Written Answers Nos. 45-53
45. Deputy Brendan Griffin asked the Minister for Finance if he will provide a breakdown of State revenue generated through the universal social charge, with details of the amounts generated from various income levels; the total amount generated per annum; and if he will make a statement on the matter. [46565/12]
Amharc ar fhreagraI am advised by the Revenue Commissioners that the net receipt from the Universal Social Charge (USC) in 2011 was €3,114.5 million and the estimated cash receipt for 2012 is €3,873 million. While the necessary detailed data is not compiled in such a manner as would enable an income distribution of expected receipts to be provided, a modelled distribution of the estimated amount of USC due for the tax year 2012 by reference to projected incomes for 2012 has been compiled and is set out in the following table.
|
Range of Gross Income |
Universal Social Charge |
USC by range as % of total |
|
€ |
€ |
|
|
0 - 20,000 |
128,999,383 |
3.4% |
|
20001 - 30000 |
335,535,868 |
8.7% |
|
30,001 - 40,000 |
455,951,252 |
11.8% |
|
40001 - 50000 |
435,770,416 |
11.3% |
|
50001 - 60000 |
369,164,370 |
9.6% |
|
60001 - 70000 |
311,375,014 |
8.1% |
|
70001 - 80000 |
263,740,770 |
6.9% |
|
80001 - 90000 |
207,524,244 |
5.4% |
|
90,001 - 100,000 |
167,003,554 |
4.3% |
|
100,001 - 120,000 |
241,761,971 |
6.3% |
|
120,001 - 140,000 |
158,024,350 |
4.1% |
|
140,001 - 160,000 |
106,565,131 |
2.8% |
|
160,001 - 180,000 |
78,804,425 |
2.0% |
|
180,001 - 200,000 |
61,481,574 |
1.6% |
|
200,001 - 250,000 |
107,728,875 |
2.8% |
|
250001 - 300,000 |
71,526,983 |
1.9% |
|
300,001 - 350,000 |
50,391,442 |
1.3% |
|
350,001- 400,000 |
37,651,749 |
1.0% |
|
400,001 - 450,000 |
30,225,816 |
0.8% |
|
450,001 - 500,000 |
24,360,437 |
0.6% |
|
500,001 - 750,000 |
77,009,704 |
2.0% |
|
750,001 - 1,000,000 |
39,912,090 |
1.0% |
|
1,000,001 - 2,000,000 |
53,576,622 |
1.4% |
|
Over 2,000,000 |
35,655,346 |
0.9% |
|
Overall Total |
3,849,741,386 |
100.0% |
The figure for total USC provided in the table is a projected estimate of the total liability to the tax in respect of the tax year 2012 and is not intended to correspond to the cash receipts expected to be collected in the corresponding calendar year. Figures of cash receipts are subject to timing arrangements and can also be distorted by cash-flow adjustments. The figures are estimates from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. These are, therefore, provisional and likely to be revised. It should be noted that Gross Income is as defined in the Revenue Statistical Report 2010. The numbers of income earners shown in the table counts a married couple who has elected or has been deemed to have elected for joint assessment as one tax unit although USC is an individualised charge and as such the estimated liability is calculated on the basis of individual incomes.
46. Deputy Peter Mathews asked the Minister for Finance if the economic impact report on the section 23 type relief changes proposed in the 2012 Finance Bill has been completed; if so, if the proposed changes have been passed; if he will provide details of the changes; if he will clarify if mortgage interest relief is restricted to 25% of the mortgage interest paid for the years 2012 and 2013; and if he will make a statement on the matter. [46603/12]
Amharc ar fhreagraI announced two proposals in Budget 2012 relating to “legacy” property-based tax relief schemes in line with the Programme for Government commitment to reduce, cap or abolish such reliefs which benefit very high income earners. The Department of Finance conducted an extensive economic impact assessment during the summer and autumn of 2011 relating to “legacy” property-based tax relief schemes. This involved: An analysis of all available data from the Revenue Commissioners on claims to date in respect of legacy property reliefs; An analysis of Central Bank and financial institution data in respect of mortgage arrears and defaults in the residential buy to let sector; The production of a detailed consultation paper which presented all preliminary analysis of the data from Revenue Commissioners as well as the Department’s own internal economic modelling; A six week consultation period was held to enable all interested parties to submit their views. In addition a copy of the consultation paper was provided to all members of the Oireachtas; The production and publication of a detailed economic model on how a removal of the legacy property reliefs would impact on individuals; Reviewing and analysing some 750 responses to the consultation paper; Detailed analysis of the impact on various investor types and on jobs and business in a number of economic sectors (healthcare, hotels, student accommodation).
