Written Answers Nos. 1 -27
8. Deputy Michael McGrath asked the Minister for Finance his views on the opinion of the Fiscal Council that economic growth forecasts from his Department are systematically biased upwards; his plans to improve forecasting models with the Department; and if he will make a statement on the matter. [42287/12]
Amharc ar fhreagraLast year, the Government established a Fiscal Advisory Council which is to, inter alia, assess and report periodically on the official macroeconomic and budgetary forecasts. The Council issued its third Fiscal Assessment report in September 2012. A large part of the report was devoted to assessing the appropriateness of the economic and budgetary forecasts of the Department of Finance. As the Council notes, economic and budgetary forecasts are subject to a degree of uncertainty and this is reflected in the wide range of projections and ongoing revisions. However, the findings of the Council are that the forecasts produced within the Department of Finance show no sign of optimism bias. This is one of the key conclusions of the report, and is evident for all to see. To quote from page 15 of the report, "....... the official forecasts do not exhibit evidence of optimism bias."
The Fiscal Advisory Council notes that forecasts of the timing and magnitude of the recovery have been revised down by my Department in recent years, but also notes that similar revisions have been made by all institutions which forecast the Irish economy. The recovery in the global economy - on which we rely for an acceleration of export growth - has, in recent years, proved weaker than initial expectations of a number of international forecasting agencies such as the IMF and OECD.
I am sure the Deputy is familiar with the March 2011 report on Strengthening the Capacity of the Department of Finance, carried out by Canadian expert Rob Wright. It recognised that the Department’s forecasting record was as good as any other institution engaged in the process. Nonetheless, the Department has taken steps over the last eighteen months to improve its capacity in the economics field. New graduate staff with economics qualifications to MSc level have been recruited and a separate Economics Division has been set up.
My Department will publish its next set of economic and fiscal forecasts later this month to allow an informed debate in advance of December’s Budget on the fiscal space the government will be operating within.
9. Deputy Éamon Ó Cuív asked the Minister for Finance his views on whether Ireland’s economic interests are being protected in the current discussion surrounding proposals for a Common Consolidated Corporate Tax base; and if he will make a statement on the matter. [42317/12]
Amharc ar fhreagraOn 16th March 2011 the European Commission, which has the right of initiative to bring forward legislative proposals, published its proposal for a Common Consolidated Corporate Tax Base. This represented the beginning of a process that involves a detailed examination of the proposal, line by line, by all Member States at the Council Working Group. Since the Commission's proposal has been published, Department of Finance officials, along with officials from the Revenue Commissioners have been attending the Working Party on Tax Questions which is the forum for discussions on the proposal. To date, my officials have attended meetings on a regular basis in relation to the proposal and there is still a long way to go before agreement on the Commission's proposal could be expected.
This proposal has the potential to affect the economic interests of all Member States. Therefore both I and the Government have made it clear that Ireland, like all other Member States, intends to constructively engage in that process because only in that way can we absolutely ensure that all of the arguments are brought to the table and our interests are protected.
I want to assure the Deputy that it is clearly understood that our engagement is strictly on the basis that taxation is a matter of national competence and that the principle of unanimity in taxation is fully respected.
10. Deputy Timmy Dooley asked the Minister for Finance in view of the failure to encourage the pillar banks to lend in adequate amount to meet demand in the economy if he is considering alternative strategies for improving access to credit; and if he will make a statement on the matter. [42298/12]
Amharc ar fhreagraI do not agree with the Deputy’s assertion that there has been a failure to encourage the pillar banks to lend in adequate amount to meet demand in the economy. The Government has imposed SME lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Both banks were required to sanction lending of at least €3 billion in 2011, €3.5 billion this year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks achieved their 2011 targets and I would be confident of them achieving the more challenging target this year. In terms of rejection rates from banks, I would remind the Deputy that the Credit Review Office (CRO) can review decisions by the pillar banks to refuse, reduce or withdraw credit facilities, including applications for restructured credit facilities, from €1,000 up to €500,000. The CRO is overturning 55% of the refusal decisions referred to them and I would appeal to SMEs and farmers who have been refused credit by the banks to avail of the services of the CRO.
The Deputy should be aware that the Microenterprise Loan Fund Act provides for a scheme which will facilitate up to €40 million in additional lending to microenterprises over the next five years. Furthermore, the Government is in the process of facilitating up to €150 million per annum of additional credit through the Temporary Partial Credit Guarantee Scheme, designed for SME’s who, because of lack of collateral or because of the specialised sector they operate in, face difficulties in accessing bank credit.
