Written Answers Nos. 196-216
196. Deputy Pearse Doherty asked the Minister for Finance further to reports that Allied Irish Banks, in which he is the shareholder of 99.8% of the shares, has sold a portfolio of loans with a nominal value of €675m to Lone Star, if he will confirm that arrangements will be made to ensure borrowers whose loans have been acquired by Lone Star, do not suffer inconvenience or loss. [47280/12]
Amharc ar fhreagraThe sale of loan portfolios is a commercial matter for the management and the board of the bank. I do not have a role in this function. AIB has informed me that EBS Limited has contracted to sell to Vesta Mortgage Investment Limited, (an affiliate of Lone Star), approximately €660 million nominal of loan assets as part of its continuing strategy to meet its non-core de-leveraging targets. The portfolio is primarily comprised of non-core Irish commercial real estate loans originated by EBS Limited.
Communication with affected borrowers has been a priority for the Bank and each Borrower will receive, in addition to verbal notification, a written communication from EBS notifying them of the sale. Subsequent to completion they will also receive further written communication from EBS and separately from Vesta Mortgage Investment setting out the arrangements for the management of their loans going forward. Affected borrowers will continue to remain liable for the full amount of their debt. Their loan terms and conditions remain unchanged and are not impacted by the sale of their loans.
This sale brings AIB’s total net non-core de-leveraging to date to 80% of AIB’s three year PLAR de-leveraging target of €20.5 billion. AIB remains on course to complete the majority of its total 2013 de-leveraging targets by year end 2012 and to achieve this target in line with PCAR capital requirements assumed under the March 2011 exercise.
197. Deputy Pearse Doherty asked the Minister for Finance further to reports that Allied Irish Banks, in which the he is the shareholder of 99.8% of the shares, has sold a portfolio of loans with a nominal value of €675m to Lone Star, can he confirm the regulations that govern the relationship between Lone Star and the borrowers whose loans have been acquired. [47281/12]
Amharc ar fhreagraThe sale of loan portfolios is a commercial matter for the management and the board of the bank. I do not have a role in this function. AIB has informed me that EBS Limited has contracted to sell to Vesta Mortgage Investment Limited, (an affiliate of Lone Star), approximately €660 million nominal of loan assets as part of its continuing strategy to meet its non-core de-leveraging targets. The portfolio is primarily comprised of non-core Irish commercial real estate loans originated by EBS Limited.
The purchaser was selected following the completion of a comprehensive two stage competitive auction sales process involving a number of credible international investors. AIB has informed me that it is satisfied that by selecting the purchaser following this sale process, it has maximised value for the bank and its stakeholders. This transaction was approved by the Boards of both EBS and AIB and AIB's de-leveraging committee which includes non-voting observers from my Department and the Central Bank.
The loan terms and conditions of borrowers whose loans form part of the sale remain unchanged and are not impacted by the sale of their loans. The purchaser is not a regulated entity. It should be noted that this portfolio principally comprises commercial real estate loans which are not subject to the same level of regulation that applies to home loans.
Communication with affected borrowers has been a priority for the bank and each borrower will receive, in addition to verbal notification, a written communication from EBS notifying them of the sale. Subsequent to completion they will also receive further written communication from EBS and separately from Vesta Mortgage Investment setting out the arrangements for the management of their loans going forward. Affected borrowers will continue to remain liable for the full amount of their debt. Their loan terms and conditions remain unchanged and are not impacted by the sale of their loans.
This sale brings AIB’s total net non-core de-leveraging to date to 80% of AIB’s 3 year PLAR de-leveraging target of €20.5 billion. AIB remains on course to complete the majority of its total 2013 de-leveraging targets by year end 2012 and to achieve this target in line with PCAR capital requirements assumed under the March 2011 exercise.
198. Deputy Pearse Doherty asked the Minister for Finance further to reports that Allied Irish Banks, in which he is the shareholder of 99.8% of the shares, has sold a portfolio of loans with a nominal value of €675m to Lone Star, if he will confirm the quantum of fees and commissions that AIB is paying to organisations which were engaged to assist with the sale, including fees paid to Morgan Stanley and legal fees. [47282/12]
Amharc ar fhreagraThe sale of loan portfolios and the appointment of advisors is a commercial matter for the management and the board of the bank. I do not have a role in this function. However, AIB has informed me that EBS Limited has contracted to sell to Vesta Mortgage Investment Limited, (an affiliate of Lone Star), approximately €660 million nominal of loan assets as part of its continuing strategy to meet its non-core de-leveraging targets. The portfolio is primarily comprised of non-core Irish commercial real estate loans originated by EBS Limited.
