Written Answers Nos. 180-194
181. Deputy Michael McGrath asked the Minister for Finance the contact, if any, his Department or any person acting on behalf of the Government has had with the US Senate Committee examining the amount of corporation tax paid by US multinationals; and if he will make a statement on the matter. [36691/13]
Amharc ar fhreagraMy Department works closely with the Department of Foreign Affairs and Trade who have primary responsibility for such communications on behalf of the Government. The Deputy will already be aware that the Ambassador of Ireland to the United States wrote to the Chairman and Ranking Member of the US Senate Permanent Subcommittee on Investigations directly clarifying Ireland’s position. This letter was published on my Department’s website at the end of May this year. In close coordination with my Department, the Embassy of Ireland in Washington D.C. continues to engage with the US Administration, with Members of Congress and with key contacts on these issues.
Most recently, during his visit to Washington DC last week, the Tánaiste met with a range of Congressional contacts, including Senator McCain who is the Ranking Member of the Subcommittee. This meeting was primarily to discuss US immigration reform; however I understand the Tánaiste availed of the opportunity to brief the Senator on Ireland’s corporate tax regime, the range and depth of US investment in Ireland and the mutually beneficial investment between our two economies.
182. Deputy Michael McGrath asked the Minister for Finance if he will provide details of the post programme monitoring by the troika which Ireland is expected to be subject to after we exit the current troika programme of assistance at the end of 2013; and if he will make a statement on the matter. [36692/13]
Amharc ar fhreagraFollowing approval by member countries and the European Parliament, the “Two-Pack” which contains two regulations entered into force on 30th May 2013. One of the regulations is on the monitoring and assessment of draft budgetary plans and on ensuring the correction of excessive deficits. The other is on the strengthening of economic and budgetary surveillance and sets out explicit rules for enhanced surveillance of countries experiencing or threatened with financial difficulties (Regulation (EU) No 472/2013 of the European Parliament and of the Council of 21 May 2013 on the strengthening of economic and budgetary surveillance of Member States in the euro area experiencing or threatened with serious difficulties with respect to their financial stability). The “Two-Pack” represents a significant and welcome enhancement of the euro area’s economic governance regime. It is, to a great extent, a natural extension of the measures contained in the ‘Six-Pack’ which was introduced on 13 December, 2011. The ‘Six-Pack’ - comprising five regulations and one directive - was designed to reform and strengthen fiscal surveillance under the Stability and Growth Pact and to introduce new macroeconomic surveillance.
The ‘Two-Pack’ is applicable to euro area member countries only.
The surveillance regulation provides for surveillance under a number of circumstances – specifically – where a Member State is experiencing severe difficulties with regard to its financial stability and where this is likely to have adverse spillover effect on other Member States, where a member state is in a macroeconomic adjustment programme, and also post programme surveillance. There are specific features attaching to each of these.
Under the regulation, a post-programme surveillance process will be put in place and maintained for a member country until the balance outstanding under EU-sourced financial assistance falls below 25% of the total. This covers all EU funding sources, including bilateral loans. It also provides that the Commission shall conduct, in liaison with the ECB, regular review missions in the Member State under post-programme surveillance to assess its economic, fiscal and financial situation.
The Regulation provides that the reports generated following such missions shall be considered by the European Council which - acting by qualified majority on a proposal from the Commission - may recommend to the Member State concerned to adopt corrective measures.
Post programme surveillance is a normal feature of IMF assistance programmes, and the new EU regulation provides for a similar arrangement for euro area member states in a post-programme situation.
183. Deputy Michael McGrath asked the Minister for Finance in respect of each of the State-supported banks, their policy on providing for a write off of mortgage debt while allowing borrowers to remain in the family home; and if he will make a statement on the matter. [36693/13]
Amharc ar fhreagraI can inform the Deputy that the covered banks have provided me with the following information in relation to their policies on write offs of mortgage debt.