In summary, it is vital that the banks continue to make credit available to support economic recovery. However, it is not in the interests of the banks, businesses or the economy for finance to be provided unless the business is viable and has the capacity to meet the interest payments and repay the sum borrowed. I remain open to any constructive suggestions which could augment the Government’s initiatives in this area.
11. Deputy Brendan Smith asked the Minister for Finance his views on the report of the Comptroller and Auditor General which highlighted considerable uncertainty surrounding the level of tax non-compliance and the audit processes employed by Revenue; and if he will make a statement on the matter. [42315/12]
Amharc ar fhreagraI am advised by the Revenue Commissioners that they are currently reviewing the Annual Report of the Comptroller and Auditor-General for 2011, published on Thursday, September 27th, which contains a comprehensive section on Revenue. Revenue has a strong focus on making sure that everyone complies with their tax and duty responsibilities by filing the required tax return and paying the right amount of tax on time. Revenue’s overall compliance strategy is to influence compliance behaviour in the community in general, including by making it as easy as possible for people to comply. In that regard, the Deputy will be aware of Ireland’s high ranking in a World Bank/PSC index on ease of payment of business taxes. The Revenue Commissioners also actively support compliance by reducing the administrative burden on businesses. A measurement carried out recently in accordance with the internationally accepted Standard Cost Model, and overseen and validated by external consultants showed a reduction of 25% in the compliance cost burden for business.
Some examples of initiatives that Revenue has delivered to support tax compliance include:
- The development of its well-regarded Revenue’s Online Service (ROS), incorporating the electronic filing of tax returns and tax payment. Its usage continues to grow (with increased use of Electronic Funds Transfer for tax payments). The number of payment transactions made via ROS increased by 35.6% in 2011 to 975,105, while the value of those payments increased by 16% to €32.1bn.
- The extension of mandatory electronic Filing – which now incorporates all public sector bodies, all VAT registered businesses and employers that employ more than 10 people
- The introduction of electronic Relevant Contracts Tax from January 1 2012 which, by streamlining processes has also had a very significant compliance impact:. This project
- Reduced the administrative burden on business and Revenue,
- Streamlined and modernised the administration of Relevant Contracts Tax,
- Enhanced tax compliance,
- Reduced the opportunities for fraud,
- Improved cash flow for compliant subcontractors, and
- Removed approximately 1,000,000 pieces of paper from the system.
- Principal contractors now electronically inform the Revenue Commissioners of the payments made and the associated tax implications.
It is international best practice amongst tax administrations that making it easy to comply with tax obligations encourages good compliance and I am satisfied that the Revenue Commissioners are to the forefront in that approach. The following statistics are indicators of the achievements of the Revenue Commissioners in 2011 through its strategy of encouraging voluntary compliance:
- A 95% Return and Payment Compliance for Large Cases by the Due Month,
- A 95% average of tax collected by the due date for PAYE/PRSI,
- A 91% average of tax collected by the due date for VAT, and
- A 97% average of tax collected by the due date for Preliminary Income Tax (non-PAYE).
The other aspect of Revenue’s strategy to maximise tax compliance is the development of a comprehensive compliance programme. Here Revenue’s approach is to undertake a range of compliance interventions that are the most appropriate to target the specific risk or risks identified and to influence the compliance behaviour of the taxpayer by so doing. By carefully selecting the cases for intervention, and carefully choosing the type of intervention, Revenue strives to maximise the use of resources and minimise the compliance burden on compliant taxpayers. In his 2011 Report, the C&AG noted ‘that Revenue’s risk assessment is relatively effective in targeting higher-risk cases’.
Among the outcomes that Revenue’s compliance activities have delivered for 2011 are the following:
- In excess of 11,000 audits completed generating a yield of €440.5m,
- A further €81.3m collected from other assurance checks,
- 16 convictions for serious tax offences, and
- 366 published audit settlements to a value of €76m.
It is now widely accepted by Revenue administrations that there is no one absolute way to measure changes in compliance levels. Most modern administrations use a number of indicators that can be looked at as a package, to help them form a view on whether compliance levels are improving or otherwise. I am confident that the Revenue Commissioners are pursuing programmes that maximise voluntary compliance and deal in a very determined way with tax non-compliance.