The analysis and findings in the final report, which was published and is available on my department’s website, were reviewed and validated by the Central Expenditure Evaluation Unit (CEEU) of the Department of Public Expenditure and Reform, and by economic consultants Indecon International Economic Consultants.
Finance Bill 2012 contained two measures related to property reliefs designed to reduce the ongoing cost of these schemes to the Exchequer and to eliminate it in as short a time as possible.
With effect from 1 January 2012, a USC surcharge will be introduced on all investors with annual gross incomes over €100,000. The surcharge will apply at a rate of 5% on the amount of income sheltered by property reliefs in a given year and will be in addition to any normal USC payable on this income. This USC surcharge will apply to all investors with this level of gross income regardless of whether they invested in Section 23 type investments or accelerated capital allowance schemes.
In addition, investors in accelerated capital allowance schemes will no longer be able to use any capital allowances beyond the tax life of the particular scheme where that tax life ends after 1 January 2015. Where the tax life of a scheme has ended before 1 January 2015 no carry forward of allowances into 2015 will be allowed. The delayed implementation of this measure is designed to give individuals time to adjust to the absence of the carry forward provision.
The interest restriction on residential landlords was introduced in the April 2009 supplementary budget as part of an urgent revenue-raising package aimed at stabilising the public finances. The reduction in the level at which interest could be claimed for residential rental properties significantly reduced the cost of this relief to the Exchequer. In the case of interest accruing on or after 7 April 2009 (insofar as it would otherwise be allowable) the deduction available to the landlord is limited to 75% of such interest.
47. Deputy Terence Flanagan asked the Minister for Finance the position regarding a pension levy (details supplied); and if he will make a statement on the matter. [46608/12]
Amharc ar fhreagraThe pension fund levy applies at a rate of 0.6% per annum to the market value, on the valuation date, of assets under management in pension funds and pension plans approved under Irish tax legislation. The levy will operate for a period of 4 years only (2011 to 2014) and the legislative provisions giving effect to the levy (section 4 of Finance (No 2) Act 2011) were specifically drafted to reflect this.
The moneys raised from the pension fund levy are being used to pay for the Government’s Jobs Initiative introduced in May 2011. The measures introduced as part of the Jobs Initiative include a new 9% VAT rate on certain activities, the halving of the lower rate of PRSI and small amounts of additional current and capital expenditure.
The implementation of a jobs and growth strategy is a key priority of the Government. The measures announced in the Jobs Initiative are aimed at assisting in employment generation – providing opportunities for those who are out of work, to restore public morale and confidence in the economy and encourage spending by consumers.
The chargeable persons for the levy are the trustees or other persons (including insurance companies) with responsibility for the management of the assets of the 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.
However, the legislation also includes safeguards aimed at ensuring that benefits payable, either currently or prospectively to any member, are adjusted in such a way that the reduction in value of those benefits shall not exceed 0.6% of the market value of the assets accounting for the scheme’s liabilities to that member.
I am conscious of the concerns of pension scheme members about the impact of a levy in circumstances where the pensions sector, in common with other sectors in our economy and society, is finding the current economic and financial environment very challenging. However, much of the value of pension funds is attributable to the rolled up value of generous tax reliefs that pension savings have historically been granted and continue to receive. The imposition of the levy is for a relatively short period and its purpose is to improve the economic environment by providing the means to encourage job creation in areas of our economy most likely to deliver that employment quickly.
