 2021. The help-to-buy scheme was extended in the Finance Act 2022 for a further two years to the end of 2024. This approach took account of the need for certainty in the market pending an increase in new housing supply envisaged in Housing for All and is in line with a recommendation of the independent review of the scheme completed by Mazars in July 2022.
Applications for the help-to-buy scheme may be made on a provisional basis as first-time buyers seek to clarify their entitlements in advance of commencing the purchase of a property. An application will only progress to the claim stage if and when the applicant decides to purchase a property that is eligible for the scheme. It is at the claim stage that the property address details become available. To the end of April 2023, 39,657 help-to-buy claims had been made, of which 38,924 had been approved. The estimated total value of approved claims to date is in the order of €786.3 million and the total value of approved and pending claims to date is in the order of slightly less than €800 million.
I have information about the number of claims relating to properties located in the counties referred to by different Deputies, including Deputy Cahill, where the relief exceeded €20,000 or more than 5% of the purchase price or approved valuation. In Tipperary, that number was 290 claims.
Does the Minister have any plans to further amend the scheme to help first-time buyers? Does he have any plans to devise a mechanism to prevent developers from refusing the help-to-buy scheme funding as a deposit for a house purchase?
I had an exchange with Deputy Connolly earlier about the future of the scheme. It is a scheme that the Government and I strongly support, given the fact that almost 40,000 people have benefited from it over the past number of years, many of whom would not have been in a position to buy a home without it. In the Budget Statement last year, it was announced that the scheme would be extended to the end of 2024. We will keep it under review in the interim period, with a view to setting out what the position will be beyond 2024. We will do that in the context of future budgets.
Will the Deputy clarify his second point on the deposit and I will come back to him?
Some developers will not accept a deposit from people using the help-to-buy scheme. I have heard of a few instances where developers have refused to accept it as a deposit on a new house. That is something that needs to be looked into. The figures the Minister gave for the scheme are impressive. I urge him to extend the it. Any further amendments that could improve it would be most welcome. The expenditure on the scheme fully justifies it and shows its benefit to first-time buyers.
I would be grateful if the Deputy would share some of the details of the cases he is referring to with my office so that we can examine them and make sure that the legislation is being fully applied in all cases. He has correctly highlighted the value of the scheme in his county. A number of other colleagues tabled questions relating to Carlow, Clare, Laois, Limerick, Longford, Offaly and Westmeath. In most counties, hundreds of claims have been successful in recent years. That underlines the value of the scheme. We will keep it under review, but if the Deputy could share some of the details of that specific deposit-related question with my office, I will have it examined and we will come back to him.
Tax Collection
Richard Bruton
Ceist:60. Deputy Richard Bruton asked the Minister for Finance if he is satisfied that the debts under tax warehousing can be successfully wound down by businesses; and if he has evolved methods for Revenue of working with companies who may have difficulties. [21510/23]
I am asking this question on behalf of Deputy Bruton. Will the Minister confirm whether he believes businesses can effectively reduce their tax warehousing debts?
The debt warehousing scheme allows for the deferral of the payment of VAT, PAYE and certain self-assessed income tax liabilities, including the temporary wage subsidy scheme, TWSS, and employment wage subsidy scheme, EWSS, overpayments. It provided a vital liquidity support to businesses during the Covid pandemic and continues to support businesses as they recover from the impacts of the pandemic and the energy crisis.
As of the end of March 2023, the value of debt warehoused was €2.216 billion for 63,600 businesses. Of this total, some 31% have warehoused debts of less than €100; some 15% have warehoused debts of between €101 and €1,000; and a further 19% have warehoused debts between €1,001 and €5,000. In total, 41,294 businesses in the warehouse - 65% of the total - have an outstanding balance of less than €5,000. The bulk of the debt figure is warehoused by just 6,462 customers, with outstanding balances greater than €50,000 totalling almost €1.9 billion of the overall figure of €2.2 billion.
Last October, the Revenue Commissioners announced an extension to the period during which debts can remain parked in the warehouse. This means that businesses no longer have the challenge of making arrangements to repay their warehoused debt until 1 May 2024. This significant additional time should greatly support businesses in their recovery from the impacts of the pandemic and the energy crisis and prevent business failure. Importantly also, businesses are still able to avail of the reduced 3% interest rate from 1 January 2023, as opposed to the general interest rate of 10%, when they come to pay the debt.