12. Deputy Billy Kelleher asked the Minister for Finance the progress that has been made to date in implementing a Europe wide system of bank supervision; and if he will make a statement on the matter. [42301/12]
Amharc ar fhreagraThe European Council meeting of 29 June considered a report from the President of the European Council in cooperation with the Presidents of the Commission, Eurogroup and ECB which set out building blocks for future Economic and Monetary Union. One of these building blocks is an integrated financial framework or banking union which comprises three elements (a) an integrated system for the supervision of cross-border banks (b) a European deposit insurance scheme, and (c) a European resolution scheme. The Euro Area Summit also on 29 June called on the Commission to quickly present proposals for the setting up of a single supervisory mechanism which would be considered by the Council as a matter of urgency. Significantly the statement of the Euro area Summit clearly stated that when such a mechanism is in place for banks in the euro area the ESM could, following a regular decision, have the possibility to recapitalise banks directly. The statement also committed the Eurogroup to examining the situation of the Irish financial sector with a view to further improving the sustainability of our well-performing adjustment programme.
The Commission presented legislative proposals in September for a single supervisory mechanism conferring powers on the ECB for the supervision of all banks in the euro area, with a mechanism for non-euro countries to join on a voluntary basis.
Ireland supports in principle the development of a banking union for Europe. Our support for a single supervisor is contingent on such a system definitively breaking the link between the sovereign and the banking sector. We are also seeking to ensure that shared supervision is progressed as part of a package which will also address shared risk and mutualisation of debt. The question of retrospective application of ESM remains firmly on the table as far as Ireland is concerned and we would expect to see more detail on how this can be addressed over the coming months. Any move to a banking union must respect the integrity of the single market and be consistent with the principle of free movement of capital throughout the European Union.
The Commission called on the Council and European Parliament to adopt the legislative proposal by the end of 2012. While the timetable is ambitious we will be supporting efforts by the European Council to meet this target.
The establishment of the single supervisory mechanism is a crucial and significant first step to completing the banking union. The banking union will also require further work to develop a common system for deposit guarantees and an integrated crisis management framework.
13. Deputy Seán Crowe asked the Minister for Finance the plans, if any, he has to publish the economic rationale for all existing tax reliefs and for all proposed tax reliefs being considered; and if he will make a statement on the matter. [42274/12]
Amharc ar fhreagraThe rationale for existing tax reliefs is already in the public domain. The Commission on Taxation included a comprehensive review of all tax expenditures then current in its 2009 Report, with a view to assessing their economic and social benefits. The Commission examined tax expenditures introduced in legislation up to and including Finance (No. 2) Act 2008 which had not been repealed by legislation up to Finance Act 2009.
Not many tax reliefs have been introduced since that time. However, when a relief is introduced or indeed amended or abolished, this is done via the Budget and Finance Bill process. In this way any such change is done in a public manner and the reasons, economic and otherwise, behind the proposed change are fully explained. If Deputies consider that more information is required than initially is being provided by the Minister, then Committee Stage of the Finance Bill provides an opportunity for more detailed analysis to be made. Records of these Oireachtas proceedings are themselves subsequently published.
Where a particularly major change is contemplated, an additional level of analysis is undertaken, frequently involving a consultation process.
An example of such work recently conducted by my Department would be the Economic Impact Assessment of Potential Changes to Legacy Property Reliefs. This assessment, undertaken last year and published by my Department, included a consultation paper, engagement from over 700 submissions and an analysis, enabled the Department to understand the possible legacy costs to the State as well as the impacts on individuals and economic sectors of a change in law relating to the use of these particular reliefs.
Another example, which is currently work in progress, is the Public Consultation on Section 481 Film Tax Relief. I published a consultation paper which set out preliminary analysis and data and invited interested parties to make submissions as part of an economic impact assessment of film tax relief. The impact assessment will enable the Department to better understand the benefits that may accrue to the exchequer as well as consequences for investors, the audiovisual industry, and the wider economy arising from potential changes to the relief.
I would add also that much of the preparatory work done by my Department in relation to tax policy options and choices generally is reflected in the papers prepared for and presented to the Tax Strategy Group. These papers are subsequently published on my Department’s tax policy website www.taxpolicy.gov.ie.
As regards proposed tax reliefs being considered, I can say that all reliefs come under review as part of the annual Budget and Finance Bill process but the Deputy will be aware that it is not the practice of the Minister for Finance to comment on possible changes in advance of Budget Day.
14. Deputy Micheál Martin asked the Minister for Finance his plans to attract non Euro investors by offering Irish government bonds denominated in US dollars; and if he will make a statement on the matter. [42306/12]
Amharc ar fhreagraInternational investors, including non-euro investors, are already significant holders of Irish Government bonds. The NTMA inform me that, to the best of their knowledge, a large proportion of the buyers of Treasury Bills in auctions this year and of the €4.2 billion of long-term bonds issued in July were non-domestic investors and that there has been significant non-euro interest in Ireland. The €1 billion issuance of amortising bonds in August was primarily, as one would expect, driven by domestic demand. The NTMA already issue non-euro-denominated short-term commercial paper in the market. It is the policy of the NTMA to swap non-euro receipts into euro and so remove the currency exposure.