48. Deputy Gerry Adams asked the Minister for Finance if there is a North South Co-operation unit in his Department; the number of staff working in the North South Co-operation unit; the number of staff who have worked in the North South Co-operation unit in each year since 2007. [46617/12]
Amharc ar fhreagraThere is no North South Co-operation unit in my Department.
49. Deputy John Halligan asked the Minister for Finance if he will detail in tabular form the number of illicit cigarettes that have been seized by the Revenue Commission and Gardaí to date in 2012; if he could detail the source of origin of these cigarettes; if he can provide an estimate of the monetary value of the illicit cigarette trade here to those engaged in the smuggling and sale of illicit cigarettes; if he will provide an estimate of the cost to the Exchequer and legitimate retailers of the illicit cigarette trade; if any co-operation takes place between the Revenue Commissioners, the Gardaí and his Department, the Department of Justice and the Department of Jobs, Enterprise and Innovation in formulating and implementing policy in relation to the illicit cigarette trade; his plans to adopt any additional measures to counteract the damage the illicit cigarette trade causes by exposing minors to unregulated supplies of tobacco, such as those recommended by Retail Ireland in their August 2012 report Tackling the Black Market and Retail Crime; and if he will make a statement on the matter. [46636/12]
Amharc ar fhreagraI am informed by the Revenue Commissioners, who are responsible for the collection of tobacco products tax, and for tackling the illicit trade in cigarettes and tobacco products, that the following table sets out the information requested by the Deputy in respect of the period 1 January 2012 to 19 October 2012.
|
2012 |
No. of seizures |
Quantity |
|
Cigarettes |
6,670 |
90.2 million |
|
Tobacco |
1,132 |
3,828 kgs |
The above figures include illicit tobacco products seized by An Garda Síochána and transferred under agreed procedures to Revenue custody.
The Commissioners inform me that in the absence of information specific to each case, it is not possible to state categorically the individual country in which a particular seizure of cigarettes was manufactured. There were eight significant cargo seizures of cigarettes so far this year. One of these seizures was consigned to Ireland from Vietnam. The other seven seizures were consigned from ports in other EU states and consequently it is not possible to determine the origin of the cigarettes in these cases. In addition to these large individual detections, the figures in the Table above include a significant number of smaller seizures of regular brand cigarettes purchased in countries that have a comparatively low tobacco tax rate. These seizures are from air and sea passengers arriving in the State.
In general, information available to Revenue and international enforcement agencies, including OLAF, the European Commission Anti-Fraud Office, indicates that South-East Asia, and China in particular, are the source of manufacture of large quantities of illicit cigarettes.
The Deputy will appreciate that by its nature it is not possible to provide an accurate estimate of the monetary value to those involved in shadow economy activities such as the smuggling and sale of illicit cigarettes. Neither is it possible to provide an estimate of the cost to legitimate retailers from the illicit cigarette trade. As regards the cost to the Exchequer, I can inform the Deputy that in the most recent survey carried out on behalf of Revenue and the National Tobacco Control Office, it was estimated that the volume of illicit cigarettes consumed in 2011 was 770m, resulting in a loss of approximately €258m (excise duty + VAT).
I can assure the Deputy there is strong co-operation between all relevant Departments and offices on an ongoing basis in relation to formulating and implementing policy. This includes co-operation between the Revenue Commissioners, An Garda Síochána, Departments of Finance, Health and other relevant Departments. At an operational level there is strong co-operation between all agencies involved in the fight against the illicit tobacco trade including between the Revenue Commissioners, An Garda Síochána and the Criminal Assets Bureau at a national level. Also at an international level there is ongoing co-operation between the relevant Irish agencies and the European Commission Anti-Fraud Office (OLAF), HM Revenue & Customs and other UK agencies, and with other Customs Administrations.
As regards additional recommendations contained in Retail Ireland's report on Tackling the Black Market and Retail Crime, the need for such measures are kept under review by the agencies with responsibilities in this regard.