The purchaser was selected following the completion of a comprehensive two stage competitive auction sales process involving a number of credible international investors. This transaction was approved by the boards of both EBS and AIB and AIB's de-leveraging committee which includes non-voting observers from my Department and the Central Bank.
AIB has further informed me that it typically engages external parties to advise it on sale processes in order to avail of relevant and necessary experience and expertise. AIB does not disclose the amounts paid to these advisors for commercial reasons. As AIB has a strong focus on minimising the costs to the bank of these expert advisors, in each case, the bank undertook a competitive tendering process to select the advisors to assist in this sale process. These processes focused on relevant experience, product knowledge, quality of advisory team and fee structure. Furthermore, in the case of the sales advisor, fees were structured to incentivise the advisor to assist in maximising value for the bank and its stakeholders.
This sale brings AIB’s total net non-core de-leveraging to date to 80% of AIB’s three year PLAR de-leveraging target of €20.5 billion. AIB remains on course to complete the majority of its total 2013 de-leveraging targets by year end 2012 and to achieve this target in line with PCAR capital requirements assumed under the March 2011 exercise.
199. Deputy Maureen O'Sullivan asked the Minister for Finance if he will ensure that marked gas oil MGO / green diesel is assigned a separate commodity code by the Revenue Commissioners to enable the Central Statistics Office and its users to separate imports of MGO from normal diesel products; and if he will make a statement on the matter. [47268/12]
Amharc ar fhreagra200. Deputy Maureen O'Sullivan asked the Minister for Finance if he will introduce an arrangement for users of marked gas oil MGO / green diesel to seek tax rebates annually rather than providing the fuel to the qualified consumer at a separate price, thus encouraging illegal diesel laundering which is increasingly costly to multiple enforcement agencies, damaging to the persons forced to work in these plants, damaging to the environment where the waste is dumped and the State Exchequer when sold; and if he will make a statement on the matter. [47269/12]
Amharc ar fhreagraI propose to take Questions Nos. 199 and 200 together.
I have been informed by the Revenue Commissioners who have responsibility for mineral oil tax that they do assign a separate code to marked gas oil imports in their regular return of data to the Central Statistics Office. In addition, details of all hydrocarbon oils, including marked gas oil, retained for home use are included in Revenue’s annual statistical report, which is published on www.revenue.ie.
My understanding of the Deputy’s second question is that it envisages a movement away from the current system of marking of oil to which a reduced rate of tax applies to one in which certain users would be given refunds as part of the mineral oil tax paid by them in respect of fuel used for non-auto purposes. The issue of the introduction of a rebate scheme for users of marked gas oil has been addressed in previous parliamentary debates. A change to a system of this nature would involve the establishment of an expensive repayments system and would give rise to significant costs and place an administrative burden on oil traders, users and the Revenue Commissioners. It would also pose significant cash-flow costs for those currently using marked gas oil. Marked gas oil has a wide range of uses such as the propulsion of trains, the operation of agricultural, construction and industrial machinery, commercial sea-navigation (including fishing) and for commercial and home heating purposes. Any change in the existing system would therefore impact across a wide range of users.
Enforcement action is taken by the Revenue at all stages of the fuel supply chain, targeting those involved in laundering and those selling laundered fuel. Legislation introduced this year includes provision for the strengthening of licensing requirements for the sale of auto-fuel as well as the introduction of a new system of licensing for the sale of marked gas oil. There will also be a new requirement, from January 2013, for all fuel traders to make monthly returns to Revenue detailing their fuel transactions. This will be an important new source of information on the fuel supply chain and will assist in the identification of unusual or suspicious patterns of activity.
In addition, the Revenue Commissioners are working closely with Her Majesty’s Revenue and Customs in the UK on the development of a more effective fuel marker. An invitation to make submissions was issued jointly by both administrations in June. This has generated considerable interest across a number of countries and I am advised that it is expected that a significant number of proposals will be submitted by the closing date of 30 November.
