Wednesday, 13 Nov 2013

Written Answers Nos. 47-52

Job Creation Data

Ceisteanna (47)

Lucinda Creighton

Ceist:

47. Deputy Lucinda Creighton asked the Minister for Finance if he is able to track the number of jobs that can be attributed to measures introduced as a result of the jobs initiative and put a single estimated figure on the total number of jobs created to date as a result of these measures; if he can detail such a figure; the total number of persons employed, broken down between full time and part-time employment, for each year between 2007 and 2013 to date who are earning under €356 a week; and if he will make a statement on the matter. [48412/13]

Freagraí scríofa

Minister for Finance

As part of the Programme for Government, the May 2011 Jobs Initiative introduced a number of measures designed to support the creation of employment. Since Q3 2011, net employment has increased by some 27,800. A number of measures were introduced under the Initiative including the introduction of the reduced VAT rate of 9% on tourism-related services. Measures to reduce the cost to employers of taking on new employees included a halving in the lower rate of Class A employer PRSI from 8.5% to 4¼% on jobs paying up to €356 per week (€18,523 annually) to apply between July 2011 and the end December 2013.

I am advised by the Revenue Commissioners that the estimated numbers of income earners whose main source of income is taxable under the PAYE system and whose annual gross income is less than €18,512, are set out as follows for tax years 2007 to 2013 inclusive.

Tax Year	2007	2008	2009	2010	2011	2012e	2013e
Numbers (000s)	773	716	658	644	612	644	642

Source: Revenue Commissioners.

Estimated numbers are rounded to the nearest one thousand.

It should be noted that Gross Income referred to above is as defined in Revenue Statistical Reports. It should also be noted that a married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit in these figures.

The numbers for tax years 2012 and 2013 are estimates from the Revenue tax-forecasting model using actual data for the year 2011 adjusted as necessary for income and employment trends in the interim. These figures are, therefore, provisional and likely to be revised .

The estimated numbers provided above include both full-time and part-time earners. Revenue income statistics are compiled on an annual basis and include incomes that were earned over a period of less than a year. It is not possible to distinguish the numbers in employment between those in full-time employment and those in part-time employment.

In relation to the reduced VAT rate, between Q3 2011 and Q2 2013 the numbers employed in the accommodation and food services sector have increased by 11,800 (10%) with a sizeable portion of this related to the reduced VAT rate. Work published by my Department found that in year-on-year terms, compared with a range of counterfactuals there was a net employment growth differential of 8-9% in this sector between Q2 2011 and Q2 2012 since the introduction of the reduced rate (MTFS, November 2012). A July 2013 Deloitte Report prepared for Bord Fáilte found the total increase in jobs following the VAT reduction could be estimated at c.10,000. The Initiative also provided additional public capital investment of some €109 million targeted specifically towards schools, local and regional roads and national energy retrofitting. Estimates suggest that between 8 and 12 jobs are created directly for every € 1 million in additional capital expenditure, indicating these measures alone directly supported the creation of over 1,000 jobs. Jobs Initiative measures also served to support on-going improvements in labour cost competitiveness, a feature supportive of the labour market recovery we are now evidencing.

Tax Reliefs Application

Ceisteanna (48, 56)

Lucinda Creighton

Ceist:

48. Deputy Lucinda Creighton asked the Minister for Finance if he will consider including amendments (details supplied) on Committee Stage of the Finance Bill 2013 or by way of new amending legislation; and if he will make a statement on the matter. [48429/13]

Seán Kyne

Ceist:

56. Deputy Seán Kyne asked the Minister for Finance if an amendment will be included in the Finance Bill to permit the category of physiotherapy, in the context of self-referrals without the need for a prior medical consultation, as an allowable health expense under the Revenue Med 1 scheme; and if he will make a statement on the matter. [48572/13]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 48 and 56 together.

I have considered this matter carefully and I have decided at this time, not to extend the parameters of the scheme to include self-referral for physiotherapy.

General practitioners act as an access and control point for the scheme of tax relief on health expenses, as all such expenses must be incurred on the advice or referral of a general practitioner. If physiotherapy was allowed without the need for the treatment to be prescribed by a practitioner, it would inevitably lead to calls for other treatments to similarly qualify for relief, which could greatly increase the overall cost of the scheme. Given the difficult fiscal environment, I am not predisposed to such a potential cost increase.