50. Deputy Gerry Adams asked the Minister for Finance if he will provide in tabular form a year by year breakdown of the cost of the bank bailout since 2008 as well as a breakdown of the percentage share holding the state currently has in each of the banks. [46640/12]
Amharc ar fhreagraThe bank recapitalisation commitments made by the State to date are set out in the following table:
|
€bn |
AIB/EBS |
BoI |
IL&P |
IBRC (Anglo/INBS) |
Total |
|
Government preference Shares (2009) - NPRF |
3.5 |
3.5* |
- |
- |
7.0 |
|
Capital contributions (with Promissory Notes as consideration) /Special Investment Shares (2010) – Exchequer ** |
0.9 |
- |
- |
30.7 |
31.6 |
|
Ordinary Share Capital (2009) – Exchequer |
- |
- |
- |
4.0 |
4.0 |
|
Ordinary Share Capital (2010) - NPRF |
3.7 |
- |
- |
- |
3.7 |
|
Total pre-PCAR 2011 (A) |
8.1 |
3.5 |
0 |
34.7 |
46.3 |
|
PCAR 2011: |
AIB/EBS |
BoI |
IL&P |
Anglo/INBS |
Total |
|
Capital from Exchequer*** |
3.9 |
- |
4.0 |
- |
7.8 |
|
NPRF Capital |
8.8 |
1.2 |
- |
- |
10.0 |
|
Total PCAR (B) |
12.7 |
1.2 |
4.0 |
- |
17.8 |
|
Total Cost of Recap for State (A) + (B) |
20.7 |
4.7 |
4.0 |
34.7 |
64.1 |
* €1.7bn of BoI’s government preference shares were converted to equity in May/June 2010 (€1.8bn still left in existence). The government also received €0.5bn from the warrants relating to BoI’s preference shares (excluded from table above). In addition the State received €1.1bn stock coupons from BoI and AIB relating to the Government Preference shares.
** The IBRC amount is made up of a total capital contribution for Anglo / INBS of €30.6bn and a special investment share of €0.1bn (INBS). The Anglo / INBS capital contribution impacted in full on the GGB in 2010. The consideration for the Anglo / INBS capital contribution was €30.6bn of promissory notes. These Promissory Notes are an amount due from the State to IBRC. Each year, on 31 March, €3.06bn is paid by the Exchequer to Anglo / INBS as part of the scheduled repayments of the promissory notes. The first such repayment was made on 31 March 2010.
*** The Exchequer cost of the 2011 BoI recap is shown net of share sale to private investors (Completed in October, 2011)
This recapitalisation table split year by year is:
|
Year |
Anglo |
INBS |
AIB/EBS |
BOI |
ILP* |
Total |
|
2008 |
||||||
|
2009 |
4.0 |
0 |
3.5 |
3.5 |
0 |
11.0 |
|
2010 |
25.3 |
5.4 |
4.6 |
0 |
0 |
35.3 |
|
2011 |
0 |
0 |
12.7 |
1.2 |
2.7 |
16.5 |
|
2012 |
0 |
0 |
0 |
0 |
1.3 |
1.3 |
|
29.3 |
5.4 |
20.7 |
4.7 |
4.0 |
64.1 |
As the Deputy will be aware, the banks were required to raise a total of €24bn as a result of the Central Bank’s 2011 Prudential Capital Assessment Review (PCAR). However, primarily as a result of successful private equity contributions, asset sales and burden sharing with bondholders the Government only had to inject €16.5bn into the relevant institutions. In addition, the State acquired Irish Life for €1.3bn to complete the recapitalisation of Irish Life & Permanent. It is expected that the proceeds of an onward sale of Irish Life in due course will reduce the amount the State has committed to the bank recapitalisation.