201. Deputy Billy Kelleher asked the Minister for Finance the names of each staff member within his Department that has been rehired since March 2011 and the cost involved in each case; and if he will make a statement on the matter. [47294/12]
Amharc ar fhreagraInformation regarding the number of retired public servants who have been re-hired is detailed in the Appropriation Accounts. The Appropriation Accounts are available online at www.audgen.gov.ie. During the period January 2012 to date, no staff member was rehired. However, one former staff member provided contractual services to this Department for 1.5 days and was paid at a per diem rate.
202. Deputy Kevin Humphreys asked the Minister for Finance the current Exchequer account balance; the estimated cost of maintaining such a large amount of cash on hand; the plans for the use of these funds for 2012, 2013 or 2014; and if he will make a statement on the matter. [47327/12]
Amharc ar fhreagraIt has been clarified with the Deputy that the question refers to the cash balances held in the Exchequer account and the use to which these will be put. The Exchequer had available cash balances of €22.5 billion at end-October 2012. Funds in the Exchequer are used for the ongoing payments necessary for running the State. The April stability programme update, SPU, estimated that the cumulative Exchequer deficit over the years 2013-2014 would be close to €25 billion. In addition to these day-to-day costs, there are large debt redemptions that are scheduled from early 2013, including a €5.6 billion bond repayment in April 2013 and a €7.6 billion bond repayment in January 2014. The continuing budget deficits and debt redemptions must be adequately and prudently funded.
The cash reserves held in the Exchequer come from a number of different sources such as tax revenue, non-tax revenue, and borrowings by the State from the market and under the EU/IMF Programme. As the Exchequer is an omnibus account, it is not possible to derive a single robust cost figure in relation to the balances maintained. A cost, for example, of not maintaining an adequate and prudent cash balance would include the risk that the Exchequer would be unable to meet its obligations and that market interest rates would possibly be higher than would otherwise be the case due to the perception that the State had a precarious liquidity position.
Exchequer cash reserves are an important component in bolstering investor confidence in Ireland as it continues on the path to full independent market access at sustainable interest rates. The EU/IMF programme ends in 2013 making such market access of critical importance.
203. Deputy Pearse Doherty asked the Minister for Finance the amount that could be raised for the Exchequer if the imputed distribution percentage on approved retirement funds and PRSAs was increased from 6% to 8% where the asset values are in excess of €2 million and from 5% to 7% where the asset values are between €1 million and €2 million. [47348/12]
Amharc ar fhreagraAn annual imputed distribution rate of 5% applies to approved retirement funds, ARFs, with asset values of €2 million or less and, from this tax year, to ‘vested’ personal retirement savings accounts, PRSAs, where benefits have commenced) on the same basis. A higher imputed distribution rate of 6% applies from this tax year to ARFs and/or ‘vested’ PRSAs with asset values of more than €2 million. I assume the Deputy is suggesting an increase in the imputed distribution from 6% to 8% for ARFs and/or ‘vested’ PRSAs of more than €2 million in value and an increase from 5% to 7% where the asset values are greater than €1 million and less than €2 million. I am informed by the Revenue Commissioners that information provided to them in the context of the tax paid on these deemed or imputed distributions does not include information on the value of the ARFs and/or ‘vested’ PRSAs out of which the distributions are deemed to arise. There is therefore no basis on which a definitive estimate of the impact on the Exchequer of the change mentioned in the question could be compiled.
As an exercise that might provide some indication of the scale of the additional tax yield involved, data made available to my Department from private sector sources provides a breakdown of ARFs by value in respect of a number of providers representing an estimated 40% of the ARF market. There is no similar data available in relation to ‘vested’ PRSAs.
Out of a total value of some €2.4 billion in ARFs under management by these providers where the average ARF value was just over €127,000, the total value of those ARFs representing individual funds of over €1 million and under €2 million was €274 million. The total value of those ARFs representing individual funds of over €2m was €137 million. Based on a very rough extrapolation of these figures to arrive at a broad potential estimate for the total value of ARFs with assets in excess of €1 million, the estimated additional tax yield from applying increased imputed distribution rates to such ARFs as set out above would be about €8 million in a full year.