Property Taxation Administration

Ceisteanna (49)

Patrick Nulty

Ceist:

49. Deputy Patrick Nulty asked the Minister for Finance if his attention has been drawn to the concerns being raised by persons who are trying to get through to the Revenue Commissioner's property tax helpline but who cannot get through or who are having to wait a very long time to get to speak to someone; if he will provide extra staff to ensure that persons are able to speak to someone in a timely manner when they ring the helpline; and if he will make a statement on the matter. [48478/13]

Freagraí scríofa

Minister for Finance

I am advised by Revenue that the introduction of Local Property Tax (LPT), which is the largest ever extension of the self-assessment system, represents a very great administrative challenge. For example, Revenue has answered in excess of 580,000 telephone calls and replied to in excess of 200,000 letters or emails since March 2013. Revenue has further advised me that because LPT is a new tax it is difficult to anticipate service volumes and as a consequence the number of agents required. Revenue has acknowledged that exceptional delays in accessing the Helpline, which is the primary contact point for LPT queries, were experienced by some callers in the days immediately following the issue of the 2014 notifications. Access was also hampered on an intermittent basis on those days by technical issues in the service provider’s telephony system which, have since been resolved.

In response to the demand for service, Revenue ensured that extra resources were deployed to the helpline within two days of the peak period occurring and also deployed extra resources to its own internal support service to cater for the more complex queries. It has put contingency plans in place to further rapidly increase the number of agents on the helpline should it be necessary to do so. In total there are now 200 agents fully deployed to LPT telephone call handling. In addition to the extra staff deployment, callers can now leave their telephone contact details on the system in preference to waiting for service and will receive an out of hours call back from the LPT team. Revenue has extended the helpline opening hours from 9am to 5pm to 8am to 8pm since 6 November and will maintain these hours for the peak filing periods.

Revenue has also extended the paper filing date by one week to 14th November to allow people further consider their 2014 payment method before committing their preferred option to Revenue. The combined initiatives of additional deployments, extended opening hours and the extended ‘paper’ deadline have already significantly reduced the waiting times on the Helpline.

I again commend Revenue for the excellent work it has done in taking LPT from concept to a fully functioning tax in such a short period of time, including the drafting of legislation, the building of a brand new property register, the provision of customer service to such a large volume of taxpayers and crucially the contribution of €215m to date to the Exchequer.

Property Taxation Assessments

Ceisteanna (50)

Barry Cowen

Ceist:

50. Deputy Barry Cowen asked the Minister for Finance if he will provide a county breakdown of the 2014 property tax charges falling due on local authority housing. [48489/13]

Freagraí scríofa

Minister for Finance

I am advised by the Revenue Commissioners that, in accordance with section 851A of the Taxes Consolidation Act 1997, all taxpayer information held by the Commissioners is confidential and they are therefore precluded from providing a detailed breakdown of the amount of Local Property Tax (LPT) due on residential properties owned by individual local authorities for 2014. However, the following may be helpful to the Deputy.

I am informed that local authorities are liable to pay LPT on their properties in the same way as any other residential property owner, unless the properties are used to accommodate people with special housing needs – the legislation provides for a specific exemption in these cases. I am further informed that, based on estimates provided by the Department of Environment, Community and Local Government, the Revenue Commissioners expect that residential properties owned by local authorities and other social housing providers will amount to approximately 160,000 properties. They will, however, be unable to confirm final figures until details of all the properties are provided by local authorities and social housing bodies and the data are fully analysed.

I am further advised that, for local authority owned properties that are not exempt from LPT, the market value of each of these properties will be deemed to fall into the first valuation band, that is €100,000 or less, which represents an LPT charge of €45 per property for 2013 and €90 per property for 2014.

In accordance with the legislative amendment which I introduced to the House earlier this year, LPT due from local authorities and other social housing providers in respect of 2013 is payable on or before 1 January 2014, as is the LPT due for 2014, and they can avail of the full range of payment options provided by the Revenue Commissioners. Resulting from these arrangements, local authorities may decide to pay 2013 and 2014 LPT liabilities together in 2014.

Banking Sector Issues

Ceisteanna (51)

Lucinda Creighton

Ceist:

51. Deputy Lucinda Creighton asked the Minister for Finance if he will confirm that the bank levy announced in budget 2014 is being used to fund the resolution fund pursuant to section 15 of the Central Bank and Credit Institutions (Resolution) Act 2011; his views on whether the enactment of COD 2013/0253 on the single resolution mechanism and single bank resolution fund will result in an increased revenue contribution from the domestic banks here; when he expects this additional revenue will be raised; and if he will make a statement on the matter. [48539/13]

Freagraí scríofa

Minister for Finance

The proceeds from the levy on financial institutions announced in Budget 2014 will be paid into the Exchequer. It will not be used to fund the Resolution Fund pursuant to Section 15 of the Central Bank and Credit Institutions (Resolution) Act 2011. Section 10 of the Central Bank and Credit Institutions (Resolution) Act 2011 established a resolution fund in Ireland. The purpose of this fund is to provide a source of funding for the resolution of financial instability in, or an imminent serious threat to the financial stability of, an authorised credit institution. Authorised credit institutions are required to make contributions to the fund in the form of a resolution fund levy. The domestic banks in Ireland are currently subject to the Credit Institutions Stabilisation Act (“CISA”) 2010 and are therefore outside the scope of the levy until December 2014. Upon expiry of the CISA the domestic banks will be required to pay into the resolution fund.