Longer-term Government bonds denominated in US dollars are another potential market for the NTMA to tap. I am aware that other eurozone sovereigns, such as Finland, Belgium, and other European sovereigns such as the Netherlands, Denmark and Sweden, have issued in that market this year. Any decision by the NTMA to issue bonds denominated in US dollars would depend on prevailing market circumstances and the attractiveness of the funding costs relative to other markets, particularly the euro.
15. Deputy Dara Calleary asked the Minister for Finance his views on whether the pension fund levy has contributed to the difficulties faced by many pension schemes in meeting funding standards issued by the pensions board; if he is considering reviewing the levy in view of this; and if he will make a statement on the matter. [42291/12]
Amharc ar fhreagraThe chargeable persons for the pension fund levy are the trustees or other persons (including insurance companies) with responsibility for the management of the assets of pension schemes or plans.
The payment of the levy is treated as a necessary expense of a pension scheme and the trustees or insurer, as appropriate, are entitled (where they decide to do so) to adjust current or prospective benefits payable under a scheme to take account of the levy. It is up to the trustees to decide whether and how the levy should be passed on and who should be impacted and to what extent, given the particular circumstances of the pension schemes for which they are responsible.
Where, for example, a decision is taken by the trustees of a funded Defined Benefit (DB) scheme to pass on the impact of the pension fund levy to scheme members as outlined above then the impact on the scheme in terms of meeting the minimum funding standards would be neutral.
As I understand the position, the trustees of many funded DB schemes are still in the process of considering their plans for dealing with the minimum funding standards recently issued by the Pensions Board. While I am conscious that pension schemes may have to address a number of difficult issues in meeting these requirements, I would not consider, in all the circumstances, the temporary stamp duty levy of 0.6% to be significant in this context.
In line with standard practice and in common with other tax measures, the operation of the pension fund levy will be reviewed by me in the context of the Budget and Finance Bill.
16. Deputy John McGuinness asked the Minister for Finance his views on whether a deal to remove loss making tracker mortgages from the balance sheets of covered banks would reduce the risk of those banks increasing standard variable rate mortgages, in view of the impact such increases have on customers who are unable to switch their mortgage to more competitive providers; and if he will make a statement on the matter. [42309/12]
Amharc ar fhreagraGiven discussions on any bank debt deal are on-going, it would be inappropriate of me to speculate over what future scenarios may arise based on those discussions and as no decision to transfer the tracker mortgage portfolio to any other entity has been taken, I cannot outline the impact that such a transfer would have. As the Deputy will be aware, the Banks’ policies in relation to lending rates is a matter for the boards and management of each institution. Notwithstanding the fact that the State is a significant shareholder in various institutions, I must ensure that the banks are run on a commercial, cost effective and independent basis to ensure the value of each bank as an asset to the State, as set out in the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. Relationship Frameworks have been specified that define the nature of the relationship between the Minister for Finance and the banks.
These Frameworks were published on the Department of Finance website on 30 March 2012 and can be found at:
http://banking.finance.gov.ie/presentations-and-latest-documents/
Ultimately the pricing of financial products, including standard variable mortgage interest rates, is a commercial decision for the management team and board of each bank, having due regard to their customers and the impact on profitability, particularly where the cost of funding to each bank, including deposit pricing, is under pressure. Neither the Central Bank nor the Department of Finance has a statutory function in relation to interest rate decisions made by individual lending institutions at any particular time.
17. Deputy Robert Troy asked the Minister for Finance his plans to hold discussions with the Irish Stock Exchange with a view to supporting its continued development; and if he will make a statement on the matter. [42320/12]
Amharc ar fhreagraI would like to inform the Deputy that there is regular contact between my Department's officials and the Irish Stock Exchange. My particular function in relation to the Irish Stock Exchange is to ensure that they continue to be regulated by the Central Bank of Ireland, and authorized under the MiFID legislation. I have no specific arrangements to have discussions with the ISE at this time, but I am open to such a meeting in the future. At a broader level, I would support an ambitious enterprise policy for Ireland, which would facilitate Irish companies making their mark on a global scale. This policy is under the remit of my colleague, Minister Bruton.
18. Deputy Patrick Nulty asked the Minister for Finance when Ireland will receive a write down of its debt burden as indicated by EU leaders following the July 2012 summit. [41267/12]
Amharc ar fhreagra19. Deputy Patrick Nulty asked the Minister for Finance the steps he is taking to renegotiate the promissory note which the State must pay in relation to Irish Bank Resolution Corporation formerly Anglo Irish Bank. [41266/12]
Amharc ar fhreagraI propose to take Questions Nos. 18 and 19 together.
