Thursday, 21 Feb 2013

Written Answers Nos. 67-73

Property Taxation Application

Ceisteanna (67)

Finian McGrath

Ceist:

67. Deputy Finian McGrath asked the Minister for Finance the main changes in the property tax in relation to the unemployed, senior citizens and the disabled, exemptions, waivers and so on. [9313/13]

Freagraí scríofa

Minister for Finance

I assume the Deputy is referring to the Finance (Local Property Tax) (Amendment) Bill 2013 which I announced to the House last week. Certain provisions included in the Bill may apply to individuals who are unemployed, senior citizens or disabled. It should be noted that the changes to which I refer are subject to the enactment of the Bill. An exemption from the charge to Local Property Tax (LPT) will apply to a residential property purchased, built or adapted to make it suitable for occupation by a permanently and totally incapacitated individuals as their sole or main residence, where an award has been made by the Personal Injuries Assessment Board or a court or where a trust has been established specifically for the benefit of such individuals. In the case of adaptations to a property, the exemption will only apply where the cost of the adaptations exceeds 25% of the market value of the property before it is adapted. The exemption ends if the property is sold and the incapacitated individual no longer occupies it as his or her sole or main residence.

In addition, the Bill also provides for a reduction in the market value of a residential property that has been adapted for occupation by a disabled person where the adaptation has been grant-aided by a local authority. The reduction is limited to the lesser of the market value attributable to the adaptation work carried out on the property and the maximum grant payable under the relevant local authority scheme. The relief ends on the sale or transfer of a property that has been adapted, unless the person with the disability continues to reside in the property.

Furthermore, residential properties that have been certified as having significant pyritic damage will be exempt from LPT for a temporary period of approximately three years. Regulations will be made by the Minister for the Environment, Community and Local Government stipulating how properties are to be tested to establish whether they have been affected by a significant level of pyrite-induced damage and providing for the issue of certificates by a competent person where this has been established.

The Finance (Local Property Tax) Act 2012 already contains a number of specific deferral provisions that cater for cases of low income and significant mortgage interest burden. However, I appreciate that these may not cater sufficiently for some specific situations and, in the Amendment Bill, I am proposing additional categories of property owners that may qualify for a deferral of the local property tax payable. These include the personal representatives of a deceased liable person and an individual who enters into an insolvency arrangement under the Personal Insolvency Act 2012.

A further provision will allows for a measure of discretion by the Revenue Commissioners to grant a full or partial deferral in very particular circumstances where a person suffers both an unexpected and unavoidable significant financial loss or expense, as a result of which he or she is unable to pay the LPT without causing excessive financial hardship. Claims for this type of deferral will require full disclosure of the person’s financial circumstances, supporting documentation and any other information required by Revenue.

Mortgage Arrears Proposals

Ceisteanna (68)

Clare Daly

Ceist:

68. Deputy Clare Daly asked the Minister for Finance the administrative costs of the mortgage arrears resolution process; the number of persons that have applied to the scheme; the number that have been approved; and if he will make a statement on the matter. [9425/13]

Freagraí scríofa

Minister for Finance

The Mortgage Arrears Resolution Process (MARP) is not a scheme that a borrower applies for, rather it is a framework and process, set out in the Code of Conduct on Mortgage Arrears (CCMA), under which lenders are to engage with a cooperating borrower in arrears or pre-arrears and which requires a lender to consider viable alternative repayment arrangements to address mortgage difficulty. The Central Bank of Ireland has informed me that it does not track the number of borrowers covered under the MARP but does track the number of alternative arrangements put in place across the regulated industry and which is published quarterly by the Central Bank. This is available on the Central Bank’s website, http://www.centralbank.ie.

Protections offered to borrowers under the CCMA include the following:-

- All cases must be handled sympathetically and positively by the lender;

- A lender must not apply to the courts to commence legal action for repossession until every reasonable effort has been made to agree an alternative repayment arrangement with the borrower;

- Where a borrower co-operates with the lender, the lender must wait at least 12 months from the date the borrower is classified as a MARP case before applying to the courts to commence legal action;

- Each branch, or office of the lender, must have a person responsible for dealing with borrowers in difficulty and must have a dedicated Arrears Support Unit to deal with all MARP cases;

- Lenders are restricted from imposing charges on arrears arising on a mortgage account in arrears where the borrower is co-operating with the lender;

- All communications about arrears and pre-arrears must be provided in a timely, clear and consumer friendly manner e.g. information booklet providing details of MARP and dedicated section on website.