In July of this year the Commission published its proposal for a Single Resolution Mechanism (SRM) as the next essential step to the banking union. The SRM proposal includes provision for a single resolution fund for Member States participating in the banking union. It is anticipated that when the SRM comes into force the domestic banks in Ireland will contribute to this fund in place of our national resolution fund. Therefore, the domestic banks will be making a contribution as a result of the SRM. This contribution will be held in the single resolution fund to be set up at EU level under the SRM.

The purpose of the single resolution fund is to provide a source of funding for the resolution of banks in the EU banking union. One of the objectives of the SRM is to avoid that funds needed for such purposes come from national budgets. This in turn assists in minimising taxpayers’ exposure to the costs of bank rescues.

The fund is to be built up over a ten year period from the date of entry into force of the SRM. While negotiations are on-going, I expect the SRM to enter into force sometime in 2015.

Banking Sector Issues

Ceisteanna (52)

Lucinda Creighton

Ceist:

52. Deputy Lucinda Creighton asked the Minister for Finance if he will detail in the context of COD 2013/0253 on the single resolution mechanism and single bank resolution fund if he favours allowing the European Commission having the final responsibility to validate resolution plans of the bank that have been accepted by the resolution board; if he will outline whether as currently envisaged in the context of COD 2013/0253 if the ECB decides, as the single supervisor, that a bank should be shut down, the proposed single resolution fund board could overrule this decision as currently envisaged; if he will outline in the context of the level of liquidity that the ECB provides banks when they cannot access private markets the extent to which the single resolution board will be able to prevent an ECB Governing Council decision to remove liquidity from the banking system, as was threatened in Ireland and Cyprus; and if he will make a statement on the matter. [48540/13]

Freagraí scríofa

Minister for Finance

In May 2012 the Commission called for a banking union to restore confidence in banks and in the euro. This was reflected in the report on Economic and Monetary Union prepared by the Presidents of the European Council, the Commission, the Eurogroup and the European Central Bank. The SSM which is the first part of this process was formally adopted by ECOFIN in October and has entered into force. The next important step is the establishment of the SRM. Such a mechanism is considered necessary on the basis of the principle underpinning the banking union that where supervision is centralised it should be complemented with a centralised resolution authority.

The SRM proposal consists of the Single Resolution Board and a Single Resolution Fund, financed by contributions from the financial sector. As the Deputy notes the ultimate decision maker in this process is the Commission, as only an EU institution can carry out such a function and not an agency. While the SRM proposal is under consideration at the Council, the view of the Commission and most Member States is that we should proceed on the basis of the current proposal.

On the second issue raised by the Deputy regarding resolution of a bank, Article 16 of the draft proposal sets out the procedures to be followed.

The first step involves the ECB or a national resolution authority making an assessment whether:

(i) an entity is failing or likely to fail;

(ii) having regard to timing and other relevant circumstances, there is no other reasonable prospect that any alternative private sector or supervisory action would prevent its failure within a reasonable timeframe;

(iii) a resolution action is necessary in the public interest.

If the Single Resolution Board is of the view that all of these conditions have been met, it is required to make a recommendation to the Commission that the bank be placed into resolution. If the Commission agrees with the Board, then it will decide accordingly. If it is however of the view that the conditions are not met, there is a due process that must be followed, but ultimately it can decide not to place the entity in resolution and in such circumstances national insolvency law will apply.

In relation to the Deputy’s final point, there are a number of measures in the proposal which require the ECB to work in conjunction with the Single Resolution Board to ensure consistency so that the system works effectively. Both share the objective of ensuring financial stability and growth in the Euro area. This is considered a crucial step to overcome the current financial fragmentation and uncertainty, to ease funding conditions for sovereigns and banks and to break the link between the two. This is in the best interests of Member States and the banking system as a whole.

Furthermore, Article 12 of the SRM proposal sets out the resolution objectives, which include the need to avoid significant adverse effects on financial stability “in the EU and Member States concerned”. This means that account has to be taken of national interests in any resolution decision.

While this represents the current position of the proposal, the matter will be discussed by Ministers at the forthcoming Ecofin this week.