It is important to note that the deemed or imputed distribution measure is designed to encourage draw downs from ARFs and ‘vested’ PRSAs so that they are used, as intended, to fund a stream of income in retirement in the same way as a retirement annuity, for which ARFs are supposed to operate as a more flexible alternative. The measure, in itself, does not give rise to significant tax revenues as it does not apply to actual draw-downs from ARFs and ‘vested’ PRSAs, which are taxed in the normal way. Moreover, increasing the annual percentage notional distribution for ARFs and ‘vested’ PRSAs as suggested in the question would further increase the risk that the retirement income derived by the owners from such funds could be depleted before death.
204. Deputy Thomas Pringle asked the Minister for Finance if any analyses are being undertaken in view of the IMF World Economic Outlook note on multipliers to establish the short-term multiplier for Government spending. [47386/12]
Amharc ar fhreagraAt the outset, I want to stress that the Government’s key objective of supporting economic growth that delivers jobs remains to the forefront in framing fiscal and economic policy. Fiscal consolidation reduces the fiscal deficit and increases investor confidence which in turn lowers the cost of borrowing and helps to put public debt on a declining path. Having said that I fully recognise that there will be a short term reduction in output before these medium term benefits are realised. So it is a difficult balancing act between the need for consolidation on the one hand and the need to support the emerging recovery on the other. There is, I think it is fair to say, an acknowledgement among many commentators that we in Government are getting this balance right.
The recent IMF World Economic Outlook suggests that the average size of fiscal multipliers (the effect of consolidation on growth) across countries may have been underestimated in recent years. More recently, senior IMF staff tasked with monitoring developments in Ireland pointed to the multiplicity of factors at play in acting as a dampener on growth and acknowledged that there was no convincing evidence that the fiscal multiplier for Ireland was underestimated compared with that assumed under the programme.
Ireland is a small, open economy with imports accounting for over three quarters of GDP. This means that a considerable amount of consolidation leaks out through reduced demand in countries we import from. We can already see this in the Balance of Payments figure, which shows the current account moving from a deficit of -5.7% of GDP in 2008 to a surplus of 1.1% in 2011.
Fiscal multipliers vary according to the fiscal instruments used, and the impact on aggregate demand as a result of expenditure changes can differ from tax changes. I would reiterate the Government’s cognisance of this and its commitment to implementing consolidation in as growth-friendly a manner as possible.
In order to correct our excessive deficit and minimise the cost to the taxpayer through sustaining investor confidence and keeping the cost of borrowing as low as possible, Ireland is committed to implementing further consolidation over the next three years. Evidence of the rewards associated with this approach is already visible through the lowering of bond yields since early summer and the successful return of the NTMA to the debt market.
205. Deputy Pearse Doherty asked the Minister for Finance the savings to the Exchequer from reducing the maximum tax free lump sum upon retirement from €200,000 to €100,000. [47331/12]
Amharc ar fhreagraThe following arrangements currently apply to retirement lump sums paid under pension arrangements approved by the Revenue Commissioners. Lump sum amounts up to €200,000 are paid free of tax. They are also paid free of USC. The portion of a lump sum between €200,001 and €575,000 is taxed on a ring-fenced basis at 20%. This means that no tax credits or other tax reliefs can be set against this portion of the lump sum. No USC is chargeable. Any amount of a lump sum in excess of €575,000 is taxed at the individual’s marginal rate of tax (credits and other tax reliefs are available). In this instance, USC is chargeable on the excess. These amounts are lifetime amounts with prior lump sums aggregating with later lump sums. I assume from the Deputy’s question that he is proposing that retirement lump sums in excess of €100,000 be taxed as outlined above. As there is no general requirement for data on the number of persons who are receiving payments of retirement lump sums of less than €200,000 to be returned to my Department or to the Revenue Commissioners, I am not in a position to provide definitive figures on the Exchequer impact of reducing the tax-free retirement lump sum amount from €200,000 to €100,000.
As an exercise that might provide some indication of the scale of the savings involved, it is estimated that just over 33,000 individuals in the public service would be on salaries of over €67,000 and less than €133,500 which, under existing pension scheme arrangements generally applying across the public service, would deliver retirement lump sums of between €100,000 and €200,000 to persons retiring after a full 40 year career. If it is assumed that these individuals would retire in line with retirement trends from the public service in a normal year (about 2.5%), then the additional tax yield from taxing lump sums in excess of €100,000 at 20% could be about €8 million in a full year.