As the Deputy is aware, the Irish Government has been working extremely hard to secure a deal on the Irish bank debt and detailed work will continue to ensure that the positive moves in Europe are harnessed to maximise the benefit to the Irish taxpayer. This is on the back of the Euro Area summit statement of 29 June of this year and the on-going work is one of the Government’s key priorities.
On 12 and 13 September I travelled to Paris, Berlin and Rome for meetings with my counterparts in the respective Ministries of Finance. These meetings were part of our on-going consultations with our European colleagues, at all levels, to support broader understanding of the extent to which we are living up to our commitments under the EU-IMF Joint Programme of Assistance, as well as the remaining challenges we face.
A priority item on the agenda in each of these meetings was the issue of the promissory note. I am glad to say that we met with strong appreciation of our situation and we were able to have very constructive dialogue in each case on our approach to this question. At this point it is not possible to guide on the potential timing of any agreed approach but we will be continuing our engagement with the Troika and our partners in the European Union with a view to a satisfactory resolution of this issue and other related questions.
20. Deputy Catherine Byrne asked the Minister for Finance if he will consult with the Governor of the Central Bank of Ireland with a view to the banks capping the interest rate being charged by licensed money lenders; and if he will make a statement on the matter. [37883/12]
Amharc ar fhreagraI mentioned in the House on 18 July 2012, at the conclusion of the debate on the Private Members' Bill on the issue of capping the interest rate charged by licensed moneylenders, that I would draw to the attention of the Governor of the Central Bank, the concerns and points raised during the debate. I have received a reply from the Governor and its contents are being examined. The Governor's response raises a number of significant issues which will require additional consultation between my Department and the Central Bank. The Governor did mention, however, that an interest rate cap on licensed moneylenders may lead to greater financial exclusion and more customers may resort to the use of illegal moneylenders.
21. Deputy Gerry Adams asked the Minister for Finance the way he plans to achieve a broadening of personal income tax base as promised to the international monetary fund in the letter of intent he signed in August 2011. [42260/12]
Amharc ar fhreagraIn the Memorandum of Understanding (MoU) under the EU / IMF Programme of Financial Support, which is reviewed quarterly with the Troika i.e. the European Commission, the International Monetary Fund and the European Central Bank, the Government has committed to consolidation measures for 2013 of at least €3.5 billion. It is proposed that this consolidation will be made up of a combination of revenue measures and expenditure reductions. In the MoU, Revenue measures to raise at least €1.25bn are proposed including:
- A broadening of the personal income tax base.
- A value-based property tax.
- A restructuring of motor taxation.
- A reduction in tax expenditures.
- An increase in excise duty and other indirect taxes.
As the Deputy will be aware, it is a long standing practice of Finance Ministers not to comment on any tax proposals that may be the subject of forthcoming Budget decisions.
22. Deputy Aengus Ó Snodaigh asked the Minister for Finance if there is an estimate of the tax forgone to the State from the activity whereby propriety directors can make tax free contributions to pensions; if he has considered placing a limit on the amount that can be contributed to pensions tax free by these persons for example in the region of 20% on an individual salary. [42268/12]
Amharc ar fhreagraContributions to occupational pension schemes by employees are tax-relieved at the marginal rates of income tax applying to such individuals, subject to restrictions on the annual amount of tax-relieved contributions based on annual earnings (a maximum of €115,000 per annum applies) and age-related percentage limits of those annual earnings. To the extent that “proprietary directors” make pension contributions as employees of their business these restrictions would apply. However, employer contributions to occupational pension schemes are not included within the age-related percentage limits and the overall earnings cap for tax-relieved pension contributions referred to above. This is on the basis that employers cannot fund for pension benefits in excess of the statutory maximum of a pension of 2/3rds of final salary. I assume it is to these employer contributions that the Deputy is making reference in his question.
A review of certain tax schemes undertaken in 2005 included a review of Tax Relief for Pensions Provision which was carried out jointly by my Department and the Revenue Commissioners. The results of this review were published in February 2006 as part of Volume III of the Budget 2006 Review of Tax Schemes. Among the main conclusions of the review were that, notwithstanding the maximum funding rule of a pension of 2/3rds final salary:
“Current tax reliefs appear to be very generous in relation to individuals whose employers are in a position to make substantial tax deductible contributions to their schemes effectively without limit, particularly in circumstances where they can influence the level of employer contributions and their remuneration level”
Proprietary directors would be among the individuals being referred to in this context.