With regard to the repayment of warehoused debt, from 1 May 2024, Revenue’s approach to collecting the tax debt remaining in the warehouse at that time will be flexible and tailored to each business, based on its capacity to pay. In advance of the repayment date, Revenue will engage with those businesses yet to agree a payment plan, to discuss their payment options and, where required, it will agree a tailored and phased payment arrangement in respect of the parked liability over an agreed timeframe.
From speaking to those who visit my constituency offices, a lot are grappling with the dual pressures of escalating debt and the rising cost of living, compounded by the inflationary environment we are in. We need to ensure that Revenue and the county sheriffs are collaboratively working together and demonstrating compassion with individuals and businesses that are impacted by this. It is paramount that we continue to develop strategies to support those who find themselves in challenging circumstances. I welcome the flexible payment arrangements. That is important, particularly in light of the cost-of-living issues and the ongoing challenges people face. We must stand alongside our local businesses and ensure they can maintain their presence in our towns and villages and that they support employment. I ask that the Government continues to assist companies that might struggle in this process.
It is worth reflecting on the numbers I put on the record and the fact that two thirds of the businesses that have tax debts warehoused owe less than €5,000. I recognise that this is a significant amount of money for a lot of businesses but in the great majority of cases, with goodwill and co-operation between the business and the Revenue Commissioners, it should be possible to put in place repayment arrangements over a period of time. The Revenue Commissioners have assured me that they will be as flexible and supportive as possible. The requirement that people engage with Revenue is important and it is important that we all emphasise the need to do that.
We must also remind businesses that it remains a key condition of the debt warehousing scheme that current liabilities are filed and paid on time. In order to avail of that lower interest rate and flexibility of entering an arrangement between now and 1 May 2024, current liabilities, as they fall due, must be paid and returns must be filed on time. That said, I have discussed this issue with the Revenue, it knows the importance of it for many businesses concerned and I am satisfied that it will engage in a spirit of co-operation to find solutions in individual cases.
I would make a point on some of the letters I have seen that have been issued by county sheriffs locally. They leave a lot to be desired and the language that is being used is challenging for those on the receiving end of them. I want to make that point in the House, while understanding that they are doing their best, in challenging times, to decrease their debt effectively. It only adds to the impact of anxiety and concern when that happens. I appeal to the Minister again to ensure we have the support measures in place. I ask for an update on the temporary business energy support scheme, TBESS, that was previously announced in last year's budget. Where is this scheme in its development process?
It is worth underlining the point that the requirement is to have entered into an arrangement with Revenue by 1 May 2024. It is not that the business has to have repaid the warehoused tax by that date; it just has to have entered an arrangement. Over the next ten to 11 months, I urge businesses to engage with the Revenue Commissioners and put in place that arrangement. I also want to make the point that the arrangements can be over a number of years. Despite the fact that in many cases the amount of money involved is quite low, the Revenue has a track record of entering arrangements over an extended payment duration of up to five years, with the availability of payment breaks and deferrals when temporary cashflow difficulties arise during the arrangement term. The moral of the story is that I am asking businesses to engage with the Revenue Commissioners and to ensure there is an arrangement in place before May of next year.
Departmental Schemes
Willie O'Dea
Ceist:58. Deputy Willie O'Dea asked the Minister for Finance the details of the second three-month assessment of the temporary business energy support scheme; and if he will make a statement on the matter. [21489/23]
The TBESS was being reviewed every three months. The most recent review of that was at the end of last month. Can the Minister give an outline of the issues in the scheme at that stage and of the outcome of that review?
Section 100 of the Finance Act 2022 requires that an assessment of the TBESS be carried out at intervals of not less than every three months, beginning on 20 October 2022. On 27 April 2023 I published the second three-month assessment of the scheme. The first assessment was published on 28 January. The assessment was undertaken by the Department of Finance with the assistance of the Department of the Environment, Climate and Communications and the Revenue Commissioners. It contains up-to-date data on the trajectory of energy prices, the impact from and effects of, energy prices on the economy, as well as other relevant issues relating to the operation to the scheme. It also contains details of amendments made to the scheme since the first assessment was published back in January.