I have no data on which to provide a similar estimate in relation to the private sector. I should point out, however, that one significant difference between public sector and private sector pension schemes is that private sector schemes invariably allow scheme members the option of commuting part of their pension fund for a tax-free lump sum. The option of receiving benefits in the form of pension only is not available to members of public sector schemes. Depending on the impact of any tax charge on retirement lump sums, the option to commute part of a pension fund may no longer be exercised by private sector pension scheme members or may be exercised in a manner that reduces the value of the lump sum taken to minimise or avoid any immediate tax charge.
206. Deputy Pearse Doherty asked the Minister for Finance the savings to the Exchequer from reducing the maximum tax free lump sum upon retirement from €200,000 to €100,000 and taxing the margin over €100,000 at 41% rather than 20% between €200,000 and €575,000 which currently exists. [47332/12]
Amharc ar fhreagraThe following arrangements currently apply to retirement lump sums paid under pension arrangements approved by the Revenue Commissioners. Lump sum amounts up to €200,000 are paid free of tax. They are also paid free of USC. The portion of a lump sum between €200,001 and €575,000 is taxed on a ring-fenced basis at 20%. This means that no tax credits or other tax reliefs can be set against this portion of the lump sum. No USC is chargeable. Any amount of a lump sum in excess of €575,000 is taxed at the individual’s marginal rate of tax (credits and other tax reliefs are available). In this instance, USC is chargeable on the excess. These amounts are lifetime amounts with prior lump sums aggregating with later lump sums. I assume from the Deputy’s question that he is proposing that retirement lump sums in excess of €100,000 be taxed at 41% instead of 20% as outlined above. As there is no general requirement for data on the number of persons who are receiving payments of retirement lump sums of less than €200,000 to be returned to my Department or to the Revenue Commissioners, I am not in a position to provide definitive figures on the Exchequer impact of reducing the tax-free retirement lump sum amount from €200,000 to €100,000.
Based on broad assumptions and an extrapolation of certain available data, it is estimated that the additional tax yield from taxing lump sums in excess of €100,000 at 41% in respect of the public service could be about €20 million in a full year. I have no data on which to provide a similar estimate in relation to the private sector. I should point out, however, that one significant difference between public sector and private sector pension schemes is that private sector schemes invariably allow scheme members the option of commuting part of their pension fund for a tax-free lump sum. The option of receiving benefits in the form of pension only is not available to members of public sector schemes. Depending on the impact of any tax charge on retirement lump sums, the option to commute part of a pension fund may no longer be exercised by private sector pension scheme members or may be exercised in a manner that reduces the value of the lump sum taken to minimise or avoid any immediate tax charge.
207. Deputy Pearse Doherty asked the Minister for Finance further to his announcement on 23 April 2012 that the 17% stake in the National Asset Management Agency, or specifically National Asset Management Agency Investment Limited, owned by what was Irish Life and Permanent in the residue of which, the Minister controls 99.5% of Permanent TSB and 100% of Irish Life was sold; if he will confirm that the party to whom his April 2012 announcement related was the same as the party whom NAMA announced was its new stakeholder in October 2012. [47437/12]
Amharc ar fhreagra208. Deputy Pearse Doherty asked the Minister for Finance to confirm the actual sale price of the 17% stake in the National Asset Management Agency, or specifically National Asset Management Agency Investment Limited, owned by what was Irish Life and Permanent, which had a nominal value of €17m, and whether Irish Life booked any loss in its accounts on the transaction; in addition if Irish Life has retained any exposure on the stake after the sale, including a commitment to buy-back the stake or to guarantee a minimum return to the buyer. [47438/12]
Amharc ar fhreagra209. Deputy Pearse Doherty asked the Minister for Finance further to the announcement of the sale of the 17% stake in the National Asset Management Agency, or specifically National Asset Management Agency Investment Limited, owned by what was Irish Life and Permanent, the sales process undertaken by Irish Life so as to secure the best deal for the taxpayer. [47439/12]
Amharc ar fhreagra210. Deputy Pearse Doherty asked the Minister for Finance further to the announcement of the sale of the 17% stake in the National Asset Management Agency, or specifically National Asset Management Agency Investment Limited, owned by what was Irish Life and Permanent in the residue of which, the Minister controls 99.5% of Permanent TSB and 100% of Irish Life if he will confirm the costs incurred by Irish Life in selling its stake including fees paid to promoters and external providers of legal and other advice. [47440/12]
Amharc ar fhreagra211. Deputy Pearse Doherty asked the Minister for Finance further to the announcement of the sale of the 17% stake in the National Asset Management Agency, or specifically National Asset Management Agency Investment Limited, owned by what was Irish Life and Permanent in the residue of which, the Minister controls 99.5% of Permanent TSB and 100% of Irish Life if he will set-out the terms of the share holding; the entitlement to dividends and the method by which any ultimate value of the stake will be determined when NAMA is wound up. [47441/12]
Amharc ar fhreagra212. Deputy Pearse Doherty asked the Minister for Finance further to the announcement of the sale of the 17% stake in the National Asset Management Agency, or specifically National Asset Management Agency Investment Limited, owned by what was Irish Life and Permanent in the residue of which, the Minister controls 99.5% of Permanent TSB and 100% of Irish Life; the consideration given to acquiring the stake by the Bank of Ireland, in which the Minister controls 15% of the ordinary shares and further controls preference shares recently valued at €1.5bn. [47442/12]
Amharc ar fhreagraI propose to take Questions Nos. 207 to 212, inclusive, together.