A lender must explore all options for alternative repayment arrangements, when considering a MARP case, in order to determine which options are viable for each particular case. The lender must document its considerations of each option examined and also the reasons why the option offered to the borrower is appropriate for his/her circumstances.

If a lender is not willing to offer a borrower an alternative repayment arrangement, for example, where it is concluded that the borrower can afford the mortgage or where the mortgage is unsustainable, then the reasons for this must be given in writing to the borrower. In these circumstances, the lender must make the borrower aware of certain information including the borrower’s right to make an appeal to the lender’s Appeals Board and include the procedure for making an appeal and the relevant time allowed to the borrower to consider submitting an appeal.

The Deputy may wish to note that borrowers can appeal to the Financial Services Ombudsman (FSO) after the internal appeals process has ended but the FSO will look at the process rather than opine on whether the credit decision made was correct.

Banking Sector Remuneration

Ceisteanna (69)

Thomas P. Broughan

Ceist:

69. Deputy Thomas P. Broughan asked the Minister for Finance the number of staff earning more than €100,000 but under €150,000, between €150,000 and €200,000, between €200,000 and €250,000 and more than €250,000 per year in Allied Irish bank, Bank of Ireland and Permanent TSB; and if he will make a statement on the matter. [9298/13]

Freagraí scríofa

Minister for Finance

I refer the Deputy to PQs 49499/12, 50511/12 and 50513/12 which were answered in November 2012 and which provide information on the basic salaries in Permanent TSB, Allied Irish Bank and Bank of Ireland respectively. Also PQ 51096/12 giving total remuneration package information for staff in the covered institutions. As the Deputy will be aware, officials in my Department and Mercer have been working on a remuneration review of the Covered Banks. I have committed to publishing the details underpinning the review in view of the public interest in the matter. The report will provide a comprehensive and professional analysis of remuneration structures and levels across the Covered Banks both now and before the onset of the banking crisis. The report is expected shortly.

Proposed Legislation

Ceisteanna (70)

Clare Daly

Ceist:

70. Deputy Clare Daly asked the Minister for Finance his plans to reform the statue of limitations in order that claims can be made against financial institutions that mis-sold financial products. [9309/13]

Freagraí scríofa

Minister for Finance

I do not have the primary role in relation to amending the law on the "Statue of Limitations". This is a matter which has broader legal application and as such would fall for consideration for my colleague the Minister for Justice and Equality.

Property Taxation Application

Ceisteanna (71)

Dominic Hannigan

Ceist:

71. Deputy Dominic Hannigan asked the Minister for Finance if there are plans for the payment people make to management companies to be taken into account when they are paying the local property tax; and if he will make a statement on the matter. [9317/13]

Freagraí scríofa

Minister for Finance

The Government agreed with the recommendation of the “Thornhill Group” (the inter-Departmental Group, chaired by Dr Don Thornhill, which considered the structures and modalities of a property tax) that a universal liability to the Local Property Tax should apply to all owners of residential property with a limited number of exemptions. Limiting the exemptions available allows the rate to be kept low for those liable persons who do not qualify for an exemption. The Finance (Local Property Tax) Act 2012 provides for a number of specific exemptions from the charge as well as the possibility of deferring the charge in certain cases of hardship.

A requirement to pay management fees is not relevant in determining liability. Accordingly, whilst those who are liable for management fees to property management companies may be exempt from LPT for another reason, or may be entitled to avail of a deferral arrangement under the provisions contained in the legislation, there is no specific exemption for the payment of management fees.

Revenue from the Local Property Tax will accrue to local authorities and will support the provision of local services. Local authorities provide a broad range of services in the public realm which benefit the wider community and the proper functioning of which are important for the wellbeing of every community and household. These include:-

- fire and emergency services;

- road maintenance and cleaning;

- street lighting;

- spatial and development planning and other similar services;

- regulatory and inspection functions and business support services, as well as libraries, parks, and other recreation and cultural public amenities.