As noted in the assessment, the worst-case scenarios for energy prices that were in prospect last autumn, when the TBESS and other schemes were being developed, have not materialised. A warmer than usual winter, as well as mitigation measures taken across Europe, have curbed demand for energy and led to reduced, rather than increased, energy prices. As a result, many businesses fell short of the thresholds built into the scheme as originally designed.
According to data provided by the Department of the Environment, Climate and Communications when compiling the assessment, this fall in energy prices is expected to continue, with prices for the second quarter of this year expected to be 24% lower relative to the first quarter. However, these data also show that gas prices remain significantly above - around double - levels seen in previous years. Notwithstanding the decline in energy prices at the wholesale level, it is taking time for reductions to filter through to business customers, as we know. As a consequence, I took the decision in February to exercise the power contained in the legislation to extend the scheme to the end of April and to increase the monthly limits on aid under the scheme.
This extension, together with a further extension to 31 May and additional enhancements provided for as part of the Finance Bill 2023, will allow more businesses to avail of the scheme and will provide increased relief. These enhancements include a reduction in the energy cost threshold for entry to the scheme from 50% to 30%, with effect from September 2022, and the increase in the amount of the temporary business energy payment from 40% to 50% of the eligible costs for the claim period from 1 March 2023 until the end of the scheme, subject to the relevant monthly limits.
Finally, as noted in the assessment, it is expected that these enhancements will result in an increase in the uptake of the scheme and will help businesses to mitigate the worst effects of the energy crisis.
The introduction of the business energy support scheme was a very strong move by the Government to help businesses with their energy costs. The scheme was helpful to many, even though there were issues initially. In fairness to the Government, the Department identified this issue and took measures to make the scheme more accessible and to support businesses better with the scheme because of the low take-up. We recognise as well that there was an issue with people who did not have access to the gas network. There is a gas network in many built-up areas but not right across the country. Businesses in towns and villages and the countryside that do not have mainline gas and may be heating their buildings through liquefied petroleum gas, LPG, or kerosene have experienced the same pressures as any other business. There was a commitment to give access to a variant of the scheme in order that people experiencing those energy costs would be supported. Will the Minister give an outline of that measure?
My question, No. 65, is very similar to this one, so I will come in just to avoid duplication. I look for figures for Clare, Limerick and Tipperary. My understanding is that 37,100 claims have been approved at the time of the assessment. Does the Minister expect any more to come through the system? I concur with the points made by Deputy Moynihan. As our questions are similar, I said I would ask for further clarification.
The Finance Bill, which provides for some of the changes to the TBESS, passed in the Seanad this evening so will be signed into law shortly. As the Deputies will know, the reduction in the energy cost threshold for entry to the scheme from 50% to 30% will be backdated to September 2022. Therefore, businesses that did not qualify all along because they did not meet that 50% test, if they meet the new 30% test, will receive the payment and it will be backdated to last autumn. The increase in the payment of the eligible cost is going from 40% to 50%. That can be done only prospectively, that is, going forward, from 1 March until the end of the scheme, and that is subject to the relevant monthly limits. As the Deputies will know, we also increased the monthly limits.
As regards the LPG and the kerosene issue, my colleague, the Minister, Deputy Coveney, is working on that. It has taken longer than we would like, certainly, but he gave the commitment to bring forward a scheme, and work on that in the Department of Enterprise, Trade and Employment is ongoing.
Question No. 62 taken with Written Answers.
Question No. 63 taken with Question No. 59.
Questions Nos. 64 and 65 taken with Written Answers.
Budget 2024
Richard Boyd Barrett
Ceist:66. Deputy Richard Boyd Barrett asked the Minister for Finance if he intends to make further tax changes in budget 2024 to address the issue of vacant and derelict properties, given the current housing emergency; and if he will make a statement on the matter. [21570/23]
In the face of an absolutely diabolical housing and homelessness crisis that sees record numbers of people in this country with nowhere to live - nearly 12,000 now in emergency accommodation, including nearly 4,000 children, shamefully - it is even more shameful that, according to the census, we have 166,000 vacant properties, 48,000 of those vacant for six years and 23,000 of them vacant since 2011. Will the Minister introduce tax measures in the budget to deal with this scandal?