I can confirm that the transaction recently completed was not the transaction referred to in the Dail in April 2012 as a decision was subsequently taken, that Irish Life would engage a financial adviser to perform a wider marketing of the stake to Irish and international investors. Irish Life appointed Davy Corporate Finance to run a competitive sales process which ultimately resulted in a company owned by the Partners of Walbrook Capital acquiring the 17% shareholding in NAMAIL. I am informed by Irish Life that the costs incurred by it in selling its stake in NAMAIL are commercially sensitive.
Irish Life does not now retain any interest in NAMAIL. I am not in a position to disclose the consideration paid by the buyer due to contractual confidentiality restrictions. Details of the terms of the shareholding are outlined on page 140 of NAMA’s Annual Report for 2011.
213. Deputy Niall Collins asked the Minister for Finance if he will permit special mortgage relief for applicants who have contracts agreed and mortgage approval granted but will not be able to take possession of the dwelling until after 31 December 2012. [47457/12]
Amharc ar fhreagraThe position is as I stated in my budget day speech and on many occasions in this House that mortgage interest relief for principal private residences will no longer be available to house purchasers who purchase after the end of 2012 and will be fully abolished from 2018. This means that the qualifying loan will have to be drawn down on or before 31 December 2012 in order to qualify for this relief. I have no plans to review this decision. A qualifying loan for mortgage interest relief is one which without having been used for any other purpose, is used in the purchase, repair, development or improvement of a claimant’s principal private residence.
214. Deputy Pearse Doherty asked the Minister for Finance the savings that could be made for the State from reducing the pensions related earnings cap from €115,000 to €60,000. [47481/12]
Amharc ar fhreagraI assume that the Deputy is referring to the current annual earnings cap of €115,000 which operates to limit the level of tax-relieved personal pension contributions in any one year. The annual earnings cap acts, in conjunction with age-related percentage limits of annual earnings, to put a ceiling on the annual amount of tax relief an individual taxpayer can obtain on pension contributions. A breakdown of the cost of tax relief on employee contributions to occupational pension schemes is not available by income tax rate, as tax returns by employers to the Revenue Commissioners of employee contributions to such schemes are aggregated at employer level. An historical breakdown is available by tax rate of the tax relief claimed on contributions to personal pension plans — Retirement Annuity Contracts, RACs, and Personal Retirement Savings Accounts, PRSAs — by the self-employed and others, to the extent that the contributions have been included in the personal tax returns of those taxpayers. There is, therefore, only a limited statistical basis for providing definitive figures. However, by making certain assumptions about the available information, the Revenue Commissioners inform me that the combined estimated full year yield to the Exchequer from reducing the current annual earnings cap of €115,000 to €60,000 in respect of individual contributions to occupational pension schemes, RACs and PRSAs would be about €175 million.