In an effort to address the issues raised in the various conclusions of the review, including the specific conclusion referred to above, various options for change were put forward which resulted in a number of significant amendments being made to the tax regime for both pensions and Approved Retirement Funds in the 2006 Budget and Finance Act.
The changes involved:
- Closing off excessive tax relieved funding for pensions through the imposition of a maximum allowable pension fund on retirement for tax purposes of €5m, with punitive tax on amounts drawn down in pension benefits in excess of that sum. (This maximum allowable pension fund for tax purposes -the Standard Fund Threshold - has since been reduced to €2.3 million).
- Imposing a cumulative limit of 25% of the Standard Fund Threshold on the maximum tax-free lump sum that can be taken on retirement. (This cumulative lifetime limit for tax-free retirement lump sums has since been reduced to €200,000).
- Restricting the capacity of individuals to use Approved Retirement Funds (ARFs) as purely long-term tax-exempt vehicles by introducing the concept of an annual imputed or notional distribution from ARFs which is taxable at the ARF owner’s marginal tax rate. (The imputed distribution was introduced on a phased basis rising to a rate of 3% of ARF assets. The imputed distribution percentage was increased from 3% to 5% in Budget and Finance Act 2011 and to 6% in this year’s Budget and Finance Act for ARFs with assets of €2 million or more.)
The fact that employer contributions to occupational pension schemes are not included within the employee age-related percentage limits and the overall earnings cap on pension contributions, was identified as an anomaly in the review and was considered among the options for change. However, the review identified difficulties with such a course of action and rather than change the treatment of employer contributions, it was considered that the imposition of the limit on the maximum allowable tax relieved pension fund (the Standard Fund Threshold) would be as effective, without giving rise to the difficulties identified in the review.
I am advised by the Revenue Commissioners that employer contributions to occupational pension schemes are returned annually to the Revenue Commissioners on an aggregate basis as part of the P35 tax return by employers. Small self-administered pension schemes (SSASs) are a particular type of occupational pension scheme which are normally single member schemes – that member generally being a proprietary director. However, Revenue systems are not capable of distinguishing between multi-member and single member schemes for the purpose of establishing the employer contributions made specifically in relation to proprietary directors as part of the P35 returns.
I am also advised by the Commissioners that a condition of approval of small self administered schemes is the supply of regular information about the scheme, including the submission of annual audited accounts of the scheme which would include contributions made. However, this material is not as yet held in a manner that would allow the information requested by the Deputy to be extracted without a significant investment of resources by them.
23. Deputy Niall Collins asked the Minister for Finance his plans for the operation of the eligible liabilities guarantee; the implications for the public finances of any change to the scheme; and if he will make a statement on the matter. [42294/12]
Amharc ar fhreagraThe Deputy will be aware that the continuation of the ELG Scheme (Scheme) which has been in operation since 9 December, 2009, is subject to approval by the EU Commission every six months under State Aid Rules. The current issuance period (during which new liabilities may be guaranteed),which was approved for prolongation by the EU Commission on 1 June last, is due to terminate on 31 December, 2012. As part of the bi-annual review process, the Central Bank of Ireland (CBI) and the National Treasury Management Agency (NTMA),the Scheme Operator, have been asked for their assessments of the case for further prolongation of the ELG Scheme beyond December, 2012. When these assessments have been made available to me, I will take them into account along with the advice of my Department before deciding on whether or not to seek approval from the EU Authorities to extend the issuance period of the Scheme.
At the same time, an inter-Agency Working Group led by my Department is currently working with the brief to develop a roadmap to provide for a winding-down of the Scheme consistent with preserving financial stability. The outcome of the Group’s deliberations will be discussed with the Troika Authorities over the final Quarter of this year.
As regards implications for the public finances of any change to the Scheme, the Deputy will be aware that, under its terms, Participating Institutions are obliged to pay fees to the State in respect of their outstanding guaranteed liabilities. The fee rate is determined by the EU Commission and is reviewed on a regular basis. Any decision to alter current rates would consequently have an impact on the amount of fees currently being generated by the Scheme.
The fee income expected to be received in 2012 by the Exchequer is of the order of €1bn. Any decision in the future to end the Scheme would ultimately eliminate this income. The extent of the impact would depend on how such a move was managed but as fee income is paid quarterly in arrears and as any existing guarantee –and therefore corresponding fee - would continue to apply until the maturity of the liabilities concerned, income would tend to reduce on a gradual basis. Any such change in fee income accruing to the Exchequer in the future would be taken account of in the normal Budgetary arithmetic.