As Deputy Boyd Barrett will be aware, it is long-standing practice of the Minister for Finance not to comment, certainly in any detail, in advance of the budget on taxation matters that might be the subject of budget decisions.
The Government is acutely aware of the difficulties in the housing market and the challenges they present for many people and families at the moment. The need to address vacancy and to ensure all viable housing stock is being used is a priority for the Government. In Housing for All, the Government has set out a suite of incentives available to encourage the reuse of properties and increase the supply of housing. Following from a commitment made in Housing for All, a new vacant homes tax was announced in the last budget and was legislated for in the Finance Act 2022.
This tax is only one part of a much wider suite of measures. Housing for All outlines a suite of measures under pathway 4 to address vacancy and efficient use of existing stock. The Minister for Housing, Local Government and Heritage launched a vacant homes action plan in January, which outlines the progress that has been made in addressing vacancy, along with the actions being pursued to return as many vacant and derelict properties back to viable use as possible. More recently, the Minister for Housing, Local Government and Heritage announced further enhancements to the vacant property refurbishment grant with the aim of increasing the pace at which vacant and derelict properties are renovated for new housing. This grant is being increased from €30,000 to €50,000 for vacant properties and from €50,000 to €70,000 for derelict properties, extended to cover houses built up to 2007, and will be available for properties intended for rental as well as owner-occupied properties.
As regards dereliction, I understand that the Department of Housing, Local Government and Heritage has established a focused working group of local authority officials nominated by the County and City Management Association to examine the operation of the Derelict Sites Act. It is expected that the report of that group will be finalised shortly. Its recommendations will be considered once it is received.
We are a decade into the worst housing crisis this country has ever seen, and the Government's vacant homes tax is 0.3%, three times the average local property tax rate. The increased wealth that somebody sitting on a derelict or vacant property can make just by sitting on it and paying that derisory tax is multiples of what the Government is asking them to pay. It does not offer any incentive or penalty in real terms for sitting on vacant property, and tens of thousands are doing so. There may be cases in which people need assistance - they may genuinely have difficulty refurbishing the property - so a carrot is fine, but there needs to be a stick for people who are wilfully sitting on empty property just watching an asset accumulate in value while others need a home.
The Minister says there is a group in the Department of Housing, Local Government and Heritage now prioritising dereliction. The Derelict Sites Act was introduced in 1990, 33 years ago. I will give the Minister some of the figures. There are 1,415 sites on the derelict sites register, with an outstanding €15,424,000 that has not been collected over the years. We believe that figure of 1,400 is only a fraction of the number of derelict sites. To give the Minister more figures, according to the vacant sites register there are 1,783 vacant homes with an outstanding amount of €14,698,000 that has not been collected. Those are figures I got through freedom of information from the Department. I will leave the Minister with this. His vacant homes tax of 0.3% is a disgrace. How will that incentivise these landholders and speculators who are sitting on property while we are in the middle of a housing crisis? It is a sham.
I heard the Minister's response with regard to the various incentives to bring derelict sites back into use. I have one question. There are many properties around the State where the upper floor is vacant and the ground floor is neither vacant nor derelict, nor has it been vacant or derelict at any point. It has been in consistent use as a commercial unit, but the upper floor has not been used for generations. Every market town in the country is full of such properties. Do those properties which are partly vacant, but in respect of which it could not be said that they are derelict or vacant in their entirety because the ground floor is in use, qualify for the Croí Cónaithe scheme? I have had questions to the Ceann Comhairle's office bounce back to Departments coming back to me, over and back. It is a simple question. They either qualify or they do not. They are not fully derelict and not fully vacant. They are vacant in the upper floors. The ground floors are in use and have been in use.