AIB
AIB has informed me that it reviews each individual’s circumstances on a case by case basis through the provision by the borrower of a Standard Financial Statement where that is supplied by the customer. AIB proactively works with individual borrowers in arrears or difficulty with their mortgage to determine a sustainable long term solution that will ultimately allow them to exit from arrears. This may include debt compromise arrangements, such as the warehousing of a portion of the borrowers mortgage debt. However, the provision of any compromise or restructuring agreement to the borrower is predicated on the full cooperation and disclosure of the borrower, that the home is appropriate for their individual financial circumstances and that the borrower is making every effort based on their financial circumstances to repay the maximum sustainable portion of the mortgage debt outstanding and are prioritising the payment of their secured mortgage debt.
BOI
I am informed by Bank of Ireland that it deals with each customer’s circumstances on a case by case basis. The bank does not have a policy of debt forgiveness for secured owner occupier mortgage debt.
Permanent TSB
I am informed by Permanent TSB Group that it has put in place a range of long term sustainable solutions for co-operating customers who are in mortgage difficulties. A key aim of these treatments is to maintain as many borrowers as possible in their family homes.
As required in the Code of Conduct on Mortgage Arrears (CCMA) and as part of Permanent TSB’s processes, co-operating customers complete a detailed Standard Financial Statement (SFS) outlining their circumstances. Following a detailed assessment of this information the Group will propose a sustainable long term treatment where the customer has the ability to meet its terms. This is designed to keep the maximum number of borrowers in their family home.
Permanent TSB will consider in certain circumstances, on a case by case basis as part of a long term sustainable treatment for a co-operating customer, an element of mortgage debt write off. Such debt write off will only take place at the end of the treatment and subject to the customer fully meeting their obligations under the agreed sustainable treatment.
185. Deputy Patrick Nulty asked the Minister for Finance the amount of money that would be raised in a full year by limiting the business and agriculture reliefs, for capital acquisitions tax, by reducing the level of discount on market value, before tax is calculated, from 90% to 75%, 90% to 60% and 90% to 50%, respectively; and if he will make a statement on the matter. [36735/13]
Amharc ar fhreagra186. Deputy Patrick Nulty asked the Minister for Finance the amount of money that would be raised in a full year by limiting the business and agriculture reliefs for capital acquisitions tax by introducing, on the qualifying amount, a ceiling of €3 million, €2.5 million and €2 million, respectively; and if he will make a statement on the matter. [36736/13]
Amharc ar fhreagraI propose to take Questions Nos. 185 and 186 together.
It is not possible to answer the Deputy’s question on business and agricultural reliefs for Capital Acquisitions Tax in the time available. I will contact the Deputy directly with a reply.
187. Deputy Patrick Nulty asked the Minister for Finance the amount of money that would be raised in a full year by abolishing the dwelling home exemption for capital acquisitions tax; and if he will make a statement on the matter. [36737/13]
Amharc ar fhreagraI am advised by the Revenue Commissioners that the necessary detailed data is not available to provide a basis for estimating the Exchequer yield that would be raised if the dwelling home exemption for capital acquisitions tax was abolished.
188. Deputy Patrick Nulty asked the Minister for Finance the amount of money that would be raised in a full year by increasing the annual charge on the value of trust assets from 1% to 2% for the purposes of discretionary trust tax; and if he will make a statement on the matter. [36738/13]
Amharc ar fhreagraI am advised by the Revenue Commissioners that the estimated full year yield to the Exchequer from the suggested increase in the rate of 1% in the annual charge would be of the order of €0.8 million. This estimate is provisional and subject to revision.
It should be noted that this estimate is based upon an assumption that there would be no behavioural impact of this change, which could lead to a less than expected impact on Exchequer yield. In addition, the realisation of any estimated yield from an increase in taxation on assets relating to property is subject to movements in the value of such assets, which are currently occurring in the economy.