The percentage share holding the state currently has in each of the banks is as follows:
|
Bank |
State shareholding |
|
AIB |
99.8% |
|
BOI |
15.1% |
|
IBRC |
100% |
|
PTSB |
99.2% |
51. Deputy Gerry Adams asked the Minister for Finance if he will provide in tabular form a breakdown of the Banks in which the Government has appointed public interest directors; when the Directors were appointed; the names of same; and the remuneration they receive for their position as a public interest director. [46641/12]
Amharc ar fhreagraAs the Deputy will be aware this Government has not appointed any public interest directors to the boards of the Covered Banks since taking office. The details of public interest appointed are shown in the table below. Information regarding the remuneration of directors, including public interest directors, can be found in the published annual reports of each of the covered institutions.
|
Bank |
Public Interest Directors |
Date of Appointment |
Fees 2011 € |
Directors’ Remuneration Report |
|
AIB |
Mr Dick Spring |
January 2009 |
59,000 |
From p380 of Annual Report 2011 |
|
BOI |
Mr Tom Considine Mr Joe Walsh |
January 2009 January 2009 |
90,000 79,000 |
From p160 of Annual Report 2011 |
|
PTSB |
Ms Margaret Hayes Mr Ray MacSharry |
December 2008 December 2008 |
64,000 56,000 |
From p60 of Annual Report 2011 |
Dr Michael Somers is a Government Nominee (not a Public Interest Director) appointed to the AIB board on 14 January 2010 under the terms of NPRFC’s investment of €3.5bn in AIB of May 2009.
52. Deputy Michael McGrath asked the Minister for Finance if he was consulted prior to the transfer by Allied Irish Bank of €1 billion in loans to the company pension fund; the funding position of the AIB pension following the transfer; if this transfer counts towards the bank's deleveraging target; the action he took to ensure that the interests of the State as the majority shareholder in AIB was protected; and if he will make a statement on the matter. [46658/12]
Amharc ar fhreagraThe transfer of €1.1bn (gross) loans assets to the AIB Defined Benefit Pension Scheme was approved by the AIB Board and the Bank's Deleveraging Committee whose members include officials from the Department of Finance and the Central Bank of Ireland in observatory capacities. I am informed by the Bank that the transfer of assets into the AIB pension scheme enabled the Trustee to satisfy the increase in the Minimum Funding Standard requirement. The contribution of these assets, combined with other measures, has significantly improved the Scheme’s actuarial funding position.
This transaction forms part of AIB’s continuing strategy to meet non-core deleveraging targets of €20.5bn by December 2013 as set out by the Central Bank of Ireland. Including this transfer, AIB’s total net non-core deleveraging to end September represents 80% of AIB’s overall deleveraging target and exceeds the 2012 deleveraging target.
The transaction was completed on an arm’s length basis with both the bank and the pension scheme trustees conducting independent valuations of the assets. The Bank has also informed me that it is comfortable that the transfer value of the assets represented a fair price for the bank relative to any open market sale and was in line with the 2011 Prudential Capital Assessment Review (PCAR) assumptions agreed with the Central Bank.
53. Deputy Michael Healy-Rae asked the Minister for Finance if he will amend legislation relating to tax relief for mortgage interest payments to cater for situations in which a mortgage has been taken out prior to the 31 December 2012, but the mortgage is to be drawn down on a stage payment basis; and if he will amend the law to cater for situations in which building work has commenced prior to 31 December and a first stage payment has been drawn down on the mortgage prior to 31 December (details supplied); and if he will make a statement on the matter. [46681/12]
Amharc ar fhreagraAs the Deputy is aware, tax relief on interest paid on all qualifying home loans is being phased out. Tax relief on interest paid on qualifying home loans taken out in the period 1 January 2004 to 31 December 2012 will continue up to an including the 2017 tax year. However, tax relief is not available on interest paid on loans taken out on or after 1 January 2013. Likewise, where a residence is under construction, only the interest paid on monies drawn down on or before 31 December 2012 will qualify for tax relief. A qualifying loan for mortgage interest relief is one which without having been used for any other purpose, is used in purchase, repair, development or improvement of a claimant’s principal private residence.
As with all time-limited reliefs, there will always be people who just miss out, and that is why I have been as flexible as possible with the legislation within the current budgetary constraints. However, I do not intend to extend the parameters of the measure any further.