I have raised this matter previously in the House. In fact, I raised recently with the Tánaiste the issue of the many vacant properties, and part of the reason they are vacant is because there is defective title. There is a need for local authorities to be more proactive in using compulsory purchase orders, CPOs, to assist the landowners to get good title in order that they can go and develop the properties. I really think that is something on which the Department should work with local authorities to resolve the issues as to why many properties are vacant because of the defect in title.
I will take a final response from the Minister on this matter.
It is not; I have another go.
The Deputy does not because several people have come in on it.
Hold on, a Cheann Comhairle. I get a second go. That is part of the process. I tabled the question.
I do have kind of a clue of the rules. There is time allocated for each question-----
Hold on, a Cheann Comhairle-----
I really do not want to have an argument with the Deputy about it.
I am going to have an argument, a Cheann Comhairle. I am one of the few people who turned up for their questions tonight. People have come in to substitute for other people. That is fine; I did not say anything about that. All these people did not turn up and then substitutes came running in at the last minute but then I get short-changed when I do turn up for my own question. That is not fair.
The Deputy is on his feet fairly frequently.
I know, but I put the question down.
All right, we will give the Deputy time. The Minister to respond.
The tax for which I have specific policy responsibility is the vacant homes tax, which has only just come into being. It has yet to be paid by anyone. We are in the first chargeable period. Returns will be made and the charge will be levied. The Revenue Commissioners will provide information to me regarding the operation of that tax and I will come to a view as to whether we need to change the nature of that tax. I would make the point that it is for habitable properties only.
The issue of dereliction is related but it is a separate matter. That is why I very much welcome the focused working group the Minister, Deputy Darragh O'Brien, has set up. When we go around the country to towns and villages, we see too much dereliction. We are providing the carrot now in terms of the grants that are in place but there also has to be a stick that is fully and properly applied. The implementation of that Act and register and the penalty appears to be patchy, at best, around the country. I will work with the Minister in that regard.
I want to ask about the stick. I know there are valid reasons sometimes for properties being vacant or derelict. I will give the Minister two quick instances in my area. Directly across from my office is a multi-unit apartment complex owned by a vulture fund. There are 16 perfectly refurbished apartments that have been sitting empty for approximately four years. That fund is doing it purely for commercial reasons. It is no other reason than pure greed while people need homes. At the top of York Road, just off Dún Laoghaire Harbour, for those who do not know the geography, a place has been sitting vacant for approximately ten years. We found out who owned it and traced it back to a Caribbean tax haven. There needs to be a very big stick for people like that, and 0.3% is not a big stick to force these people to bring those properties back into use for people who really need them.
When we get the full data and having looked at the legitimate exemptions that are provided for in law in terms of the vacant homes tax, the number of people who are directly impacted will not be as high as some are suggesting. I do not think the yield will be as high as some people might think either because of the exemptions that are in place, and which need to be there. That is just that whole area of habitable properties. When I look at the derelict sites issue, however, I see that the levies collected in 2021 came in at just over €1 million and the amount levied was just over €5 million. Presumably, therefore, some of the money has yet to come in or may have come in in recent months. I do not think that is a system that is fully working. That is why the working group has a very important task on its hands. We have too much dereliction in Ireland. We have the carrot now; we need to make sure the stick is working too. I will do whatever I can in my role.
Question No. 67 taken with Question No. 59.
Tax Code
Pearse Doherty
Ceist:68. Deputy Pearse Doherty asked the Minister for Finance if the current tax rules regarding the importation of vehicles from the North, including the charge of VAT and 10% customs duty, are required under European law; his views on their impact on North-South trade; and if he will make a statement on the matter. [21538/23]
Pearse Doherty
Ceist:208. Deputy Pearse Doherty asked the Minister for Finance if the 10% customs duty and 23% VAT requirement for vehicles imported from North to South, which were first registered in Britain, are a requirement under European Union law; the degree to which these charges can be amended as a national competence; and if he will make a statement on the matter. [21110/23]
It has been estimated that the price of second-hand cars has risen by 80% since the pandemic. I want to raise the impact of recent changes to the tax treatment of second-hand vehicles coming in from the North and its impact on the all-island car market. Recent changes mean that three charges may now apply to these vehicles, namely, vehicle registration tax, VRT, which we always had, but also now custom duty at 10% and VAT at 23%, which are new charges in many cases. Can the Minister clarify if these changes were required under EU law? What is his view on the impact this is having on the all-Ireland car market when we consider all three charges together?