215. Deputy Pearse Doherty asked the Minister for Finance his views on the assertion made by the Irish Association of Pension Funds, where it claims that the Programme for Government outlined the States intention to apply a cap of €60,000 on pensions that receive State support; anyone who wants and can afford a pension income in excess of €60,000 can then provide for it themselves through unsupported savings, the vast majority of ordinary pension savers, 98%+, will continue to be unaffected as they are average workers saving average amounts, the introduction of this measure could ensure the same rules apply to all those saving for retirement - whether they public servants, private sector workers or the self-employed; critically, this measure will save the State over €400m per annum and enable it to exceed the revenue target set for the pensions sector; the impact will only be felt by approximately 27,000 higher paid taxpayers rather than the 555,000 that would be hit by a change to the marginal rate of tax relief; those affected are employees typically earning in excess of €125,000 per annum, to state whether the assertion is correct; if the figures tally with his Department's figures; the way this €60,000 cap would apply; and if the Government is considering implementing such a proposal. [47486/12]
Amharc ar fhreagra221. Deputy Aengus Ó Snodaigh asked the Minister for Finance his views in relation to comments (details supplied) regrding a pensions cap for the purposes of tax relief; if he will explain how this would work;and if this approach is being considered instead of reducing tax reliefs as was provided for in the National Pensions Framework. [47778/12]
Amharc ar fhreagraI propose to take Questions Nos. 215 and 221 together.
Officials of my Department and the Revenue Commissioners have for some time been engaged in a process with representatives of certain of the professional stakeholders in the pensions sector, including the Irish Association of Pension Funds, about the potential for securing savings in the area of supplementary pension reliefs implicit in the EU/IMF agreement. That engagement is ongoing.
Research carried out on behalf of these stakeholders leads them to suggest, in broad terms, that changes to the existing maximum allowable pension fund for tax purposes at retirement (the Standard Fund Threshold - SFT) affecting individuals on earnings of over €125,000 per annum would deliver savings broadly equivalent to what would be achieved by reducing marginal rate tax relief on employee pension contributions to the standard rate while impacting on a much smaller number of taxpayers.
I would point out that the scale of pension saving reliefs available to higher earners, in particular, has been significantly restricted over recent years. Aside from the reduction in the SFT from over €5.4 million to €2.3 million in the budget and Finance Act 2011, the annual earnings cap which operates in conjunction with age-related percentage limits to determine the annual amount of tax-relievable contributions that can be made by an employee or individual to pension savings has been reduced from over €275,000 in 2008 to its current level of €115,000 per annum. This means that higher earners can only benefit from tax relief on their pension contributions on a percentage of their earnings (based on age) up to €115,000 per annum which is already below the earnings level being targeted in the research referred to in the question. The report on the research is being examined.
The debate around the incentive regime for pension saving has tended to focus either on a further reduction in the maximum allowable pension fund for tax purposes at retirement or on a reduction in the rate of tax relief on pension contributions. These approaches are not, of course, mutually exclusive. In my 2012 budget speech in December last, I said that I did not propose to make changes to the existing marginal rate relief at that time but that the incentive regime for supplementary pension provision will have to be reformed to make the system sustainable and more equitable over the long term. I said that my Department and the Revenue Commissioners would work with the various stakeholders in the next year to develop workable solutions. On foot of this, a broad informal consultation was undertaken this year across a spectrum of stakeholders in the pensions sector, in addition to the professional stakeholders mentioned earlier, to establish their views on further changes to the incentive regime for pension saving.
I will give due consideration to the views of all interested parties in the pensions sector in the context of any proposals I may make to Government regarding the incentive regime for pension saving.
216. Deputy Seán Kenny asked the Minister for Finance the number of requests received by the Revenue Commissioners to increase their number of customs dogs in each of the past three years; the number of requests that have been approved; the number of requests that were refused; if refused, the reasons for the refusal; and if he will make a statement on the matter. [47548/12]
Amharc ar fhreagraI am informed by the Revenue Commissioners that their Customs Service currently deploys 13 detector dog teams at strategic locations throughout the country. The dogs are used to detect drugs, tobacco and cash and are used at ports, airports, mail centres, express courier depots and are also used to assist in the course of certain investigations. “Passive dogs” are used as this maximises their capability, enabling the screening of passengers in addition to merchandise and baggage. The commissioning and deployment of dog detector teams is subject to ongoing evaluation by Revenue, two additional dog teams are currently undergoing training and will be fully operational in December 2012. When these new teams are operational the number of dog teams will stand at 15 (an increase of 9 since 1993). The Deputy may also be interested to note that where previously dogs were trained and deployed to detect only one commodity, where feasible newly deployed dogs are now trained to detect more than one.