IBRC Staff

Ceisteanna (72, 82, 84, 86)

Joanna Tuffy

Ceist:

72. Deputy Joanna Tuffy asked the Minister for Finance the way he proposes to deal with the redundancy entitlements of the former employees of the Irish Bank Resolution Corporation (details supplied); and if he will make a statement on the matter. [9348/13]

Michael McGrath

Ceist:

82. Deputy Michael McGrath asked the Minister for Finance his plans to improve the redundancy terms available to the employees of the Irish Bank Resolution Corporation, in special liquidation, in view of the fact that other staff members recently left the bank on significantly better redundancy terms and some of those who remained did so on the basis they would receive the same terms on the eventual wind down of the bank; and if he will make a statement on the matter. [9484/13]

Robert Troy

Ceist:

84. Deputy Robert Troy asked the Minister for Finance if he will take steps to restore the value of the severance terms previously agreed with the Irish Bank Resolution Corporation employees; if he acknowledges that employees of the firm continue to work for the best outcome for taxpayers in very difficult circumstances and that equality of treatment would imply that they receive the same terms on redundancy as was available to employees of the company who left employment in 2012; and if he will make a statement on the matter. [9495/13]

Michael Creed

Ceist:

86. Deputy Michael Creed asked the Minister for Finance if his attention has been drawn to an arrangement between the Irish Bank Resolution Corporation, his Department and the troika, setting out redundancy terms that would apply in circumstances whereby compulsory redundancies were required; and if he will comment on the document (details supplied). [9497/13]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 72, 82, 84 and 86 together.

As the Deputy is aware, the legislation surrounding liquidation ranks employees as preferential creditors in respect of certain amounts owing to them on a winding up, including accrued wages and salaries, holiday pay, sick pay, statutory redundancy, pensions contributions and claims for damages arising from accidents. Any claims over and above that described above will rank as an unsecured claim in the liquidation process.

There are standard rules which apply to the distribution of the assets of companies in liquidation and it would not be appropriate for me to interfere with these rules. However the State does intervene to ensure that statutory redundancy is available.

The special liquidators were promptly in contact with staff on Thursday 7th February and, unlike in other liquidations, the majority of employees have been re-hired by the special liquidators, for a minimum period of 3 months, to ensure an orderly wind-down of the business.

The special liquidators have said that it is their key priority that all employees are fully kept up to date on all developments during the course of the special liquidation. They have indicated that their approach will be to talk with employees directly either in small groups or on a one to one basis and they also plan to communicate by email general updates to employees during the course of the special liquidation.

Property Taxation Application

Ceisteanna (73)

Dominic Hannigan

Ceist:

73. Deputy Dominic Hannigan asked the Minister for Finance if there is any way that a householder whose home was fully compliant with building regulations when they bought it but has since been declared non-compliant, due to the fault at the build stage may not pay the local property tax until the building is fully complaint with building regulations again; and if he will make a statement on the matter. [9351/13]

Freagraí scríofa

Minister for Finance

The primary piece of legislation governing Local Property Tax (LPT) is contained in the Finance (Local Property Tax) Act 2012 which was enacted on 26 December 2012. The legislation sets out in detail how the tax is to be administered and provides how a residential property is to be valued for LPT purposes. I am advised by the Revenue Commissioners that Local Property Tax (LPT) is a self-assessment tax so in the first instance it is a matter for the property owner to calculate the tax due based on his or her assessment of the market value of the property. It will be a matter for the property owner to decide whether non-compliance with building regulations has a material impact on the value of the property, and if so, to what extent.

The Revenue Commissioners are preparing valuation guidance which, together with a liable person’s own knowledge of their property, will assist them in choosing the correct value band for their property. One of the advantages of the banding system of values provided for in the legislation is to remove the need for precision in relation to the market value, except for properties worth over €1million. Where these guidelines are used honestly the property valuation will not be challenged by Revenue in accordance with their normal Customer Service Charter.

Where a property is non compliant with building regulations due to pyrite-induced damage, the Finance (Local Property Tax) (Amendment) Bill 2013, when enacted, will provide that residential properties that have been certified as having significant pyritic damage will be exempt from LPT for a temporary period of approximately three years. Regulations will be made by the Minister for the Environment, Community and Local Government stipulating how properties are to be tested to establish whether they have been affected by a significant level of pyrite-induced damage and providing for the issue of certificates by a competent person where this has been established.