I propose to take Questions Nos. 68 and 208 together.
Since the UK left the EU Single Market and customs union, from 1 January 2021, the movement of goods from Great Britain into the EU is an importation from a third country and, in accordance with the terms of the withdrawal agreement, such goods must be declared to customs and are liable to customs duty, if applicable, and VAT at import.
However, the EU-UK Trade and Cooperation Agreement eliminated tariff duties for trade between the EU and Great Britain where the relevant rules of origin are met. This means that if vehicles are imported which are of UK origin then a 0% duty applies, whereas duty of 10% applies to vehicles which are not of UK origin.
Under the terms of the protocol on Ireland-Northern Ireland, the movement of goods between Northern Ireland and the EU is effectively regarded as a movement within the EU. However, a particular issue has existed with regard to used cars, known as margin scheme cars, following a significant change that the UK unilaterally made in January 2021, which impacted considerably on the application of the withdrawal agreement and the protocol. The UK asked the Commission for a permanent derogation from the VAT directive to allow it to operate the scheme, but the Commission refused on the basis that the margin scheme cannot be applied on sales in Northern Ireland of second-hand cars imported from any third country, including Great Britain, and would result in opportunities for significant abuse.
To counteract the tax avoidance opportunities this presented, Revenue revised its published guidance in February 2021 indicating that used cars imported from Great Britain into Northern Ireland after 31 December 2020 could only be subsequently imported into the State and re-registered here after they were declared to customs and if customs duty, if applicable, and VAT at import were paid. This ensured that the cars were liable for VAT and duty on the same basis as used cars brought into the State directly from Great Britain. It was made clear that the approach was temporary in nature, pending a resolution to the issue between the UK and the European Commission.
The Ceann Comhairle might bear with me because I am almost finished.
I have been bearing with everyone else; I might as well bear with the Minister.
Since 1 May 2023, the UK Government has introduced a new scheme known as the second-hand motor vehicle payment scheme. The new scheme allows car dealers who are VAT registered in Northern Ireland and other member states to reclaim the VAT element of the vehicle cost if the vehicle is purchased in Great Britain and removed or exported from there by the purchaser or by the Great Britain dealer. This means that Irish car dealers will now be in the same position as Northern Irish car dealers when purchasing a qualifying vehicle from Great Britain. In light of the UK’s very recent introduction of the second-hand motor vehicle payment scheme, Revenue is currently considering its impact and I expect updated guidance to be published shortly.
I thank the Ceann Comhairle for his forbearance.
I thank the Minister for putting all that on the record. We will look at that. I have read the Revenue guidance in detail. However, there is an impact here. The North has been a big supplier of cars as, indeed, has Britain. The figure we were looking at in 2019 was approximately 120,000 but the North, in particular, and, obviously, Border counties, would have had more.
Revenue gives an example of the two additional charges that now apply, that is, customs duty, which would not have applied in the past, and VAT, which would not have applied in the past in certain cases. It has now given an example of a car purchased into the State at €32,000. When customs duty is added, it goes up another €3,250 and with VAT, it goes up another €8,223. Then, VRT has to be paid on top of it. Therefore, before we even look at VRT, the car has gone from €32,000 up to €43,000.
I am aware there have been recent changes in terms of tax law in Britain that will impact on this. However, is the Minister considering any measures with regard to how VRT is now applied to the importation of those cars given that there is a significant increase in other charges, namely, customs duty and VAT?
As I said in the initial reply, the new scheme that has been produced by the UK Government is very recent. It only came in on 1 May. The Revenue Commissioners are currently examining the second-hand motor vehicle payment scheme. They are considering the impact and they will publish updated guidance shortly. I am not currently considering any particular change to the application of VRT but in light of the introduction of the new scheme in the UK, I will discuss the matter with Revenue to see what we might need to consider here in Ireland.
We are all monitoring the situation but, as I said, there has been a significant increase. The car we could have purchased a number of years ago at €32,000 is now €43,400 just because of taxes. Car prices have also increased because of the pandemic and the shortage of supply.