I am conscious that the current level of fees being paid by the Participating Institutions in the ELG Scheme is unsustainable in the long term and is having a negative impact on their profitability. With this in mind, and with my encouragement, Irish covered banks’ subsidiaries in the UK have been reducing their participation in the Scheme during 2012 by not taking on new, guaranteed deposits under the Scheme. As indicated above in the measures that I outlined, it is my intention to examine ways in which this process can be continued here in Ireland with a view to developing a plan for an orderly withdrawal of the Scheme at an appropriate time but which would, of course, continue to honour the terms of all current guarantees under the Scheme.
24. Deputy John Browne asked the Minister for Finance the process that he has undertaken to review and where appropriate take on board the recommendations of the Fiscal Council's report; and if he will make a statement on the matter. [42289/12]
Amharc ar fhreagraLast year, the Government established a Fiscal Advisory Council which is to report periodically on the fiscal position. In that context, I welcome the recent publication of the Council’s third Fiscal Assessment Report. My Department monitors all economic developments closely and considers the analysis and recommendations in expert reports such as those produced by the Fiscal Council. These will form valuable inputs to its updated economic projections, which will be published later this month in the Medium-Term Fiscal Statement (MTFS).
The Council suggests that it would be prudent to undertake additional consolidation in 2014 and 2015. It is of course extremely important that we adhere to the deficit targets which have been set and that we restore sustainability to the public finances as soon as possible. Developments this year have been broadly in line with expectations in aggregate terms. In this context, Government will take the views of the Council into consideration.
On the other hand, I am very conscious of the potential impact this could have on economic activity. In striving to restore sustainability to the public finances, we must also be mindful of protecting the emerging economic recovery and seek to strike the right balance between the two. This balancing act is difficult but it is my view that we have a reasonable balance. The fact that the Council sees us as achieving deficit targets on the basis of the already committed adjustments reinforces my view in that regard. However, we will continue to closely monitor economic developments and will take the measures necessary to meet our deficit targets.
25. Deputy Éamon Ó Cuív asked the Minister for Finance if his attention has been drawn to recent reports that more than €500m in revenue is lost annually as a result of tobacco smuggling; his views on whether these are accurate figures; his plans to take additional measures to combat such illegal activity; and if he will make a statement on the matter. [42313/12]
Amharc ar fhreagraI assume the Deputy is referring to a Market Survey Report carried out on behalf of the Tobacco industry in the second quarter of this year. I am informed by the Revenue Commissioners that they do not accept that the figures in this report accurately measure the extent of the illicit tobacco market in Ireland for the following reasons. Firstly this survey is based on an empty discarded pack collection and does not distinguish between illicit product and product legally imported by passengers arriving in to the state from other jurisdictions. Secondly, I am informed by the Revenue Commissioners that their office and the Tobacco Control Unit of the Department of Health commissioned surveys in 2009, 2010 and 2011 to establish the level of the illicit trade in tobacco. Revenue and the Tobacco Control Unit are both satisfied that this survey is more robust and comprehensive and distinguishes between tobacco products, which are legally imported and smuggled product. The surveys for 2009 and 2010 estimated that 20% of cigarettes consumed in the State had not been taxed in this jurisdiction. This figure was further broken down as 14% illicit product and 6% legally imported by passengers arriving into the State from other jurisdictions. These findings were based on the 2006 Census population figures. By applying the most up to date population data, the 2011 census population figures, which have recently become available, IPSOS MRBI have now revised the illicit percentages to 16% for 2009 and 15% for 2010. The recently published results from the IPSOS MRBI survey for 2011 indicate that illicit consumption accounted for 15% of the market, resulting in a loss to Revenue of approximately €258m (Excise and VAT).
I am informed by the Revenue Commissioners that the tackling of this illicit trade remains a key objective.
In 2010 Revenue established a high-level internal group, chaired at Commissioner level, to examine the risks related to tobacco products tax evasion and to oversee and optimise the detection of contraband and counterfeit tobacco products. This group has promoted a number of initiatives aimed at counteracting the illicit trade in tobacco. These include the adoption of a comprehensive tobacco strategy which is published on Revenue’s website www.revenue.ie . The strategy underpins a number of programmes, which are designed to complement each other in targeting the supply and demand sides of the market for contraband tobacco in Ireland. Key elements of these programmes include developing and sharing intelligence on a national, EU and international basis, development of analytics and detection technologies, and ensuring optimum deployment of resources at point of importation and within the country, in order to intercept the contraband product and to prosecute those involved.
In 2011, a total of 109.08m cigarettes with a retail value of €45.95m and 11,158 kgs of tobacco with a retail value of €4m were seized by Revenue. In addition to this Revenue has obtained one hundred and three convictions relating to cigarette smuggling, with fines of €138,800 imposed, and thirty-one custodial sentences of which twenty-one were suspended. There were a further fifty-seven convictions relating to the sale of unstamped tobacco products with fines of €115,850 imposed, and fourteen custodial sentences of which seven were suspended.