189. Deputy Patrick Nulty asked the Minister for Finance if he supports treating discretionary trusts as see through vehicles with the beneficiary taxable when the assets are placed into the trust; and if he will make a statement on the matter. [36739/13]
Amharc ar fhreagra190. Deputy Patrick Nulty asked the Minister for Finance if he supports establishing a public database of all discretionary trusts registered here; and if he will make a statement on the matter. [36740/13]
Amharc ar fhreagraI propose to take Questions Nos. 189 and 190 together.
Discretionary trusts may be set up for a variety of purposes, including:
- for public or charitable purposes,
- for the benefit of individuals who are incapable of managing their affairs because of physical, mental or legal incapacity or
- to provide for minor children.
The creation of a public data base of discretionary trusts, as well as the level of detail which would be disclosed on such a database, gives rise to questions around the right to privacy and data protection. These are matters for consideration by my colleague the Minister for Justice and Equality.
There is a special tax regime applicable to discretionary trusts which, depending on the circumstances, can include an initial discretionary trust tax levy of 6% and an annual levy of 1% of the value of the property subject to a discretionary trust. In addition, income tax and capital gains tax may arise on income and gains arising to the trustees of a discretionary trust. There would be practical difficulties in designing an equitable basis for taxing the beneficiaries of many discretionary trusts. This is because specific beneficiaries may not be identified in all cases, since the trustees may have discretion as to which specific beneficiaries out of a class of beneficiaries will benefit from the trust.
Should it be brought to my attention that further measures are required to counter any particular unacceptable features of discretionary trusts, or to strengthen the powers of the Revenue Commissioners to obtain information in relation to the operation of discretionary trusts, I will consider the matter.
191. Deputy Patrick Nulty asked the Minister for Finance the amount of money that would be raised in a full year by making inheritances and gifts from spouses subject to capital acquisitions tax with a defined threshold of €1,250,000 for spouses; and if he will make a statement on the matter. [36741/13]
Amharc ar fhreagraI am informed by the Revenue Commissioners that figures are not captured in such a way as to provide a dedicated basis for compiling an estimate of the gain to the Exchequer from the change mentioned in the question. Accordingly, the specific information requested by the Deputy is not available.
192. Deputy Patrick Nulty asked the Minister for Finance the amount of money that would be raised in a full year by reducing the tax exemption for lump sum pension payments to the level of the average industrial wage with the balance taxed at the marginal rate of income tax; and if he will make a statement on the matter. [36742/13]
Amharc ar fhreagra193. Deputy Patrick Nulty asked the Minister for Finance the amount of money that would be raised in a full year by reducing the tax exemption for lump sum pension payments up to €80,000 with the balance taxed at the marginal rate of income tax; and if he will make a statement on the matter. [36743/13]
Amharc ar fhreagra194. Deputy Patrick Nulty asked the Minister for Finance the amount of money that would be raised in a full year by reducing the tax exemption for lump sum pension payments up to €100,000 with the balance taxed at the marginal rate of income tax; and if he will make a statement on the matter. [36744/13]
Amharc ar fhreagraI propose to take Questions Nos. 192 to 194, inclusive, together.
The 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.
Based on certain assumptions the average annual industrial wage is estimated at about €31,500 in 2012. As there is no general requirement for data on 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 €31,500, €80,000 or €100,000. Furthermore, details of the marginal rate of income tax an individual would pay on a taxable lump sum pension payment in the scenario outlined in the Deputy’s question are not available.
Based on broad assumptions and an extrapolation of certain available data in relation to the public service, it is estimated that the additional tax yield from taxing lump sums of €31,500 and over at the higher income tax rate of 41% could be about €100 million in a full year.
Similarly, it is estimated that the additional tax yield from taxing lump sums of €80,000 and over at 41% could be about €20 million in a full year.
Finally, it is estimated that the additional tax yield from taxing lump sums of €100,000 and over at 41% could be about €10 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 new 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.