There are other issues that I will take the opportunity to raise. There is increased frustration among many dealers in respect of the requirements they have to fulfil with Revenue in terms of showing a car was imported from the UK or that it was in the North for a number of years. All of these rules are changing and it is causing serious problems. The Minister talked earlier about businesses needing certainty and I agree entirely. We need more clearly understood guidance for importers of cars from Britain or the North. They are importing cars and thinking they are paying zero rates only to find they have to pay 10%. That means their margin is gone and they have lost out. There are no profits and those dealers have made a loss on the car. We need a better system.
I thank the Deputy. It has been a messy period for the motor sector and its trade with the North and Great Britain because of Brexit. When one considers what has transpired since Brexit, including the unilateral changes that were made in January 2021 and the fact that Revenue had to update its guidance in response to the withdrawal agreement, the Northern Ireland protocol and a new scheme from the UK that was introduced last week, there have been too many changes and we need a period of certainty. I will engage with the Revenue Commissioners on the specific issues the Deputy has raised to see if we need to consider any changes.
Banking Sector
Richard Boyd Barrett
Ceist:69. Deputy Richard Boyd Barrett asked the Minister for Finance if he will stop the sell-off of two banks (details supplied) and use the State's majority stake as the basis for a publicly owned non-profit banking system; and if he will make a statement on the matter. [21571/23]
The Ulster Bank abandoned approximately 1 million loyal customers. We have vulture funds, such as Lone Star Funds, Mars Capital Ireland and Start Mortgages ripping people off with ridiculous interest rates. Is it not time for a public not-for-profit banking system? Instead of selling off the remaining Government share in Permanent TSB and AIB, we should use those institutions, which we still control, to set up a not-for-profit public banking system that cares about the people of this country and its customers.
Notwithstanding good progress in reducing our shareholdings in the banking system and returning funds to the Exchequer, the State remains a majority shareholder in AIB, with a 53% stake, and in Permanent TSB, with a stake of approximately 62%. It continues to be this Government’s belief that banking in the main is an activity that should be provided by the private sector and that taxpayer funds which were used to rescue the banks should be recovered and used for the benefit of the citizens of the State.
The State recently completed a share buyback programme with AIB and we continue to sell shares in AIB through a trading plan, phase 3 of which has been operational since 11 January 2023 with BofA Securities acting as the trading plan manager. Indeed, I will continue to monitor market conditions for further opportunities to reduce the State's shareholding in AIB in the period ahead.
With regard to Permanent TSB, the State is currently not selling shares in the bank and has no near-term intentions to do so with the priority being the successful and safe integration of Ulster Bank's loans, customers and staff. The retail banking review published by my Department in November 2022 considered whether the introduction of a local public banking structure would be desirable. It concluded that the credit union sector should be given the opportunity to transform into a community-based provider of universal retail banking products and services. The findings of the review are available on my Department’s website. I highlight the work that the Minister of State, Deputy Carroll MacNeill, is doing to support the development and growth of the credit union sector, including the passage of legislation. We are now seeing more mortgage activity and investment in technology within credit unions. More current accounts are being opened up by credit union members. I can elaborate on those points another time.
There are 15 seconds available to Deputy Boyd Barrett.
Is there a single shred of evidence that privately run for-profit banks have worked in our lifetime? We had to bail them out after the madness of the Celtic tiger that they helped to instigate. They are now ripping off people with mortgage interest hikes, profiteering-----
I am sorry, Deputy, but we are out of time. The Minister may make a brief response.
We must have a banking system that provides services to customers. The State had to rescue the banks by investing an enormous amount of money. We are recouping much of that money but still have a journey to go. All of that work and the services provided by the banking sector, which supports thousands of staff in Ireland, is complemented by the work of the credit union movement. Credit unions are community-focused and their volunteer ethos is unique. The Government is a strong supporter of the credit union movement.
I agree with that.
The truth is that the sector is now looking at and embracing enormous opportunity. As bank branches are closing around the country, credit unions are present and embedded in communities. We are now providing the policy and legislative framework to enable them to grow and prosper into the future. We will continue with that work.
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