In 2012 to date a total of 81.1m cigarettes with a retail value of €36.6m and 3,338kgs of tobacco with a retail value of €1.2m have been seized by Revenue. In addition to this Revenue has obtained forty-one convictions relating to cigarette smuggling, with fines of €69,250 imposed, and nineteen custodial sentences of which five were suspended. There were a further fifty-two convictions relating to the sale of unstamped tobacco products with fines of €89,800 imposed, and twenty custodial sentences of which twelve were suspended.
Revenue also consistently monitors ongoing developments in available x-ray and other technologies, and the selection and deployment of detection equipment is constantly reviewed. In this regard Revenue has recently purchased an additional mobile X-Ray van which it hopes to have commissioned by the end of this year.
26. Deputy Jonathan O'Brien asked the Minister for Finance the recommendations contained in the Keane Report that have been implemented by his Department and the actions taken on each of these recommendations. [42271/12]
Amharc ar fhreagra68. Deputy Denis Naughten asked the Minister for Finance the progress he is making to assist families in mortgage difficulty; and if he will make a statement on the matter. [42246/12]
Amharc ar fhreagraI propose to take Questions Nos. 26 and 68 together.
Mortgage holders who are in difficulty with their mortgage obligations in respect of their primary residence have significant protections available to them under the Central Bank’s Code of Conduct on Mortgage Arrears. The Department of Social Protection’s mortgage interest supplement scheme also provides for direct support to mortgage holders that have had to avail of social welfare support. Budgeting and debt advice is also available through MABS which is also funded by the Department of Social Protection.
In addition, last October the Government published the Report of the Inter-Departmental Working Group on Mortgage Arrears (“Keane Report”) and the implementation of its recommendations is now a significant part of the Government’s overall efforts to tackle mortgage difficulty.
A number of significant milestones have now been achieved in the implementation of the report's recommendations. These are:-
- The Personal Insolvency Bill was approved by Government on 26 June 2012 and published on 29 June 2012. The Committee stage of the Bill was passed by the Dáil on 13 September;
- The Minister for Housing and Planning formally launched the “mortgage to rent” scheme on a nationwide basis at the end of June;
- An extensive independent advice framework has now been put in place comprising of (i) an enhanced website, www.keepingyourhome.ie , (ii) a Mortgage Arrears information helpline, and (iii) a service to provide free independent ‘one-to-one’ professional financial advice to borrowers in mortgage distress. The advice will be provided by a panel of accountants and a protocol has been agreed between recognised accountancy bodies and the lenders. The list of accountants providing the service is located on the keepingyourhome.ie website.
The Government remains very committed to progress measures to assist genuine mortgage holders in difficulty and the Government committee on mortgage arrears, which is chaired by An Taoiseach, continues to meet. It is the intention of Government to ensure that those mortgage holders in genuine difficulty will receive appropriate assistance and a high priority has been assigned by Government to the implementation of this broad range of measures to assist those experiencing difficulty on their mortgage across the relevant Departments and agencies.
27. Deputy Mary Lou McDonald asked the Minister for Finance if he will provide an update on the operation of the SARP tax relief passed in Budget 2012, including the number of persons who have availed of this tax relief; the total amount of relief awarded and the number of jobs that have been directly created as a result of this relief. [42261/12]
Amharc ar fhreagraSection 14 of Finance Act 2012 introduced the Special Assignee Relief Programme which is designed to reduce the cost to employers of assigning key individuals in their companies from abroad to take up positions in the Irish based operations of their employer. The programme provides for an exemption from income tax on 30% of salary between €75,000 and €500,000 for employees that are assigned for a minimum of 1 year. The exemption is available for a maximum of 5 years. The scheme operates through the PAYE system as a deduction from income tax, but USC and PRSI continue to be payable on the full income amount.
The scheme has been introduced for an initial three-year period ending on 31 December 2014, in order to allow for review. Any assignee that avails of the scheme during this time will have access to the relief for the period of their assignment, up to the maximum 5 years.
Paragraph 10 of Section 14 provides that relevant employers must submit an annual return to the Revenue Commissioners detailing, inter alia, the number of employees and the amounts of exempt income claimed under the programme. This return will not be sought until after the end of the tax year in order to ensure that an accurate picture of take up levels over a full tax year can be provided. Therefore, given that 2012 is the first year of the programme, it will be 2013 before reliable statistics on its uptake will be available.
